Euroclear’s assets under custody reached €31.1 trillion at the end of June, representing a year-on-year increase of 3.7 percent.
The H1 2020 results showed a record number of netted transactions at 141 million, amounting €461 trillion, or a 12 percent increase compared to H1 2019, while the Collateral Highway infrastructure mobilised €1.5 trillion, a 15 percent increase compared to H1 2019.
Global financial markets continue to be shaped by the response of companies, governments and other participants to the wide-ranging implications of COVID-19.
Euroclear noted that the “exceptionally strong” business income growth in the first half of 2020 is expected to subside as growth rates regress towards a traditional through-the-cycle growth trajectory, while at the same time settlement volume is expected to stabilise.
Although increased debt issuance by both corporates and governments is expected to drive safekeeping fees during the ongoing COVID-19 pandemic, several business lines may be negatively affected by lower equity market valuations, such as interest-related income.
Additionally, it explained that by facilitating primary issuance of government debt, required in response to the crisis, fixed income assets under custody increased.
Lieve Mostrey, CEO of Euroclear, commented: “Euroclear delivered a resilient financial and business performance in the first half. Our strategy is proving successful even in the context of an unprecedented global crisis.”
“Our robust operating performance and business continuity in such unparalleled circumstances has cemented our reputation as a safe and reliable infrastructure partner for global financial market participants. I would like to thank the whole Euroclear team for their hard work and commitment during this challenging time.”
The continued lower interest rate environment is expected to produce a year decline in banking and other income of around 60 percent, compared to 2019 figures.
Euroclear highlighted that although the firm predicts it will meet business income operating margin targets of low to mid 30 percent range at the end of the year, there will overall be a lower level of profitability compared to 2019.
