euroclear plc 2016 results · euroclear plc 2016 results 1 march 2017. restricted to euroclear 2...

Euroclear plc2016 Results

1 March 2017

2Restricted to Euroclear

Forward looking statements

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What we will cover today

Highlights – Lieve Mostrey, Chief Executive Officer

Financials – Bernard Frenay, Chief Financial Officer

Business update – Frederic Hannequart, Chief Business Development Officer

Summary & Outlook – Lieve Mostrey, Chief Executive Officer

Questions & Answers


Highlights

Robust financial performance in line with record previous year, and stable dividend

Stronger than normal second half drove 2016 results

Net Interest Earnings uptick, driven by negative interest charges

Increasing investment plans to deliver our strategy

Financial flexibility strengthened, taking advantage of low interest rates

1

2

3

4

5


Full year business metrics held at strong levels overall

Assets under custody grew to €27.7 trillion

Settlement volume increased to 195.9 million netted transactions

Collateral flat with €1,072 billion in average daily outstandings

Fund assets under custody, with 11.1 million orders routed

+1%

+3%

>€1tn

+6%

542 573623

670 655

159170

182191 196

-

50.0

100.0

150.0

200.0

250.0

-

200.0

400.0

600.0

800.0

1,000.0

2012 2013 2014 2015 2016

Value of securities transactions settled (EUR trillion)

Number of transactions after netting (million)

Value and volume of securities transactions settled


Net fee income and assets under custody both stable,

despite foreign exchange headwinds

23.024.2

26.0

27.5 27.7

14.0

16.0

18.0

20.0

22.0

24.0

26.0

28.0

30.0

2012 2013 2014 2015 2016

874 877924

983 985

0

200

400

600

800

1,000

1,200

2012 2013 2014 2015 2016

Net fee income

€million

Securities held in custody

€trillion equivalent, year-end


Financial performance


Robust 2016 financial performance

€ million 2016 2015 Y-o-Y

FY FY

Net fee and commission income 985 983 -

Net interest and other income 177 147 20%

Operating income 1,162 1,130 3%

Administrative expenses -751 -730 3%

Operating profit before tax 411 401 3%

Taxation and other -113 -108 5%

Profit for the period 298 293 2%

Earnings per share (€/share) 92.4 87.0 6%

Dividend per share (€/share) 37.0 36.3 2%


Flat net fee income, combined with increasing cost evolution

• Increasing costs due to investments in regulatory-driven, cyber security & growth initiatives

101 101

107

114 114

100

7578

83

105

127

9693

96

102105

2011 2012 2013 2014 2015 2016

Net fee income NII & Other income Operating Expenses


Increasing investment in regulatory-driven and cyber security

initiatives

400

450

500

550

600

650

700

750

800

2015 2016 2017e

Op

era

tin

g ex

pen

ses

€m

Exceptional restructuringcosts

Regulatory-driven & cybersecurity investments

Core operating expenses


Operating profit before tax and net fee income margin

2016 operating profit growth, despite higher investment,

reflecting higher contribution from net interest income

€ million

+ 3%


Return on equity sustained, while earnings per share increased

63.069.3

78.6

87.092.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2012 2013 2014 2015 2016

Return on equity Earnings per share

+6%

€/share

7.8%8.3%

8.7% 8.7% 8.5%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2012 2013 2014 2015 2016


Securing our financial position

Strong and stable ratings illustrate our performance and market position:

• Fitch and S&P rate Euroclear Bank AA+/AA Stableand Euroclear Investments AA-/AA

€600 million debt issuance providing greater financial strength and flexibility:

• New issue, with 10-year maturity, received strong ratings AA- (S&P) / AA (Fitch)

• Benefitting from low interest rates: fixed rate coupon of 1.125%

• Oversubscribed by 4x; placement to qualified investors across Europe


Healthy, stable balance sheet

€ million 2016 2015

end of year balance

Loans and advances to banks and customers 18,398 18,031

Financial assets 2,881 2,448

Goodwill and (in)tangible fixed assets 1,113 1,098

Other assets/accrued income 485 408

Total assets 22,876 21,985

Deposits by banks and customers accounts 17,886 17,828

Other liabilities/provisions 1,430 681

Shareholders'equity 3,560 3,476

Subordinated liabilities 0 0

Total liabilities and shareholders' equity 22,876 21,985


Business update

16

Consistent strategy, combining our values and client needs

We continue to invest in capabilities and innovative

business solutions that help clients improve operating

efficiency, strengthen market stability and mitigate risk

Euroclear’s strategy

Euroclear values

• Openness

• Profit moderated

• For the public good

Client needs

• Efficiency

• Regulation /

resilience

• Global / local

+ =

Data applications

DistributedLedger Tech.

FinTechpartnerships

Expand GrowthInitiatives

StrengthenEuropean Core

Explore innovativevalue-add solutions

Global Reach

Funds

Collateral

Asset Servicing

SettlementSafekeeping


Gateway to pan-European securities, providing choice between central and commercial bank money:

• >50% of European securities serviced through Euroclear Bank and 6 Domestic CSDs

• Asset Servicing, Funds and Collateral Management services

• Investing for an unparalleled Investor CSD offering

Investing in our European presence for safe and efficient capital markets:

• Investing to implement CSD Regulations

• Building new Nordic CSDs IT infrastructures

• Enhancing cyber security resilience

Strengthening our European core

Euroclear

BankESES


701787

887

1,068 1,072

14.0

214.0

414.0

614.0

814.0

1,014.0

1,214.0

2012 2013 2014 2015 2016

Collateral management is a maturing contributor of growth:

• Collateral outstanding +9% CAGR, since launch of Collateral Highway in 2012, reaching €1072 billion in 2017

• GlobalCollateral Ltd: moving to business phase, with set-up of collateral link between Euroclear and DTCC

• OTC derivative regulations: supporting clients’ new requirements for collateral solutions for initial margin

• GC Access: fulfilling increasing need for high quality collateral amongst market participants

Expanding growth initiatives: Collateral

Average daily collateral outstanding

€billion


Expanding growth initiatives: Funds

Building Euroclear FundsPlace, a unified value proposition for funds services

• Fund assets under custody grew 6% year-on-year

International ETF structure continues to gain traction:

• BlackRock transferred 165 domestic ETFs to international form, worth over $200 billion

• State Street moved 40 ETFs to FundsPlace, with 29 moving to international structure

• Euroclear selected for China ETF products by ICBC Credit Suisse, Fullgoal Asset Management & GF International

0

50

100

150

200

250

2014 2015 2016

Tota

l €b

n

International ETF Structure by Assets


Expanding growth initiatives: International Markets

Global Reach connects domestic markets to global investors through ‘Euroclearability’:

• Partnering with governments to develop capital market practices to meet global investor requirements

• Increase breadth of domestic securities available through our CSD links

• Chilean Ministry of Finance announced new reforms to become ‘Euroclearable’

• Following inclusion of RMB in IMF’s SDR currency basket, Euroclear now facilitates access to Chinese government bonds for central banks and supranational clients

Supporting growth markets in accessing a global investor base:

• Argentina returned to capital markets through its successful $16.5 billion bond issuance

• Kingdom of Saudi Arabia completed first ever bond issuance, raising $17.5 billion

• Chile issued $1.5 billion government bonds


Exploring innovative, value-add solutions

Collaborating in industry initiatives for new technology:• Exploring applications for DLT, such as in the French SME sector, London’s

Gold Bullion market and for Housing Company Certificates in Finland

Partnering with FinTech to bring specialised, innovative client solutions:• Investment in Taskize, a work flow tool for greater back-office efficiency

Bringing insights through our position at the source of market data:• e-Data Liquidity: a new solution for bond market analysis


Summary / Outlook


Increased dividend and shareholder equity

• Board launched a new share buy-back, bringing total four-year programme to €469 million

3,187 3,212 3,2443,476 3,560

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2012 2013 2014 2015 2016

€/share

+2%

Dividend per share & Dividend pay-out Total group shareholder’s equity at year end

€million

25.4

29.631.5

36.3 37.0

40% 40% 40% 40% 40%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2012 2013 2014 2015 2016

Dividend per share Div pay-out (%)

+2%


Resilient. Relevant. Returns.

Robust financial performance as new regulatory environment

begins to adversely impact operating profit levels

Resilient, well diversified with a solid core franchise positions

Euroclear for future growth as we implement our strategy

Delivering shareholder value, while preserving strong

capital levels

1

2

4

Increasing investment plans to deliver our strategy, allowing us to

cement our role as a cornerstone of the financial markets3


Questions?

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