The Johannesburg Stock Exchange (JSE) has reported double-digit earnings growth despite macro-economic and market headwinds for the first half of 2023.
The bourse achieved a 10% year-on-year increase in Net Profit After Tax (NPAT), reaching R493 million and posted 12% growth in headline earnings per share (HEPS), rising to 607.20 cents. This performance was supported by a 53% increase in net finance income, on the back of higher interest rates in the first half.
Total revenue was up 5% to R1.45 billion, despite headwinds in the equity market, the largest contributor to revenue. The result was supported by an increasing contribution from diversified, non-trading revenue – largely within the Information Services and JSE Investor Services (JIS) segments, both reporting double-digit growth.
“The Group’s performance was supported by our ongoing focus on diversifying earnings through new business lines. The contribution of non-trading revenue including margin income in H1 now represents 36% of operating revenue, up from 29% in 2019,” said Leila Fourie, JSE Group CEO.
“We maintained operational resilience with outstanding uptime across our markets of 99.98%. The business continues to be cash generative with a sound balance sheet. We remain focused on delivering on our strategic objectives of protecting the core, growing non-trading revenue, and driving innovation in financial markets.”
Capital expenditure (R33 million) in the first half of the year was strategically directed towards safeguarding core business operations and fueling the growth of new business lines.
The bourse also reported a healthy cash balance of R1.9 billion as of 30 June 2023 (excluding bond investment of R195 million). Ring-fenced and non-distributable cash and bonds (regulatory capital and investor protection) amounts to R1.5 billion.
“Our continued focus and steady progress in our strategy is creating positive momentum and an ability to withstand fluctuations in trading activity,” said Fourie.
The bourse continued to drive innovation with an emphasis on sustainability and technology. This has resulted in the addition of seven new sustainability bonds to its portfolio (taking the total to 70 sustainability bonds listed), the launch of 11 new actively managed certificates (bringing the total to 32), and the first new actively managed Exchange Traded Fund (ETF).
In an ambitious effort to forge new frontiers in financial markets, the JSE has also been actively working on developing a South African Voluntary Carbon Market (VCM) and Renewable Energy Certificates (RECs) market. The objective is to enhance transparency and liquidity in these emerging sectors. The Group is also developing potential funding solutions for carbon credit and REC projects, including the introduction of carbon credit futures to facilitate forward pricing and unlock crucial funding.
The JSE recently announced a new business venture, big xyt ecosystems, in a global partnership with big xyt technologies. big xyt ecosystems will deliver the first of its kind exchange solution -Trade Explorer – a data analytics solution to global stock exchanges and their ecosystems.
Clear targets have been set for the remainder of 2023. Operating expense growth is expected to be within the range of 5% to 8% for the full year. Capital expenditure is forecasted to end the year between R130 million and R150 million.
“We are well-positioned to take on the opportunities and challenges within our operating environment during H2 and continue to deliver sustainable value for all our stakeholders,” concluded Fourie.
Revenue performance per segment
- Primary Market: +1% to R83 million.
- Equity Trading: -5% to R261 million.
- Equity Derivatives Trading: +1% to R59 million.
- Bond and Interest Rate Trading: +27% to R46 million.
- Currency Derivatives Trading: +33% to R18 million.
- Commodity Derivatives Trading: +8% to R37 million.
JSE Investor Services (JIS)
- JIS: +23% to R94 million.
- Clearing and Settlement: -4% to R221 million.
- Back-office services (BDA): +1% to R181 million.
- Funds under management: +18% to R53 million.
- JSE Clear: +15% to R53 million.
- Information Services: +13% to R227 million.
Other net income
- Other net income: +50% to R39 million.