Tech, post trade and weak pound bolster LSE earnings

Despite a rough quarter for its capital markets business, LSEG’s other key business lines all saw good growth.

London Stock Exchange Group (LSEG) has seen its profits jump 17% in Q1 due to strong growth in its technology, data and post trade operations, though currency fluctuations also played a major role.

In its first interim management statement since the group’s plans to merge with Deutsche Boerse were scuppered for a third time by competition regulators, LSEG said it is continuing to examine both organic and inorganic investments to drive its growth.

Its LCH clearing business saw some of the strongest growth, with revenue up 31%, though this was impacted by the slump in the value of sterling since the EU referendum and increased by 21% on a constant currency basis.

Post trade services in Italy saw income rise 18% or 6% at constant currency (CC), with increased settlement and custody revenue offsetting lower clearing revenue. Information services sales were up 24% (9% CC), while technology services increased 27% (18% CC).

However, capital markets revenues have barely moved, nominally up 1%, but down 4% after currency fluctuations are taken into account. LSEG said this is partly due to a particularly strong Q1 2016, while trading levels this year have been lower.

Xavier Rolet, chief executive of LSEG, said: The Group has made a strong start to the year with growth across all of our core businesses.  In particular, we recorded strong results in the SwapClear OTC clearing service, and at FTSE Russell.  We also have the first contribution from Mergent, having completed the transaction at the start of the quarter.

“We are well positioned as an open access financial markets infrastructure group to benefit from the introduction of MiFID II and remain focused on executing our strategy, partnering with customers and delivering value for shareholders.  We continue to be actively engaged in exploring selective ongoing organic and inorganic investments in order to drive further growth.”