LSEG profits boosted by market volatility

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  • LSEG reported a 16% increase in revenue and a 13% increase in gross margin.
  • New share issues fell 60% and total funds raised fell 64% to £2.5bn.

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The London Stock Exchange Group reported a 16% rise in revenue to £1.9bn and a 13% increase in earnings, thanks to recent market volatility.

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The owner of the stock exchange and clearing house said all of its divisions posted growth in the third quarter, but new share issues fell sharply.

Revenue from the data and analytics division rose 15.4% to £1.27 billion thanks to the acquisition of Refinitiv.

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The London Stock Exchange Group said it has benefited from recent market volatility.

Capital markets earnings rose 19 per cent to £369m thanks to “volatility” at the end of the quarter when a mini-budget triggered a bond sell-off.

However, new share issues fell 60% year-over-year and total funds raised fell 64% to £2.5bn as companies became more cautious about raising money amid economic uncertainty.

Postal trade revenue rose 15% to £249m, “reflecting strong demand for clearing services”.

The LSE also noted “good performance” in the OTC markets “as we helped clients manage their risk in the face of market uncertainty”.

Gross profit rose 13% to £1.7bn, or 5% in constant currency, and the group left its guidance for the year unchanged.

“Our strategy is working to drive growth and efficiency gains,” said LSEG CEO David Schwimmer.

“We have also made significant progress in returning excess capital to shareholders through our share buyback program,” he added.

In August, the group launched a larger-than-expected £750 million share buyback program.

It returned £235m to investors in the quarter.

LSEG shares fell 2.8% to £72.80 in Friday morning trading.

They are about 11 percent lower than a year ago.

Charlie Huggins, head of equity at financial research firm Wealth Club, said: “The difficult economic situation does not appear to be affecting the LSE much.

“This is because about three-quarters of its income is permanent, and the products and services it provides tend to be critical to customers. This makes the LSE a fairly resilient business, as these results show.”

The Refinitiv deal, announced in 2019 and completed last January, “transformed the LSE’s data capabilities,” Huggins said.

“Credibility for the Refinitiv deal is growing and every quarter of good deliveries helps to calm the naysayers. However, it is still too early for the LSE to announce victory,” she added.

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