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SGX’s full-year net profit down 3% at S$340 million

SINGAPORE — The Singapore Exchange (SGX) turned in a flat report card for the full financial year of 2017 despite the market surge over the latter half of this period. However, the exchange’s chief executive expects the outlook to improve in the year ahead as economic prospects brighten and with more new listings in the pipeline.

SINGAPORE — The Singapore Exchange (SGX) turned in a flat report card for the full financial year of 2017 despite the market surge over the latter half of this period. However, the exchange’s chief executive expects the outlook to improve in the year ahead as economic prospects brighten and with more new listings in the pipeline.

For the financial year ended June 30, net profit fell 3 per cent from the previous year to S$340 million, as revenue decreased 2 per cent to S$801 million, the SGX reported on Thursday (July 27). The board of directors proposed a final dividend of 13 cents per share, bringing the total dividend to 28 cents per share, unchanged from the previous year.

Over the last financial year, the benchmark Straits Times Index rose about 13 per cent, reflecting a similar gain in the total market capitalisation of all listed shares to slightly above S$1 trillion. Investors piled back into the market late last year after Republican candidate Donald Trump won the US Presidential elections in November, and the US Federal Reserve in December raised short-term interest rates for the first time since the financial crisis in a vote of confidence in the US economy. Uncertainty in the global economy had earlier rattled stock markets around the world, including the SGX.

Among the key segments, equities and fixed income, which accounted for half of SGX’s total revenue delivered takings of S$404.5 million, down slightly from S$405.8 million a year ago. Derivatives revenue declined 7 per cent to S$303.1 million while market data and connectivity revenue increased 7 per cent to S$93.2 million. Expenses declined by 2 per cent to S$399 million, primarily due to lower processing and royalties fees and technology expenses.

For the fourth quarter, SGX reported a 10.9 per cent increase in net profit from the previous corresponding period to S$85.2 million while revenue rose 4.9 per cent to S$207.7 million.

SGX CEO Loh Boon Chye said: “We achieved creditable results in a year of relatively low volatility in global markets. Our diversified multi-asset revenue base enables us to sustain consistent financial performance through different market environments.”

Looking ahead, Mr Loh said: “There is clearly a better outlook on economic growth globally and in the region. That always translates into a better performance for asset classes. But there are risk factors ahead clearly, tapering the pace, some geopolitics, but that will be just volatility which exchanges typically are well-placed in those cycles,” he said.

SGX had 23 IPOs in fiscal year 2017 which raised S$1.3 billion, compared to 21 new listings raising S$2.1 billion a year earlier. Mr Loh expects more new listings in the year ahead, saying: “In the financial year 2018, we added three IPOs. The key is really to get on with more IPOs and to add value to existing listed customers.” On concerns with delistings, Mr Loh said these are part and parcel of the capital markets cycle.

On the possible introduction of a dual class share structure in Singapore, Mr Loh said the exchange has closed the consultation and will announce to the market when a decision is reached, without giving more details.

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