Country for PR: United Kingdom
Contributor: PR Newswire Europe
Saturday, October 29 2022 - 01:37
Euroclear continues to outperform, despite volatile financial markets, as it accelerates business strategy and investments
BRUSSELS, October 28, 2022 /PRNewswire-AsiaNet/--

Euroclear today provides an update on its performance to the end of the third 
quarter 2022.

Financial summary
Euroclear continued to deliver a strong financial performance to the end of the 
third quarter 2022, with the underlying business performing well and 
benefitting from its diversified, resilient business model. 

The group also reported higher interest earnings due to rising interest rates 
on cash balances as well as increased cash balances from frozen assets due to 
Russian sanctions.  

At the end of the third quarter, 2022 net profit increased 95% to EUR 667 
million, of which EUR 426 million resulted from the strong underlying business 

Euroclear Holding

                            YTD     YTD     Russian    YTD Sept    Underlying
       (€ m)                Sept    Sept   sanctions     2022          vs
                            2021    2022    impacts    Underlying     2021 
Operating income	   1,199    1,725     335	  1,390	    191   16%
    Business income	   1,133    1,202      -5	  1,208	     74    7%
    Interest, banking 
& other income		      65      522     340	    182	    117   179%
Operating expenses	    -723     -824     -13	   -811	    -88   -12%
Operating profit before 
Impairment		     476      901     322	    579	    103    22%
     Impairment		     -16      -13      -1	    -12	      4	
Pre tax profit		     460      888     321	    567	    107    23%
     Tax		    -118     -221     -80	   -140	    -22   -19%
Net profit		     342      667     241	    426	     84    25%
EPS		           110.3    211.9		  135.5			
Business income 
operating margin	   36.2%    31.5%		  32.9%			
EBITDA margin 
(EBITDA/oper.income)	   46.2%    57.0%	          47.5%			
											Note: 2021 figures (except for EPS) have been restated to include 
MFEX pro forma, in order to allow like-for-like comparison.		

Year-to-date operating income was up 44% year-on-year to EUR 1,725 million. 

An increase of 92% in earnings per share to EUR 211.9 per share, reflected the 
increase in net profit. 

Underlying Business Performance & Highlights
Excluding the impact of frozen assets due to the Russian sanctions, Euroclear’s 
underlying business continues to perform strongly.  Adjusted net profit rose by 
25% to EUR 426 million.

Business income was up 7% to EUR 1,208 million, reflecting continued solid 
growth of Euroclear’s business lines. The diversification of the business has 
provided a hedge against market volatility over recent months. Interest, 
banking and other income increased by 179% to EUR 182 million. 
Operating Expenses increased to EUR 811 million, up 12% compared to the prior 
year, as Euroclear continued to invest in its technology and service offering, 
as well as being impacted by inflation. 

Inflationary pressures on costs, as well as the broader impact of the 
macro-economic environment, are monitored at the level of each of operating 
entity. Only Euroclear Bank benefits directly from the compensating effect of 
higher interest rates. 

Overall, Euroclear expects expenditure to remain above its “through-the-cycle” 
target of 4-6% p.a. in 2023 as a result of accelerating investment in both its 
strategy and the resilience of the business, coupled with continued 
inflationary pressures on the cost base. However, profitability is expected to 
rise as inflation headwinds are more than offset by higher net interest income 
from subsequent rate increases.  

The key operating metrics, shown below, underpinned the strong business 
performance during the period.

- Market volatility remains high, driving transaction volumes to record levels. 
- Equity market valuations have fallen significantly during 2022 which has led 
to declines in assets under custody and fund asset under custody during the 
- The impact of lower equity markets is mitigated by the group’s diversified 
and subscription-like business model. Approximately three quarters of the 
group’s business income is decoupled from financial market valuations. 
- Euroclear sees sustained demand for collateral management and lending 
services from a broad range of market participants as they seek to reduce 
credit risk in volatile financial market conditions. 

	                    Q3 YTD 2022	     Change vs Q3 YTD 2021
Assets under Custody	   EUR 34.9 trillion     -3.5%
Number of Transactions	   229 million	         +4.3%
Turnover	           EUR 791.8 trillion    +8.1%
Fund Assets under Custody  EUR 2.8 trillion	 -2.7%
Collateral Highway	   EUR 1.9 trillion	 +7.5%

In the third quarter, Euroclear outlined its updated strategic vision and 
targets to its investors. Through its strategy, the group will continue to 
focus on meeting the evolving needs of all financial market participants from 
issuers to investors. 

In addition, Euroclear will increase its focus on ESG, data-driven and digital 
innovations and expanding its global reach. 

Illustrating this strategic focus, Euroclear enhanced its offering in 
sustainable finance through an investment in Impact Cubed, a leading provider 
of ESG tech-enabled analytics and data science solutions. This investment 
complements Euroclear’s investment in Greenomy, a provider of data and 
reporting for issuers to comply with EU sustainable finance legislation.

International investor appetite for global market access as part of their 
diversified holdings remains robust and issuers continue to seek to benefit 
from an international investor base. Euroclear’s strategic focus on meeting 
these demands continued to deliver growth, despite the headwinds resulting from 
the Russia’s invasion of Ukraine. Assets under custody from international and 
emerging markets were up 18% year-on-year to EUR 1.7 trillion. 

One year ago, Euroclear acquired MFEX as part of its expanded funds platform. 
Considerable progress has been made to integrate MFEX and enhance the group’s 
end-to-end funds offering. This is reflected through the new MFEXbyEuroclear 
branding for all group funds solutions.

Implications of Russian sanctions
The sanctions imposed by the US, the EU and other jurisdictions, as well as 
Russian countermeasures, resulted in a loss of Russia-related business income 
which was more than compensated by increased interest income. 

The cash on the balance sheet has increased as blocked coupon payments and 
redemptions accumulate.  At the end of September, Euroclear Bank’s balance 
sheet increased by €88.7 billion year-on-year to a total of EUR 119.9 billion.

As per Euroclear’s standard process, the cash balances arising from the 
sanctions are invested which, depending on the prevailing interest rates, 
results in interest income. Over the nine months, revenues on cash balances 
arising from sanctions on Russia was EUR 340 million.  

With the growth of sanctioned liabilities and the increase of interest rates, 
the materiality of revenues on cash balances arising from sanctions on Russia 
on the group’s financial results is unprecedented. As such, the Board considers 
it necessary to separate these earnings from the underlying financial results 
when assessing the company’s performance and resources. 

The Board expects interest income to continue to grow materially as blocked 
payments and redemptions continue to accumulate in a rising interest rate 

As previously outlined, while this is expected to have an impact on the balance 
sheet, it should not result in material change in credit risk profile and 
therefore will not have a meaningful impact on the group’s capital ratios. 

The Board recognises that the unexpected profit should be managed prudently, in 
line with its corporate purpose and considering its responsibilities towards 
stakeholders and society.  Euroclear continues to act in a transparent manner 
with all authorities involved. The Board will continue to act cautiously by 
retaining any profits related to the Russian sanctions until the situation 
becomes clearer.

Commenting on the results
Lieve Mostrey, Chief Executive Officer
“Despite an extraordinary context, we continued to deliver an excellent 
business performance, with financial results above our strategic 
‘through-the-cycle” targets. 

The group benefits from a diversified business model which allows us to focus 
on supporting clients through these uncertain times,  providing robust 
infrastructure and fulfilling our duties with respect to the sanctions on 

Our results show that we are on the right path. We are now accelerating 
investments to deliver on our long-term strategy and drive value for all our 

Interest income is driven by the prevailing interest rates in each currency of 
the cash balances held by the group. As at 30 September 2022, cash balances 
totaled EUR 111.7 billion, of which EUR 85.8 billion related to the sanctions 
on Russia.

The proportion of cash balances by currency is as follows: 

Euroclear Bank and Euroclear Investments are the two group issuing entities. 
The summary income statements and financial positions at Q3 YTD for both 
entities are shown below. 

 	 	 	 	                Q3 2022     Q3 2021     Variance
Euroclear Bank Income Statement	 	 	 	 	 	 	 
 Net interest income	 	                  550.9	       69.3	   481.6
 Net fee and commission income	 	 	  771.2	      686.7	    84.5
 Other income	 	 	                  -12.5	 	7.2	   -19.7
 Total operating income	 	 	        1,309.6	      763.2	   546.4
 Administrative expenses	 	 	 -485.2	     -440.8	   -44.4
 Operating profit before impairment and taxation  824.4	      322.4	   502.0
 Result for the period	 	 	          618.4	      244.2	   374.3
Euroclear Bank Statement of Financial Position	 	 		 			
 Shareholders' equity	 	 	        2,424.2	    1,924.7	   499.5
 Debt securities issued and funds borrowed (incl.
 subordinated debt)	 	 	        5,191.8	    6,869.7     -1,678.0
 Total assets	 	 	              119,887.7	   31,209.1     88,678.6
Euroclear Investments Income Statement	 	 	 	 	 	 	 
Dividend	 	 	                  313.4	      540.1	  -226.7
Net gains/(losses) on non trading financial 
assets at FVPL	 	 	                 -473.6	      -43.5	  -430.1
Other income 	 	 	                    2.9	 	1.4	     1.6
Total operating income	 	 	         -157.3	      498.0	  -655.3
Administrative expenses	 	 	           -3.4	       -1.1	    -2.3
Operating profit before impairment and taxation	 -160.7	      496.9	  -657.6
Result for the period	 	 	          -42.9	      507.3	  -550.3
Euroclear Investments Statement of Financial Position	 	 		 			
Shareholders' equity	 	 	          460.8	      757.3	  -296.6
Debt securities issued and funds borrowed	1,654.7	    1,653.3	     1.5
Total assets of which	 	 	        2,116.0	    2,449.1	  -333.1
Loans and advances at amortised cost (excluding 
                                  intercompany)	   85.9	       55.8	    30.1
Fair Value through Other Comprehensive Income 
                       (FVOCI) financial assets	  299.0	      311.1	   -12.1
Intercompany loans (at amortised cost and FVPL)	  853.4	    1,275.9	  -422.5

Note: At the end of Q3, Euroclear Investments received a dividend from 
Euroclear SA which was more than offset by unrealised fair market valuation. An 
increasing interest rate environment has impacted Euroclear Investment’s 
intra-group loans (assets), recognised at fair market value in line with IFRS 
9. Liabilities have not been impacted, due to being recognised at acquisition 
cost, in line with accounting standards. As a result, Euroclear Investments 
demonstrates a significant loss on non-trading financial assets for Q3 2022 
compared to Q3 2021, resulting in a negative operating profit. This accounting 
treatment has no impact on Euroclear group’s earnings capacity nor on the 
ability for Euroclear Investments to reimburse its debt.

Note to editors
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, Euroclear UK & International and MFEXbyEuroclear. 


Source: Euroclear