BME posts a net profit of €86 million in the first half

• In the second quarter the net profit was 43.1 million, up 0.6% from the previous quarter
• Revenues to the end of June totaled €168.2 million
• Stripping out one-off items, operating costs decreased by 1% for the first six months
• The cost base coverage ratio with revenue not linked to volumes ended the first half with a value of 119%, an increase of two points
• In the first six months the efficiency ratio at end-June 2016 was 32% while ROE for the period was 39.7%, beating the sector average by 12 and 19 points respectively

BME reported net profit of €86 million in the first half of 2016, the second best six-month period since 2008, but 6.1% lower than in the same period in 2015, which was the best recorded since the start of the crisis. The net profit for the second quarter came in at €43.1 million, an improvement of 0.6% from the first quarter and a fall of 3.2% on 2015 by the relatively improved performance of the Information and IT and Consulting, and Clearing businesses.

At the end of the first half of the year, revenue contracted by 7.2% year-on-year, to stand at €168.2 million. Revenue for the quarter totalled €86.1 million, a decline of 2.5% in relation to revenue reported for the second quarter of 2015.

Stripping out the effect of extraordinary costs and those derived from Infobolsa integration, operating costs decreased by 1% for the first six months of the year and 0.5% in the second quarter.

After deducting operating costs, EBITDA for the second quarter was €58.3 million, some 6.8% lower year-on-year. Cumulative EBITDA, up to June, reached €113.6 million, down 11.8%.

Cumulative profit per share in the first six months rose to €1.03, of which, €0.52 corresponds to the second quarter.

The cost base coverage ratio with revenue not linked to volumes has ended the first half with a value of 119%, an increase of two points compared to the end of the first half of 2015. The efficiency ratio for the second quarter stood at 31.7%, and its value for the whole of the first six months was 32%. These values show a difference from the sector average over 12 points. ROE closed the first half with a value of 39.7%.The difference compared to peers exceeds 19 points.

EQUITY

In the first half of 2016, the Equity unit obtained €73.3 million in net revenue, a 12.8% reduction year-on-year. Net revenue from trading reached €31.9 million in the second quarter and those of listing €5.5 million, down 8% and 3.7% on 2015, respectively.

Quarterly intermediation activity performed similarly to the previous quarter. A scenario of persistent high volatility, related to uncertainty in the national and international environment, in which general price falls in the market have had a greater effect on trading turnover than the number of trades. On this basis, during the second quarter of this year, 14.6 million trades took place, 6.5% fewer than the second quarter of 2015, whilst the trading turnover declined by 26.6% with €192.5 billion traded in the period.

The unit’s resulting EBITDA, after stripping out operating costs, stood at €27.4 million for the second quarter of the year and an accumulated €53.5 million in the six month period. These amounts were 11.5% and 17.9% down on 2015, respectively.

Issuers have once again gone to the market to strengthen their balance sheets, diversify funding and reduce debt. Second-quarter flows through the Exchange in the form of already listed shares, strongly rebounded to reach €12.6 billion, up 7.3% on the same period a year earlier and 292.6% higher than in the previous quarter.

SETTLEMENT & REGISTRATION

Total net revenue of the Settlement and Registration unit was €36.9 million between January and June, a decrease of 13.4% compared to last year.

With the starting of the new settlement system, operations settled have fallen significantly due to the netting process that the clearing house carries out on purchase and sale trades. The netting in the process of settlement of operations has been counterweighed through the introduction of clearing of equity trades in BME Clearing.

In the second quarter of the year, 6.2 million operations were settled, down 52.8% on the same period last year. A total of 18 million transactions were settled up to June, 33.6% fewer than in the first half of 2015.

The unit’s EBITDA fell by 16.9% in the second quarter and a cumulative 13.7% for the first six months, with respect to 2015, standing at €13.9 million and €28.9 million respectively.

CLEARING

The start of clearing house operations for equities had a positive effect on the performance of revenue during the period. Clearing of the different underlyings processed by BME Clearing generated net revenue of €6.6 million in the second quarter of the year, a 42.6% year-on-year increase. This brought total net revenue from clearing up to June to €10.6 million for an increase of 17.4% on 2015. To the end of June the system processed 21.4 million transactions for a turnover of €252.5 billion.

Second quarter EBITDA rose by 92.8% year-on-year, up to €4.1 million, with cumulative EBITDA for the year to June reaching €5.9 million, some 46.2% higher than the 2015 figure.

INFORMATION

The Information unit has shown the same business trends as in previous quarters. At the end of June, the total number of customers had increased by 5%, year-on-year. In addition, the number of customers with direct connections to BME’s information servers reached a record high, with a rise of 22.8% over the same period in the previous year.

Net revenue rose by 24.7% in the second quarter of the year, to reach €11.6 million. The cumulative increase to June was 19.7%, with total net revenue amounting to €22.4 million.

EBITDA, increased to €8.5 million, up 1.1% on the figure reported in the second quarter of 2016, with cumulative EBITDA for the first half of this year, advancing by 3.9% on the same period in 2015, to reach €17.7 million.

DERIVATIVES

The total volume of contracts traded in the Financial Derivative Products business line in the first half of 2016 was 7.2% lower than in same period in 2015.

Net revenue in the second quarter fell 13% to €2.7 million, compared to the figure obtained a year ago. From January to June, net revenue amounted to €5.8 million, a drop of 8,7%, year-on-year. EBITDA was also down 30.9% in the quarter and 21.4% in the first half of the year, respectively.

 FIXED INCOME

In the second quarter of the year, the secondary debt market has been hit by low interest rates along the entire term curve. Levels have fallen even further, as a result of the ECB’s monthly bond purchase programme.

Private Fixed Income trading fell 69.9% in the first six months of this year, and 76% in the second quarter, versus 2015. The volume of Public Debt traded, which also included that of the Spanish autonomous communities, up to June, stood at €91.9 billion, a rise of 35.8% on 2015.

The improved performance by the listing segment saw net revenue in the second quarter increase by 3.3% on that of 2015, to stand at €2.7 million; leaving the cumulative total up to the end of June, down 1.8% year-on-year. EBITDA for the second quarter exceeded that of the previous year by 9.9%.

IT & CONSULTING

In the second quarter of the year, the IT and Consulting business unit continued to maintain the same trends as in previous quarters, a positive progress in technical infrastructure, regulatory, communication and access activities.

The overall services supplied from the IT and Consulting unit generated €4.8 million in net revenue in the second quarter, 8.9% above the figure for the same quarter in 2015. Net revenue from January to June stood at €9.5 million, a 6.1% increase year on year.

As a result of increased consumption of resources in the second quarter of 2016, associated with the provision of outsourcing services, EBITDA fell 12.1% quarter-on-quarter, to €1.7 million. The unit’s EBITDA in the first six months was €3.7 million broadly in line with the previous year.