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Euroclear's Stellar Performance in 2024

Euroclear has reported impressive results for the year ending December 31, 2024, showcasing the strength and resilience of its diversified business model. This financial giant, renowned for its post-trade services, posted an underlying business income of €1,748 million, which marks a commendable 5% increase compared to the previous year. The company’s operational income also experienced growth, climbing to €2,899 million, driven by robust settlement and safekeeping activities.

As the year closed, Euroclear's assets under custody reached a staggering €40.7 trillion, reflecting an 8% increase from €37.7 trillion in the previous year. This upward trend can be attributed to a combination of strong stock performance in equity markets and substantial results in the fixed income sector. The ongoing activity within the fund assets market also played a vital role, with fund custodianship rising to a record level of €3.6 trillion—a notable 16% increase year-on-year.

Key Drivers of Growth

Several factors have propelled Euroclear to this record financial performance. The company enjoyed strong year-on-year growth in the fourth quarter, with business income surging 7% compared to Q4 2023. This success stemmed largely from the solid performance of Eurobonds, European assets, global emerging markets, and funds. Further underscoring its success, the underlying interest income grew by 3% year-on-year, amounting to €1,152 million, despite a shift in interest rates that negatively impacted earnings during the second half of the year.

Throughout 2024, Euroclear managed several one-off costs amounting to €117 million, including contributions to the new Euroclear Foundation, a voluntary retirement incentive plan, and the consolidation of Goji and Quantessence assets. Excluding these one-time costs, the adjusted operating expenses increased by just 3% to €1,333 million, aligning with the firm’s aim of maintaining sustainable cost growth. The operating margin improved by 1.5 percentage points to 23.7%, demonstrating effective cost management practices.

Innovations in Financial Services

Euroclear’s commitment to innovation is evident in its continuous support for digital asset adoption. The firm's Digital Securities Issuance (D-SI) platform has attracted new issuances and is recognized as critical in bridging traditional financial services with digital asset securities. The collaborative efforts with industry partners underscore Euroclear's determination to drive significant advancements across the European post-trade landscape.

In 2024, Euroclear made strategic moves by acquiring a significant stake in various technology firms, including a 49% investment in Inversis, aimed at accelerating its fund strategy and improving its service framework across Europe. This investment aligns with the goal of enhancing client access to a broader range of fund distribution services through an extensive network.

Strengthening Capital Position

The Euroclear group maintains a solid financial standing, holding an underlying Common Equity Tier 1 capital ratio of just above 60%. The company has proposed a dividend per share of €220, which reflects a 5% increase and a maintenance of the payout ratio at approximately 60% of adjusted underlying earnings. This move indicates Euroclear’s focus on returning value to its shareholders while retaining enough capital for future growth.

Navigating Challenges

Amidst these achievements, Euroclear continues to tackle challenges posed by international sanctions related to Russian assets. Following the regulation on windfall contributions enacted by the EU, Euroclear provisioned €4 billion in 2024 to comply with regulations. Despite incurring direct costs and potential declines in interest earnings linked to these assets, the company has established processes to ensure continued compliance while safeguarding its overall financial health.

Looking Ahead

As Euroclear forges into 2025, the company remains committed to expanding its presence opportunities across digital and traditional financial landscapes. The ongoing development of its services and the establishment of the Euroclear Foundation to amplify its social impact reflect Euroclear's holistic approach to business growth. With a strong foundation, innovative strategies, and adept management, the organization is well-positioned to continue delivering exceptional results in the coming years.

In conclusion, Euroclear's trajectory in 2024 exemplifies a robust operational performance driven by strategic expansion, a commitment to innovation, and effective management practices, poised for ongoing success in the global financial marketplace.