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Euroclear achieves strong first quarter results

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BRUSSELS, April 30, 2024 /PRNewswire/ — Results for the first quarter ending 31 March 2024

Financial highlights (excluding impacts from Russian sanctions) 

  • On an underlying basis, business income reached €423 million, an increase of 2% year-on-year. When excluding an exceptional billing adjustment, underlying business income would have increased by 3% compared to last year.
  • Quarterly underlying interest income increased by 19% to €283 million driven by prevailing interest rates.
  • Underlying operating expenses increased by 5% to €321 million. Following a step-up in investment in 2023 to support our strategic ambition to enhance digital capabilities and IT infrastructure, expenses growth is trending back towards the ‘through-the-cycle’ target of 4-6% on a full-year basis.
  • Underlying operating profit increased by 12% to €385 million and underlying net profit increased by 13% to €289 million, supported by a very robust business performance and helped by sustained high interest rates.
  • Underlying earnings per share rose by 13% to €91.8 per share, reflecting the continued increase in net profit.
  • Underlying EBITDA margin increased by 1.7 percentage points to 58.7% on year-on-year basis.
  • The impacts of Russian sanctions are highlighted in a dedicated section at the end of this press release.

Euroclear Holding

(€ m)

 

Q1 2023

Russian
sanctions impacts

 

Q1 2023 Underlying

 

Q1 2024

Russian
sanctions impacts

Q1 2024 Underlying

 

Underlying vs 2023

Operating income

1,380

729

651

2,289

1,583

706

55

8 %

Business income

409

-5

414

416

-6

423

9

2 %

Interest, banking & other income

971

734

 

237

1,872

1,589

283

 

46

 

19 %

Operating expenses

-315

-9

-307

-338

-17

-321

-14

-5 %

Operating profit before Impairment

1,065

 

720

 

344

1,951

1,566

385

 

41

 

12 %

Impairment

-2

-1

-1

-2

0

-2

-1

Pre-tax profit

1,063

720

343

1,949

1,566

383

39

11 %

Tax

-267

-180

-87

-485

-391

-94

-7

-8 %

Net profit

796

540

256

1,463

1,174

289

33

13 %

EPS

81.4

91.8

Business income operating margin

25.9 %

24.1 %

EBITDA margin

57 %

58.7 %

 

Lieve Mostrey, Chief Executive Officer of Euroclear Group, commented:

“Euroclear continues to perform extremely well, as we achieved another very strong quarter and delivered on our strategy, particularly in the funds business. We made significant progress in developing Euroclear FundsPlace by teaming up with new partners such as iCapital or Spuerkeess and making a strategic investment in blockchain-based funds marketplace IZNES. Providing access to a wide range of funds services, Euroclear FundsPlace delivers risk-mitigation, automation and efficiency at scale to a growing number of clients.

In this first quarter of 2024, the Russian sanctions and countermeasures continued to have a material impact on our operations. We are closely following the discussions at EU level about the use of profits generated by the Russian immobilised assets. Our teams continue to respond well to this unprecedented situation and remain focused on minimising the legal, operational, financial and reputational risks for our company and our clients while maintaining normal business operations.  

As Valérie Urbain is now taking over as CEO of Euroclear, I feel proud and honoured to have been able to lead Euroclear’s growth journey and further reinforce our position as trusted financial market infrastructure. The dedication of our colleagues across all locations, the support of all Euroclear stakeholders – including the Board, our shareholders, customers and partners – have been critical to our success. I am very grateful to everyone involved and will keep Euroclear close to my heart. I know that I leave the company in safe and capable hands.”

Business performance 

The key operating metrics (end of period unless stated otherwise) demonstrate a strong business performance during the period.

Q1 2023

Q1 2024

YoY evolution

3-year CAGR

Assets under custody

€36.6 trillion

€39.1 trillion

+7 %

+4.6 %

Number of transactions

79.1 million

80.6 million

+2 %

1.9 %

Turnover

€281 trillion

€274 trillion

-3 %

+4.7 %

Fund assets under custody

€2.9 trillion

€3.3 trillion

+13 %

+6.5 %

Collateral Highway

€1.75 trillion

€1.8 trillion

+3 %

+2.6 %

Underlying cash deposits (average)

€25.1 billion

€22.3 billion

-11 %

+2.3 %

With the continued increase in equity market valuations coupled with robust results in fixed income, assets under custody have reached a new record at €39.1 trillion (+7%), growing for the sixth quarter in a row. 

Funds assets under custody were boosted by ETF growth and higher stock markets valuations and reached an all-time record level.   

The Collateral Highway outstanding progressively recovered thanks to favourable market conditions characterised by the stabilisation of monetary policy and the prospect of lower interest rates in the coming quarters.       

Milestones in global funds strategy
The first quarter of 2024 was marked by a number of achievements in developing Euroclear’s funds business, a key pilar in the company’s strategy. Euroclear FundsPlace offers fund management companies, banks, institutional investors and custodians a single point of access to more than 250,000 funds.

In Q1 2024, Euroclear acquired a stake in IZNES, a pan-European funds marketplace based on blockchain technology[1]. Through this strategic partnership, Euroclear will complement its funds services on the French market and beyond and continue to support the development of innovative funds distribution models.

Banque et Caisse d’Epargne de l’Etat Luxembourg (Spuerkeess) has announced in February 2024 that it will be moving the majority of its fund portfolio to Euroclear FundsPlace in order to centralise the distribution and execution services of its funds. Euroclear’s funds platform will manage the lion’s share of Spuerkeess’ portfolio from now on and collect trailer fees on external custodians as well.

Euroclear also announced a partnership with global fintech platform iCapital. Euroclear’s clients will gain enhanced access to a broader range of alternative investments, including private equity, private credit, real estate, infrastructure, and hedge funds. The iCapital funds available on iCapital Marketplace will complement and expand Euroclear FundsPlace’s current offerings.

Euroclear hosted its first major funds-dedicated conference – Euroclear FundsCo – in London on 26 March. This inaugural Euroclear funds event brought together more than 200 senior representatives from across the funds industry to discuss future global trends.

Euroclear’s open architecture helps streamline collateral management  Euroclear’s international Central Securities Depository, Euroclear Bank, has become an eligible securities collateral location of Eurex Clearing AG. Through this partnership, clients of Euroclear Bank and Eurex Clearing will be able to post collateral directly to Eurex Clearing with the ability to further optimise the pool of collateral held in Euroclear Bank. The service offering increases operational efficiency for market participants and streamlines the collateral management process. Eurex Clearing already uses Euroclear Bank as an eligible securities settlement location.

Russian sanctions  

Financial impacts of the Russian assets in Q1 2024

  • The Russian sanctions and countermeasures continue to have a significant impact on Euroclear’s earnings, as €1.6 billion of the €1.9 billion interest income relate to Russian sanctioned assets.
  • The sanctions and Russian countermeasures resulted in direct costs of €17 million and a loss of business income of €6 million.
  • Euroclear’s net profit related to the Central Bank of Russia’s (CBR) immobilised assets as from 15 February amounts to €557 million and will be reported and retained separately.

 

Euroclear Holding

(€ m)

 

Q1 2023

o/w Russian
sanctions
impacts

 

Q1 2024

o/w Russian
sanctions
impacts

o/w
CBR as
from 15 Feb

Operating income

1,380

729

2,289

1,583

746

Business income

409

-5

416

-6

0

Interest, banking & other income

971

734

1,872

1,589

746

Operating expenses

-315

-9

-338

-17

-3

Operating profit before Impairment

1,065

720

1,951

1,566

742

Impairment

-2

-1

-2

0

0

Pre-tax profit

1,063

720

1,949

1,566

742

Tax

-267

 

-180

-485

-391

-186

Net profit

796

540

1,463

1,174

557

Update on Russian sanctions and countermeasures 

Russia’s invasion of Ukraine resulted in market-wide application of international sanctions. Euroclear considers the application of international sanctions as a key priority. Therefore, well established processes are in place which have allowed the group to implement the sanctions while maintaining our normal course of business.

As a result of the sanctions, blocked coupon payments and redemptions owed to sanctioned entities continue to accumulate on Euroclear Bank’s balance sheet. At the end of Q1 2024, Euroclear Bank’s balance sheet totalled €199 billion, of which €159 billion relate to sanctioned Russian assets.

In line with Euroclear’s Risk Appetite and Policies and as expected by the EU Capital Requirements Regulation, Euroclear’s cash balances are re-invested to minimise risk and capital requirements. In the first quarter of 2024, interest arising on cash balances from Russian-sanctioned assets was approximately €1.6 billion. Such interest earnings are driven by the prevailing interest rates and the amount of cash balances that Euroclear is required to invest. Subject to Belgian corporate tax, these earnings generated almost €400 million tax revenue for the Belgian State. As such, future earnings will be influenced by the evolving interest rate environment.

 Effective 15 February 2024, the EU Council adopted a Regulation[2] providing for an obligation for Central Securities Depositories holding reserves and assets of the Central Bank of Russia[3] to apply specific rules in relation to the cash balances accumulating due to restrictive measures. These central securities depositories, including Euroclear, should account for and manage such extraordinary cash balances separately from their other activities, should keep separate the net profit generated and should not dispose of these ensuing net profits (e.g. in the form of dividends to shareholders). Euroclear has since the imposition of sanctions reported the profitability separately and now, in addition, Euroclear is reporting separately the profitability related to the Central Bank of Russia’s immobilised assets as from 15 February 2024 – as disclosed in the table above.

Euroclear continues to act prudently and to further strengthen its capital by retaining Russian sanction related profits as a buffer against current and future risks. There are still many unknown risks given the current external climate and how it could evolve.

Various parties in Russia contest the consequences of the application of sanctions, with a significant number of legal proceedings ongoing, almost exclusively in Russian courts. The impact of the lawsuits on Euroclear is uncertain but the probability of unfavourable rulings is high since Russia does not recognise the international sanctions. Euroclear will continue to defend itself against all legal claims.

Euroclear notes that various options to use profits generated by sanctioned amounts held by financial institutions, including Euroclear, for the financing of Ukraine are being considered. Euroclear is focused on minimising potential legal, financial and operational risks that may arise for itself and its clients from the implementation of any proposals made or measures taken, while complying with its obligations.

Annexes

Infographic – https://mma.prnewswire.com/media/2401629/Euroclear1_Infographic.jpg

 

Euroclear Bank and Euroclear Investments are the two group issuing entities. The summary income statements and financial positions at Q1 2024 for both entities are shown below.

Figures in Million of EUR

Q1 2024

Q1 2023

Variance

Euroclear Bank Income Statement (BE GAAP)

Net interest income

1,875.3

970.0

905.3

Net fee and commission income

271.4

270.5

0.9

Other income

-3.6

5.8

-9.4

Total operating income

2,143.1

1,246.3

896.8

Administrative expenses

-234.5

-200.5

-34.0

Operating profit before impairment and taxation

1,908.6

1,045.8

862.8

Result for the period

1,430.9

782.1

648.7

Euroclear Bank Statement of Financial Position

Shareholders’ equity

7,466.7

3,384.2

4,082.4

Debt securities issued and funds borrowed (incl. subordinated debt)

4,474.1

5,503.2

-1,029.1

Total assets

198,758.0

140,460.8

58,297.2

 

Euroclear Investments Income Statement (BE GAAP)

Q1 2024

Q1 2023

Variance

Dividend

0.0

0.0

0.0

Net gains/(losses) on financial assets & liabilities

2.0

2.5

-0.5

Other income

-0.2

-0.1

-0.1

Total operating income

1.9

2.5

-0.6

Administrative expenses

-0.3

-0.1

-0.2

Operating profit before impairment and taxation

1.6

2.4

-0.8

Result for the period

1.1

1.8

-0.7

Euroclear Investments Statement of Financial Position

Shareholders’ equity

700.5

668.2

32.4

Debt securities issued and funds borrowed

1,663.5

1,664.5

-1.0

Total assets

2,364.7

2,333.5

31.3

 

These figures are unaudited. The computation of application of article 1.8 of EU n°2024/576 is pending implementation of the final text and procedures which could still change the figures.

About Euroclear

Euroclear group is the financial industry’s trusted provider of post trade services. Guided by its purpose, Euroclear innovates to bring safety, efficiency, and connections to financial markets for sustainable economic growth. Euroclear provides settlement and custody of domestic and cross-border securities for bonds, equities and derivatives, and investment funds. As a proven, resilient capital market infrastructure, Euroclear is committed to delivering risk-mitigation, automation, and efficiency at scale for its global client franchise. The Euroclear group comprises Euroclear Bank, the International CSD, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & International.

[1] The transaction is subject to customary closing conditions and regulatory approvals.
[2] Council Regulation (EU) 2024/576 of 12 February 2024 amending Regulation (EU) 833/2014
[3] With a total value of more than € 1 million

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AXA named as an Official Partner of UEFA Women’s EURO 2025

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AXA has proudly announced its support for the UEFA Women’s EURO 2025 as an Official Partner, furthering its sponsorship programme initiated in 2020. The prestigious event will take place in Switzerland from July 2 to 27, 2025.

Commitment to Women’s Football

This partnership underscores AXA’s dedication to promoting women’s football, building on its long-term support for the sport. Since 2020, AXA has been the main sponsor of the AXA Women’s Super League and the AXA Women’s Cup in Switzerland. By investing in women’s football, AXA aims to bolster women’s sports and promote its brand ethos, “Know You Can,” encouraging self-belief among its customers.

Statements from AXA Leaders

Fabrizio Petrillo, CEO of AXA Switzerland, expressed his enthusiasm, saying, “I’m so excited to support UEFA Women’s EURO 2025 together with other European AXA companies as a main sponsor. We are sending a strong signal and making a contribution to ensure that the players and fans can experience a great event and further strengthen women’s football. I’m looking forward to a fantastic summer of football in 2025!”

Volunteering Opportunities

The partnership includes more than just financial support. AXA employees will have the opportunity to volunteer during the tournament as part of the UEFA Women’s EURO 2025 Volunteer Programme, playing a crucial role in the event’s success.

Guy-Laurent Epstein, UEFA Marketing Director, commented, “AXA is a dedicated supporter of women’s football in Switzerland, so we are thrilled to partner with them for what will be an unforgettable UEFA Women’s EURO 2025. We look forward to working together to make this the can’t-miss event of next summer while also strengthening women’s football in the host country and throughout Europe.”

Enhancing Visibility for Female Players

Andreea Prange, Head of Customer Experience & Strategy at AXA Switzerland, added, “Promoting women’s football is a topic I hold dear to my heart. That’s why I’m delighted that AXA, as a partner of the UEFA Women’s EURO 2025, is also committed to increasing the visibility of female players at the international level.”

Tournament Details

Doris Keller, Tournament Director of UEFA Women’s EURO 2025, stated, “AXA, a long-time supporter and partner of women’s football in Switzerland and globally, is a perfect fit to become a global partner of UEFA Women’s EURO 2025. We look forward to collaborating with AXA on the UEFA Women’s EURO 2025 Volunteer Programme, as the 2,500 volunteers will play a highly essential and valuable role throughout the tournament welcoming everyone to the host country.”

The UEFA Women’s EURO 2025 will feature 16 teams competing in eight Swiss cities, attracting an estimated 500 million viewers worldwide and offering over 700,000 tickets for fans to attend the matches live.

Partnership Duration

The partnership between AXA and UEFA will continue until the end of August 2025. The financial terms of the sponsorship remain confidential.

Source: fintech.global

The post AXA named as an Official Partner of UEFA Women’s EURO 2025 appeared first on HIPTHER Alerts.

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Lucinity Wins the Microsoft Partner Awards for 2024 for Partner of the Year – Iceland and Sustainability and Social Impact

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REYKJAVÍK, Iceland, May 28, 2024 /PRNewswire/ — Lucinity, a leading AI company for financial crime prevention, won two awards at the Microsoft Partner Awards for 2024, including Partner of the Year – Iceland and Sustainability and Social Impact, highlighting Lucinity’s innovations and contribution to positive societal change. 

“Congratulations to Lucinity for being recognized as the Partner of the Year – Iceland 2024! Lucinity is leading digital transformation and delivering innovative products in their domain,” says Microsoft’s leadership.

For the past year, they have played a key role with their offerings, skilled resources, and their ability to drive change and innovative solutions both locally in Iceland and across the globe. Lucinity has had significant social impact and growth while supporting our joint customers in their AI-transformation journeys.”

In June 2023, Lucinity launched the world’s first copilot for FinCrime prevention powered by Microsoft Azure OpenAI called Luci. Luci stands out in the financial services industry with specialized skills for FinCrime prevention such as adverse media checks, case analysis, and SAR writing. 

Built on the robust and scalable Microsoft Azure platform, Lucinity offers customers a trusted SaaS product. Additionally, Lucinity’s presence on the Microsoft Azure Marketplace allows companies to leverage their Microsoft Azure credits to access the platform. 

The seamless integration with Microsoft’s Azure stack has enabled Lucinity to implement advanced AI capabilities, fostering rapid innovation and enabling banks and fintech companies to utilize AI securely and audibly. Furthermore, Luci significantly reduces investigation times from 2.5 hours to just 25 minutes, saving Tier 1 banks an estimated $25 million annually.

Guðmundur Kristjánsson (GK)Lucinity’s Founder and CEO comments, “These awards are a testament to the strength and reliability of our solutions, made possible by our strategic partnership with Microsoft. Utilizing Microsoft Azure, we have been able to drive rapid innovation and create a robust, scalable platform that meets the rigorous requirements of compliance teams.” 

On the Sustainability and Social Impact Partner Award, Microsoft says, “Lucinity, with their innovative AI solutions, has really tried to combat this huge global challenge. They use ‘Human AI’ to enhance financial crime prevention, combining AI with human expertise for efficient, user-friendly solutions. Additionally, Lucinity has developed a tool called Luci, an AI-powered copilot that helps transform financial crime prevention from a process that took hours to one that takes minutes.”

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2024 Hengqin Global Investment Promotion Conference Kicks Off

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HENGQIN, China, May 28, 2024 /PRNewswire/ — The Hengqin 2024 Global Investment Promotion Conference and sharing sessions opened on 26 May. Liu Xianfa, Commissioner of China’s Foreign Ministry in the Macao SAR; Lei Wai Nong, Director of the Executive Committee of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (hereinafter referred to as the “Cooperation Zone”); Huang Zhihao, Deputy Secretary of the CPC Zhuhai Municipal Committee and Mayor of Zhuhai; Nie Xinping, Fu Yongge, Su Kun, Deputy Directors of the Executive Committee of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin attended the event. It also attracted more than 1,000 investors from Macao’s business associations and renowned enterprises at home and abroad. Guests attending the event came from 42 countries and regions, including Portugal, Brazil, Singapore and Malaysia, and the scale of participation was greatly enlarged compared with that of last year.

Lei Wai Nong said in his speech that Hengqin is currently entering into its “prime time” of trade and investment opportunities. He invited all entrepreneurs from home and abroad to invest in Hengqin and embrace the new development opportunities together.

Su Kun introduced the open investment environment of the Cooperation Zone and highlighted that the four new industries have seen significant progress and new development opportunities since the implementation of tier-specific management.

The event featured presentations on investment and development in Hengqin by representatives of Wisewave (Zhuhai) Technology Co., Ltd. and Airbus Helicopters China.

Nine research experts, scholars, and entrepreneurs from Macao and Hengqin have been invited to serve as “Ambassadors for Hengqin”. Together with six “Advocates for Hengqin” they are expected to promote Hengqin to the world. The video series “Ambassadors for Hengqin” will be rolled out in June.

Highlights of this year’s conference included an exhibition on the four new industries in the Cooperation Zone, showcasing the fruits of development in recent years. As of the end of the event on 26 May, more than 69,000 audience watched the online broadcasts.

On 27 May, a series of sharing sessions were held for in-depth discussions on integrated circuits, traditional Chinese medicine, branded industries, modern finance, cultural tourism, conventions and exhibitions, trade, and cross-border e-commerce, with the aim of building a bridge for dialogue and cooperation in these industries. 

Photo – https://mma.prnewswire.com/media/2423506/2024_Hengqin_Global_Investment_Promotion_Conference_Kicks_Off.jpg

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