Eur Euroclear clear plc plc In Investor Da Day 2018 2018 6 March 2018
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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 Corporate evolutions – Lieve Mostrey, Chief Executive Officer Questions & Answers 3
Highlights 1 Financial performance ahead of expectations, dividend increased by 5% 2 Strong revenue performance drove 2017 results 3 Net Interest Earnings uptick, as interest rates begin to rise 4 Increased investment plans in 2017, with costs expected to stabilise in 2018 5 Solid progress with business initiatives; well positioned to manage Brexit 4
Business metrics achieved record levels Value and volume of se c ur itie s tr ansac tions se ttle d +3% Assets under custody grew to €28.6 trillion 250.0 215 1,000.0 196 191 182 200.0 170 733 800.0 670 +10% 655 Settlement volume increased to 215 million netted transactions 623 150.0 573 600.0 100.0 400.0 50.0 200.0 +7% Collateral average daily outstandings up 7% to €1,150 billion - - 2013 2014 2015 2016 2017 Va lue o f se c uritie s transac tio ns se ttled (EUR trillion) Numb er o f transac tions afte r ne tting (m illio n) +13% Fund assets under custody, with 10.5 million orders routed Note: Assets under custody at constant foreign exchange 5
Positive trends in assets under custody & net fee income Se c ur itie s he ld in c ustody €trillio n e q uiva le nt, ye a r-e nd 30.0 28.6 27.7 28.0 26.5 25.8 26.0 24.7 24.0 22.0 20.0 18.0 16.0 14.0 2013 2014 2015 2016 2017 6
7 Financial performance
Better than expected 2017 financial performance € millio n Y-o-Y 2017 2016 F Y F Y Business Income 1,039 999 4% Interest, ba nking & other inc. 184 163 13% 5% Opera ting income 1,223 1,162 Administra tive expenses -809 -744 -9% S ha re o f results -10 -7 -41% Opera ting profit before ta x 403 411 -2% Pro visio ns 5 -35 T a xa tio n & im pa irment -172 -78 P rofit for the period 236 298 -21% E a rning s per sha re (€/ sha r e ) 84.6 83.7 1% Dividend per sha re (€/ sha r e ) 39.0 37.0 5% • Dividend per share up 5% despite lower profits due to planned temporary investments Note: EPS adjusted for normalisation of DTA in 2017 and IP in 2016 8
Underlying operating costs expected to stabilise in 2018 9
Operating margin moderated due to planned investments Busine ss inc ome and Ope r ating mar gin € millio n 1,100 50.0% + 4% 1,039 45.0% 1,050 999 997 40.0% 1,000 35.0% 938 35.4% 35.4% 950 33.0% 30.0% 890 34.6% 900 25.0% 33.0% 850 20.0% 800 15.0% 2013 2014 2015 2016 2017 Business Inc o me Op erating m ar g in 10
Underlying RoE and adjusted EPS consistent with prior year levels Adjuste d r e tur n on e quity Adjuste d e ar nings pe r shar e €/ sha re 10.0% 100.0 8.7% 8.7% 9.0% 87.0 8.3% 83.7 90.0 84.6 7.7% 78.6 8.0% 7.5% 80.0 69.3 7.0% 70.0 6.0% 60.0 5.0% 50.0 4.0% 40.0 3.0% 30.0 2.0% 20.0 10.0 1.0% 0.0 0.0% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 11
Healthy, stable balance sheet; AA ratings maintained Strong and stable ratings by Fitch € millio n 2017 2016 and S&P illustrate our performance e nd o f ye a r b a la nc e and market position: L o a ns a nd a dva nc es to b a nks a nd c usto m ers 15,076 18,398 F ina nc ia l a ssets 5,372 2,881 • Euroclear Bank AA+/AA Stable Go o dw ill a nd (in)ta ng ib le fixed a ssets 1,112 1,113 Other a ssets/ a c c rued inc o m e 449 485 Euroclear Investments AA ‐ /AA • T ota l a ssets 22,008 22,876 Depo sits b y b a nks a nd c usto m ers a c c o unts 16,886 17,886 Other lia b ilities/ pro visio ns 856 836 S ha reho lders'eq uity 3,671 3,560 L o ng term deb t 595 594 12
Increasing dividend and shareholder equity Divide nd pe r shar e & Divide nd pay-out T otal gr oup shar e holde r ’s e quity at ye ar e nd €/ sha re €millio n +3% +5% 4,000 3,671 45.0 60% 3,560 3,476 39.0 3,500 3,244 3,212 37.0 40.0 55% 36.3 35.0 50% 3,000 31.5 52% 29.6 30.0 45% 2,500 25.0 40% 2,000 40% 40% 40% 40% 20.0 35% 1,500 15.0 30% 1,000 10.0 25% 500 5.0 20% 15% 0.0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Divid end pe r share Div pa y-o ut (%) 13
14 Business update
Meeting clients’ needs at the centre of our business agenda Enhancing liquidity in cash, collateral and One ‐ stop shop providing financing markets safe and efficient post ‐ trade securities services across products and markets Innovation to bring new efficiency and trading opportunities to capital markets 15
Our vision: remain a leading partner to participants in global capital markets Consistent strategy, building on client focus & our business expertise Strengthen our European Core Settlement, Safekeeping, Asset servicing • Expand growth initiatives Collateral management solutions • Funds servicing • Global Reach • Explore innovation FinTech partnerships to support core business • Data services and solutions • 16
Strengthening our European core Establishing a gateway to pan ‐ European securities, providing choice between central and commercial bank money: • >50% of European capital market securities serviced through Euroclear Bank and 6 Domestic CSDs • Asset Servicing, Funds and Collateral Management services • Launched Single CSD service to T2S Continued investment in our European presence for safe and efficient capital markets: Euroclear ESES Bank • Investing to implement CSD Regulations • Establishing a new Irish CSD to ensure service post ‐ Brexit • Building new Nordic CSDs IT infrastructures • Enhancing cyber security resilience 17
Expanding growth initiatives: Collateral 2017 highlights: Ave r age daily c ollate r al outstanding €b illio n • OTC derivatives: continue to support clients 1,214.0 1,150 1,068 1,072 as they transition to new regulatory regime. 1,014.0 887 787 814.0 • GlobalCollateral Ltd: launched Inventory Management Service & moving to client 614.0 onboarding stage. 414.0 214.0 • Collateral outstanding +7% in 2017 reaching 14.0 €1.2 trillion, benefiting from innovative and 2013 2014 2015 2016 2017 diversified product offering 18
Expanding growth initiatives: Funds 2017 highlights: International ETF Structure by Assets (€billion) • Euroclear FundsPlace assets under custody 250 grew 13% year ‐ on ‐ year. 200 150 • International ETF structure growth continues , 100 benefitting from rise of passive management. 50 • 40% of the European ETF industry now in the 0 international form 2014 2015 2016 2017 • ETF asset class increasingly used for collateral management purposes 19
Expanding growth initiatives: International Markets Euroclear connects domestic markets to global investors through ‘Euroclearability’: • Assisting governments in developing capital market practices to meet global investor requirements • Strong traction in Latin America: Chile and Peru became ‘Euroclearable’. Argentina issued further sovereign bonds after returning to capital markets in 2016 • Continue to work with growth economies, including China, to connect to Euroclear and increase breadth of domestic securities available through our CSD links 20
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