#Brussels #Belgium #Q1 2025 #Euroclear #Inversis

Euroclear Reports Strong Business Growth in Q1 2025

Euroclear has announced a remarkable performance for the first quarter of 2025, showcasing significant business income growth even as it contends with lower interest income. The financial service provider revealed that its underlying business income reached a record €466 million, marking a 10% increase compared to the same period last year. The surge in income is attributed to various robust factors including an uptick in fixed income issuances, heightened equity activity, and an increase in settlement transactions, driven primarily by the ongoing market volatility resulting from geopolitical uncertainties.

Despite the notable growth in overall business income, Euroclear experienced a 10% decline in underlying interest and banking income, which totalled €255 million, reflecting the anticipated effects of the prevailing low interest rate environment. However, this decrease was somewhat offset by increased cash balances, demonstrating the company's effective financial management.

Costs associated with operations rose by 5%, aligning with expectations as it reflects investments in strategic initiatives and measures to combat inflation. Nevertheless, the positive operating leverage led to an improvement in the business income operating margin from 23.4% in Q1 2024 to 27.1% in the current quarter. Adjusted net profit came in at €283 million, which slightly decreased by 1%, while adjusted earnings per share remained stable at €90 year-on-year.

The financial entity maintains a strong capital position, significantly above regulatory requirements, boasting a Common Equity Tier 1 capital ratio of approximately 61%. Recently, Euroclear made strides by acquiring a 49% stake in Inversis, a step that helps bolster its strategic vision for enhancing its fund offerings and expanding its footprint in Southern Europe. The integration of Inversis into Euroclear's operations paves the way for future acquisitions and strengthens its diverse service portfolio.

In alignment with its aims to fortify its presence in Asia Pacific, Euroclear secured a branch license for its Singapore operations, effective from February 1, 2025. This development underscores its commitment to enhancing operational resilience and improving service delivery to clients in the region.

A key highlight of Euroclear’s Q1 2025 performance was the launch of a US Treasury Delivery-Versus-Payment (DVP) repo service, which aims to streamline transactions in the repo market. The service enhances operational efficiency and integrates electronic trading workflows, thereby improving the experience for clients involved in collateral allocation.

Euroclear's strategic partnership with Microsoft represents a significant move towards modernizing and enhancing client interactions. This 7-year collaboration will leverage cloud technologies, analytics, and artificial intelligence to further enhance the service offerings and operational efficacy, aligning with Euroclear's long-term vision for a digital, data-enabled financial market infrastructure.

In terms of challenges, Euroclear continues to navigate the implications of international sanctions tied to its dealings with Russian assets. The financial institution recorded interest earnings of €1,470 million from these assets, a slight decrease from the previous year due to ongoing rate cuts. Additionally, Euroclear provisioned a substantial amount as part of its regulatory obligations under EU windfall contribution regulations

Moving forward, the company remains focused on maintaining resilience against legal, financial, and operational risks linked to international sanctions while ensuring compliance with its obligations. Overall, Euroclear’s performance in Q1 2025 reflects its capacity to grow and adapt amidst challenging economic conditions.