- Operating income in 2018 was CHF 1,938.7 million and therefore practically the same as in the previous year
- As expected, operating profit was lower than in the previous year (-21.1% to CHF 221.3 million), reflecting significant investments in strategic realignment, increased M&A activities and price adjustments
- Earnings before interest and tax (EBIT) came to CHF 2,946.9 million, thanks to a positive one-off effect transferring the Cards business to Worldline
- Group net profit was CHF 2,882.7 million
Overview of Key Figures
SIX ended 2018 with operating income of CHF 1,938.7 million. This represented a slight decrease (-0.3%) compared with the previous year, attributable partly to price cuts and partly to the transfer of the card business with effect from 30 November 2018. That meant that this unit no longer contributed to the operating income of SIX in December – traditionally the month with the highest turnover in this business. Without this change, there would have been a marked increase in operating income.
One-off expenses were incurred in 2018 from the transfer of the Cards business, M&A activities and the operational realignment of the core business. At CHF 221.3 million, operating profit was therefore lower than in the previous year (-21.1%), as expected.
Earnings before interest and tax (EBIT) and Group net profit reached all-time highs. The overall proceeds of the Cards transaction boosted the net financial result by CHF 2,724.0 million. This one-off effect is made up of 49.1 million shares in Worldline (equating to a stake of around 27%) and a cash component of CHF 338 million. EBIT consequently came in at CHF 2,946.9 million, and Group net profit at CHF 2,882.7 million. Excluding the one-off effect of the Cards transaction, EBIT amounted to CHF 222.9 million, while Group net profit amounted to CHF 160.6 million.
In accordance with International Financial Reporting Standards, SIX has adjusted its financial reporting to reflect the discontinuation of the business activities of the cards segment. Under IFRS, the business that SIX has transferred to the partnership with Worldline must be stated separately from the continuing business areas in the income statement. The adjusted result (see table below) ensures the comparability of 2018 with subsequent years, when SIX will focus on its core business – the securities business, financial information and banking services.
Operating income for the continuing business units came to CHF 1,115.8 million in the reporting year, while EBIT was CHF 135.0 million.
An ordinary dividend of CHF 4.10 per share (previous year: CHF 7.00) will be proposed to the Annual General Meeting. An extraordinary dividend of CHF 17.30 per share is also being proposed, corresponding to the CHF 338 million cash component from the Worldline transaction that was completed in 2018.
Growth Drivers in the Core Business
At CHF 508.0 million (+0.4%), the securities business (Securities & Exchanges) contributed the largest share of operating income in the core business. In 2018, the Swiss stock exchange recorded the highest number of IPOs since 2001 and a rise in trading turnover.
A total of 12 companies floated on the stock exchange. The IPO of SIG Combibloc was the third-largest flotation in Europe by transaction volume, at CHF 1.7 billion. New listings for ETFs, bonds and structured products also increased; the ETF segment set a new record with 1,450 listed products (+274 new ETFs).
Trading turnover on the secondary market rose year-on-year once again, reaching CHF 1,361.3 billion as at the end of December – an increase of 1.1%. SIX saw another increase in its market share of Swiss blue-chip trading (SLI stocks), from 68.3% to 70.8%. The SwissAtMid platform, which was launched in 2016, has established itself as the biggest non-displayed liquidity pool for trading Swiss equities, with trading turnover increasing almost threefold compared with the previous year.
In the post-trade area, international securities custody in particular benefited from high levels of volatility on the global financial markets. SIX is serving additional customers and markets in the clearing business, which led to a higher number of clearing transactions (+41.4%).
In the financial data business (Financial Information), SIX generated operating income of CHF 393.9 million (-0.5%) in 2018. While sales of high-quality reference and corporate actions data continued to account for the lion’s share of this income, particular progress was made by regulatory data and services, which achieved substantial growth. The early investments made by SIX in this increasingly important market segment are thus paying off. The entry into force of the European financial market regulations MiFID II and PRIIP boosted demand for products in the area of investor protection.
The Banking Services business unit generated operating income of CHF 156.1 million (-1.0%) in 2018. Following the migration of PostFinance to the Swiss Interbank Clearing system (SIC), the number of transactions processed rose by 19.5% to 610.5 million. In the interbank clearing segment, SIX also increased its stake in the German company Swiss Euro Clearing Bank GmbH (SECB) from 25% to 100%, a deal that completed with effect from 31 January 2019. SECB acts as system and liquidity manager for the euroSIC system, which is operated by SIX in Switzerland and used by banks from Switzerland and Liechtenstein to process their payment transactions in euros.
Strategic Partnership with Worldline
In view of the ongoing consolidation in the European cards sector, the Board of Directors of SIX decided that it no longer wanted to operate its cards business alone. In May 2018, SIX announced a strategic partnership with Worldline in the cards business (merchant acceptance and acquiring and international card processing). The transaction was successfully concluded in November 2018. SIX will continue to participate in the growth and active ongoing development of the international cards business via a stake of around 27% plus two representatives and a Censor on the Board of Directors.
The Cards business unit that was transferred to the strategic partnership with Worldline had contributed CHF 882.5 million (+10.1%) to operating income by the time of the transfer of ownership on 30 November 2018, and its operational profit was CHF 125.1 million (+39.2%). As in previous years, the merchant business (merchant acceptance and acquiring) grew particularly strongly, both in Switzerland and in other European countries. The number of card transactions processed between January and November rose by 20.9% compared with the same period of the previous year. This year-on-year growth was also attributable to two acquisitions in 2017.
Safeguarding Switzerland’s Long-term Competitiveness as a Financial Center
Through its reliable and stable services, SIX makes an active contribution to the international attractiveness and competitiveness of the Swiss financial center. SIX has undertaken a strategic and organizational realignment designed to actively drive the continuing development of the financial market infrastructure and equip itself to better address the fast-evolving infrastructure requirements. SIX is striving for targeted growth, both nationally and internationally, in all its business areas. There are various innovative projects and initiatives, particularly in relation to digitalization and regulation, to be successfully implemented and brought to the market. SIX will in future be able to offer and take over more joint services for banks or banking groups. At the same time, SIX is actively driving forward digital transformation in the Swiss financial center.