Singapore Exchange Third-Quarter Profit Rises 14%

Singapore Exchange, which runs the city-state's securities and derivatives markets, said third- quarter profit rose 14 percent, boosted by revenue from derivatives and futures clearing.

Net income rose to S$101.5 million ($75 million), or 9.48 cents a share in the three months ended March, from S$89.1 million, or 8.36 cents a year earlier, it said in a statement. Profit fell 17 percent from the second quarter, it said.
Sales rose 10 percent to S$173.3 million from a year earlier.

“Our derivatives business has done well in the volatile market conditions'' and “we are planning to extend our equity derivatives suite,'' Singapore Exchange said in the statement, adding that the third quarter “has been a challenging quarter affected by the sharp downturn in global markets.''

The results reflect the exchange's efforts to diversify its revenue from equities, a segment that helped drive profit to a record last year. Average daily trading during the three months dropped about 25 percent from a year earlier, according to data compiled by Bloomberg.

The increased earnings from derivatives trading would show the exchange's reduced reliance on its stock trading business, Kenneth Ng, a Singapore-based analyst at CIMB-GK Securities, said before the results were released.

“For volumes to drop even more would imply a prolonged recession, something which is not our base assumption,” he said.

“We are getting increasingly more positive” on SGX, said Ng, who estimated the company would earn S$97 million for the quarter.

The daily value of shares traded in the quarter averaged S$1.95 billion, 3 percent lower than a year earlier, according to Bloomberg data. That's the first drop since the three months ended September 2006.

Concerns of slowing growth and accelerating inflation in Singapore dragged the local benchmark Straits Times Index 12 percent lower this year. SGX lost 41 percent, making it the third-worst performer.

A 6.5 percent drop in the daily turnover of stocks traded could lead SGX's earnings to fall by as much as 20 percent, Pauline Lee, an analyst at Kim Eng Securities, said in an April 9 report.