Euroclear plc lc 2016 Results 1 March 2017
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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 3 Restricted to Euroclear
Highlights 1 Robust financial performance in line with record previous year, and stable dividend 2 Stronger than normal second half drove 2016 results 3 Net Interest Earnings uptick, driven by negative interest charges 4 Increasing investment plans to deliver our strategy 5 Financial flexibility strengthened, taking advantage of low interest rates 4 Restricted to Euroclear
Full year business metrics held at strong levels overall Value and volume of securities transactions settled +1% Assets under custody grew to € 27.7 trillion 250.0 1,000.0 196 191 182 200.0 170 159 800.0 670 655 +3% 623 150.0 Settlement volume increased to 195.9 million netted transactions 573 542 600.0 100.0 400.0 50.0 200.0 > € 1tn Collateral flat with € 1,072 billion in average daily outstandings - - 2012 2013 2014 2015 2016 Value of securities transactions settled (EUR trillion) Number of transactions after netting (million) +6% Fund assets under custody, with 11.1 million orders routed 5 Restricted to Euroclear
Net fee income and assets under custody both stable, despite foreign exchange headwinds Securities held in custody Net fee income € trillion equivalent, year-end € million 1,200 30.0 27.7 27.5 983 985 28.0 924 1,000 26.0 874 877 26.0 24.2 800 23.0 24.0 22.0 600 20.0 400 18.0 200 16.0 14.0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 6 Restricted to Euroclear
Financial performance 7 Restricted to Euroclear
Robust 2016 financial performance 2016 2015 Y-o-Y € million 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% 8 Restricted to Euroclear
Flat net fee income, combined with increasing cost evolution 127 114 114 107 105 101 101 100 105 102 96 96 93 83 78 75 2011 2012 2013 2014 2015 2016 Net fee income NII & Other income Operating Expenses • Increasing costs due to investments in regulatory-driven, cyber security & growth initiatives 9 Restricted to Euroclear
Increasing investment in regulatory-driven and cyber security initiatives 800 750 700 Operating expenses Exceptional restructuring 650 costs € m Regulatory-driven & cyber 600 security investments 550 Core operating expenses 500 450 400 2015 2016 2017e 10 Restricted to Euroclear
2016 operating profit growth, despite higher investment, reflecting higher contribution from net interest income Operating profit before tax and net fee income margin € million + 3% 11 Restricted to Euroclear
Return on equity sustained, while earnings per share increased Return on equity Earnings per share € /share +6% 10.0% 100.0 92.4 8.7% 8.7% 8.5% 87.0 9.0% 8.3% 90.0 7.8% 78.6 8.0% 80.0 69.3 7.0% 70.0 63.0 6.0% 60.0 5.0% 50.0 4.0% 40.0 3.0% 30.0 2.0% 20.0 1.0% 10.0 0.0% 0.0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 12 Restricted to Euroclear
Securing our financial position Strong and stable ratings illustrate our performance € 600 million debt issuance providing greater and market position: financial strength and flexibility: • • Fitch and S&P rate Euroclear Bank AA+/AA Stable New issue, with 10-year maturity, received strong ratings AA- (S&P) / AA (Fitch) and Euroclear Investments AA-/AA • Benefitting from low interest rates: fixed rate coupon of 1.125% • Oversubscribed by 4x; placement to qualified investors across Europe 13 Restricted to Euroclear
Healthy, stable balance sheet 2016 2015 € million 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 14 Restricted to Euroclear
Business update 15 Restricted to Euroclear
Consistent strategy, combining our values and client needs Euroclear’s strategy Explore innovative value-add solutions FinTech partnerships Expand Growth Data applications Initiatives Euroclear values Client needs • • Openness Efficiency Global + = Funds • Profit moderated • Regulation / Reach Distributed Collateral resilience Ledger Tech. • For the public good • Global / local Asset Servicing Strengthen European Core We continue to invest in capabilities and innovative business solutions that help clients improve operating Settlement efficiency, strengthen market stability and mitigate risk Safekeeping 16
Strengthening our European core 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 Euroclear ESES Bank • Enhancing cyber security resilience 17 Restricted to Euroclear
Expanding growth initiatives: Collateral Average daily collateral outstanding Collateral management is a maturing contributor of growth: € billion • Collateral outstanding +9% CAGR, since launch of 1,214.0 1,072 1,068 Collateral Highway in 2012, reaching € 1072 billion in 2017 1,014.0 887 787 814.0 • GlobalCollateral Ltd: moving to business phase, with set- 701 up of collateral link between Euroclear and DTCC 614.0 414.0 • OTC derivative regulations: supporting clients’ new 214.0 requirements for collateral solutions for initial margin 14.0 2012 2013 2014 2015 2016 • GC Access: fulfilling increasing need for high quality collateral amongst market participants 18 Restricted to Euroclear
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 by Assets International ETF structure continues to gain traction: 250 • BlackRock transferred 165 domestic ETFs to international 200 form, worth over $200 billion Total € bn 150 • State Street moved 40 ETFs to FundsPlace, with 29 moving to international structure 100 • Euroclear selected for China ETF products by ICBC Credit 50 Suisse, Fullgoal Asset Management & GF International 0 2014 2015 2016 19 Restricted to Euroclear
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