Euroclear plc lc 2016 Results 1 March 2017 Forward looking - - PowerPoint PPT Presentation

Euroclear plc lc 2016 Results

1 March 2017

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Forward looking statements

The information, statements and opinions expressed in this presentation (the “Content”) do not constitute and shall not be deemed to constitute: (i) any offer, invitation or inducement to sell a security

• r engage in investment, financial or other similar activity; or (ii) a solicitation of an offer to buy any

security; or (iii) any recommendation or advice in relation to any investment, financial or other decision. Persons considering making any investment or financial decision should contact their qualified financial

• adviser. The Content may include forward looking statements, in particular, in relation to future

events, growth, future financial performance, plans, strategies, expectations, aims, prospects, competitive environment, regulation and supply and demand. Such statements contain inherent risks and uncertainties and actual outcomes may differ materially from those expressed or implied by forward looking statements. To the maximum extent permitted by law, no warranty or representation including, but not limited to, accuracy or completeness (express or implied) is made in relation to the Content, including, but not limited to, any projections or statements about the prospects of Euroclear. Euroclear makes no commitment to update Content and expressly disclaims, to the extent lawful, liability for any errors or omissions in it. The Content is not directed at, or intended for distribution to, or use by any person or entity where such distribution or use is restricted by law or regulation. Persons into whose possession the Content comes should inform themselves about and observe any such

• restrictions. Past performance, historic financial information and/or historic distributions should not be

taken as an indication of current or future performance, results or distributions.

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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

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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

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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%

542 573 623 670 655 159 170 182 191 196

• 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

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Net fee income and assets under custody both stable, despite foreign exchange headwinds

23.0 24.2 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 874 877 924 983 985

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

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Financial performance

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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%

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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 75 78 83 105 127 96 93 96 102 105 2011 2012 2013 2014 2015 2016 Net fee income NII & Other income Operating Expenses

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Increasing investment in regulatory-driven and cyber security initiatives

400 450 500 550 600 650 700 750 800 2015 2016 2017e

Operating expenses €m

Exceptional restructuring costs Regulatory-driven & cyber security investments Core operating expenses

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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%

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Return on equity sustained, while earnings per share increased

63.0 69.3 78.6 87.0 92.4

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

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Securing our financial position

Strong and stable ratings illustrate our performance and market position:

• Fitch and S&P rate Euroclear Bank AA+/AA Stable

and 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

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

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Business update

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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 Distributed Ledger Tech. FinTech partnerships

Expand Growth Initiatives

Strengthen European Core

Explore innovative value-add solutions

Global Reach Funds Collateral Asset Servicing Settlement Safekeeping

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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 Bank ESES

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701 787 887 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

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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

50 100 150 200 250 2014 2015 2016

Total €bn

International ETF Structure by Assets

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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

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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

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Summary / Outlook

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Increased dividend and shareholder equity

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

3,187 3,212 3,244 3,476 3,560

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 29.6 31.5 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%

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• 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

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Increasing investment plans to deliver our strategy, allowing us to cement our role as a cornerstone of the financial markets

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Questions?