Euroclear Business and Financial Update - Q1 2021

BRUSSELS, April 27, 2021 /PRNewswire/ --

Business Income growth up 12%, offsetting reduction of Interest Income

• Business Income rose 12% to EUR 358 million driven by strategic progress, sustained settlement activity, higher equity valuations and new issuance by governments and corporations
• Banking and Other Income decreased 61% to EUR 24 million as expected, given the lower interest rate environment compared to Q1 2020
• Resulting total Q1 revenues of EUR 382 million were flat year-on-year, despite the reduction of interest-related income
• Operating costs were up 2% to EUR 218 million, in line with expectations, despite the strong growth in business activity
• Business Income Operating Margin, which excludes the effect of interest income, up 5.7 percentage points to 39.2%, considerably above our strategic target range of mid 30%
• EBITDA margin of 49.1% is higher than FY 2020 average of 46.6%, however remains down 1.2 percentage points year-on-year due to pre-Covid-19 prior year Q1 comparator for interest income
• Net profit was down 4% to EUR 123 million
• Balance sheet and liquidity position remains strong with AA/AA+ ratings confirmed post MFEX acquisition
• Outlook: given the strong business income growth, we expect full year 2021 financial performance at similar or higher level compared to 2020

Operating metrics reach very high levels

• Settlement volumes increased by 6% year-on-year to 76 million netted transactions processed by Euroclear's resilient infrastructure
• Assets under Custody increased 16% to EUR 34.1 trillion, boosted by equity market recovery, combined with new issuances and business strategy progress. Double-digit increases in strategic growth areas:- Fund assets under custody reached EUR 2.7 trillion, growth of 28% reflecting the appeal of Euroclear FundsPlace- Attractiveness of Euroclearability to international issuers and investors supported 19% increase in Global Reach assets under custody to EUR 1.4 trillion- Collateral outstanding increased 12% year on year with Euroclear's Collateral Highway mobilising EUR 1.7 trillion

Progressing strategic plans

Euroclear continues to progress its strategy to strengthen, grow and reshape its global network

• Acquisition of MFEX group- Acquired MFEX Group, a leading global digital fund distribution platform, creating a new funds market utility and leading global provider of fund services
• Strengthening our network- Successfully completed the migration of Irish corporate securities from Euroclear UK & Ireland to Euroclear Bank as Issuer CSD- Launched a new settlement model in the UK allowing for continued central bank money settlement in Euros
• Growing our network- Euroclear Bank partnered with the Singapore Exchange to launch the Orchid bond structure combining domestic bond issuance with global distribution channels- The Bank of China became the first issuer to utilise Euroclear Bank's recently launched Yulan bond structure
• Reshaping our network- Rolling out InvestorInsight solution for issuers, including shareholder identification services to support issuers' efforts to enhance corporate governance

Our business continuity plan continues to work well, supporting our customers as well as our colleagues. Almost everyone continues to work remotely as protecting the health and safety of our people remains our priority. The group intends to explore new ways of working, including a hybrid model combining office presence and remote working in the future.

Lieve Mostrey, Chief Executive Officer, said: "We have seen a strong start to the year, a testament to the resilience of our team and robustness of our business model as well the continuation of very high levels of activity across our markets. We remain focused on delivering on our long term strategic priorities for all our stakeholders."

Abridged Financial Statements

About Euroclear

Euroclear group is the financial industry's trusted provider of post trade services. Euroclear provides settlement and custody of domestic and cross- border securities for bonds, equities and derivatives to investment funds. Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise.

The Euroclear group includes Euroclear Bank - which is rated AA+ by Fitch Ratings and AA by Standard & Poor's - as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 897 trillion in securities transactions in 2020, representing 276 million domestic and cross-border transactions, and held EUR 32.8 trillion in assets for clients by end 2020. For more information about Euroclear, please visit www.euroclear.com^[1].

References

1. ^{^} www.euroclear.com (www.euroclear.com)