HKEx says net profit growth up 7.25pc, but staff and legal fees from LME a drag
Hong Kong Exchanges and Clearing reported a 7.25 per cent year-on-year net profit growth in the third quarter, thanks to higher market turnover and more new listings.
Hong Kong Exchanges and Clearing, the operator of the city’s stock and futures markets, reported a 7.25 per cent year-on-year net profit growth in the third quarter, thanks to higher market turnover and more new listings but this was offset by higher staff and legal fees from its subsidiary the London Metal Exchange.
The bourse said on Wednesday that its profit for the quarter to the end of September stood at HK$1.287 billion, up 7.25 per cent from the HK$1.20 billion in the corresponding quarter last year. Trading fee income during the quarter stood at HK$956 million during the quarter, up 14.76 per cent year on year. Stock listing fee during the third quarter also rose to HK$279 million, up 15.76 per cent.
Brokers said the profit growth was due to higher turnover as some investors were actively trading in anticipation of the plan to connect the Hong Kong and Shanghai stock markets in October. The launch of the stock through connect scheme has been delayed with no start date set by Beijing. Brokers believe this would hurt turnover and HKEx prospects in the fourth quarter.
The plan would have allowed the cross border trading of stocks in Hong Kong and Shanghai at up to 550 billion yuan (HK$693.87 billion).
Total revenue in the third quarter rose 15.79 per cent to HK$2.47 billion but expenses also went up sharply by 11 per cent to HK$753 million. Staff costs reached HK$444 million during the third quarter, up 22 per cent from a year earlier due to an increase in the headcount of the LME.
Legal costs mainly from litigation defence fees on LME lawsuits in the US and Britain stood at HK$43 million during the quarter, up 4.88 per cent. Depreciation and amortisation costs in the third quarter reached HK$157 million, up 32 per cent from due to its Tsang Kwan O data centre and other technology expenses.
There was also a one-off gain of HK$108 million on the investment in LCH.Clearnet Group in the third quarter last year. Net profits in the first nine months stood at HK$3.65 billion, up 4 per cent than a year earlier. Total revenue for the nine month period reached HK$7.09 billion, up 8 per cent than a year earlier.
