FINANCIAL RESULTS REVIEW

FY 2021 was a successful year for the Exchange. Cumulative fee and commission income again reached a record high, up 21% compared to FY 2020. The share of operating income accounted for by F&C continued to increase and exceeded 75% in FY’21. The Money Market, Derivatives Market and Depository and Settlement Services posted the largest increases in F&C income.

Operating income increased by 12.9%, and operating expenses grew 22.5%. EBITDA increased by 9.9% YoY; and EBITDA margin was 70.5%, 1.9 pp lower than in 2020. Capex for the year was RUB 3.61 bln. Net profit increased 11.6% to reach RUB 28.1 bln.

FEE AND COMMISSION INCOME

In 2021, most fee and commission income lines increased. At the same time, fee and commission income on the Bond Market decreased as a result of rising interest rates. Fee and commission income remained well diversified across seven business lines. The fastest growing businesses were Money and Derivatives Markets as well as Depository and Settlement Services. The largest contributors to the F&C line in absolute terms YoY were Money Market (+RUB 3,087.1 mln), Depositary & Settlement Services (+RUB 1,871.4 mln) and Derivatives Market (+RUB 1,258.6 mln).

Money Market

Money Market fee income expanded by 35.8% following an increase in trading volumes of 11.1%. The share of the market in the overall F&C income was 28%. GCC-repo volumes gained 11.6% to reach RUB 83.8 trln. CCP repo trading volumes improved 11.3%. The effective fee dynamics are mainly explained by the expansion of the average repo terms, which improved 32%.

Depository and Settlement Services

Fee and commission income from depository and settlement services increased by 28.7% as average annual assets in custody grew by 27.7% YoY. Growth was seen across all asset classes, especially in domestic government bonds (OFZs) (+40.4 %) and shares (+32.2 %). Fee and commission income was also influenced by other services, mainly for collateral management and clearing by NSD.

Equities Market

The total market capitalization of the Equities Market as of 31 December 2021 was RUB 62.82 trln (USD 841.85 bln). Fee and commission income from the Equities Market was up 23.0% on the back of a corresponding increase in trading volumes (+25.5%). The market accounted for 13% in the total fee and commission income. A modest divergence between fee and volume dynamics is the result of the tariff structure that incentivizes higher volumes traded.

Derivatives Market

The Derivatives Market F&C income added 31.9%. The share of the market in the total fee and commission income was 13%. The trading volume growth of 21.7% was mainly driven by a 40.4% expansion of commodity derivatives volumes and a sharp rise in index derivatives trading (+30.5%). Together with a surge in single-stock derivatives trading and the moderate volume dynamics in FX derivatives, these factors explain the effective fee dynamics.

IT services, listing, financial marketplace fees and other fees and commissions

IT Services, Listing and other fee income line was largely driven by revenue from the financial marketplace Finuslugi, which includes income from e-commerce platform Inguru acquired in 2021. The share of this line in the total fee and commission income was 11%. Sale of software and technical services improved 18.5%, which is mainly explained by sales growth of the ASTS FIFO MFIX protocol that was launched in late 2020. Listing and other services decreased 5.8%, while sales of information services added 6.8%. The Other fee income line includes an additional fee on EUR balances of 0.2% above the ECB rate that was introduced at the beginning of 2020.

FX Market

Fee income and trading volumes from the FX Market were virtually flat, decreasing by just 2.0% and 2.8%, respectively. The share of the market in the total fee and commission income was 10%. Spot volumes were down by 1.8%, while swap volumes declined by 3.2%. The trading volume mix slightly improved towards the more profitable spot segment. FX Market fee income now includes consolidated revenue from FX OTC platform NTPro following its acquisition in 4Q’21.

Bond Market

Fee income from the Bond Market decreased 17.4% while trading volumes dropped 28.9% (excluding placements of overnight bonds). The market accounted for 6% in the total fee and commission income. Primary market volumes (excluding placements of overnight bonds) shrank by 36.8%, largely driven by lower OFZs & OBRs placements in a growing interest rate environment. Secondary market trading volumes decreased 8.9%.

NET INTEREST AND OTHER FINANCE INCOME

Net interest income fell by 8.9% to RUB 12.9 billion, on the back of lower realised interest rates on average for the year; net interest income excluding realised gains or losses on the revaluation of the investment portfolio fell by 6.9%.

Operating expenses grew 22.5%, slightly above the FY’21 OPEX guidance. The key drivers of the increase in OPEX were: 1) the effect of the consolidation of BierbaumPro AG and Inguru acquired during 2021; 2) the hiring of additional staff: the Group had 2,208 employees at the end of 2021 compared to 1,980 employees at the end of 2020; 3) marketing and advertising costs.

CAPITAL EXPENDITURES

Capex for the year was RUB 3.61 bln, in line with the guidance range for 2021, all of which was spent on Finuslugi development, purchases of equipment and software as well as software development.

CASH AND CASH EQUIVALENTS

The cash position Cash position is calculated as the sum of Cash and cash equivalents, Financial assets at fair value through profit and loss, Due from financial institutions, Financial assets at fair value though other comprehensive income, Current tax prepayments and Other financial assets less Balances of market participants, Overnight bank loans, Distributions payable to holders of securities, Margin account, Liabilities related to assets held for sale, Current tax payables and Other financial liabilities.  at the end of 2021 was RUB 90.66 bln. The company had no debt as of the end of the reporting period.