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Economy knocks JSE earnings down 18%

Aug 03 2017 21:15
Lameez Omarjee

Johannesburg – Low economic growth, the credit downgrades and low business confidence has also taken its toll on South Africa's financial markets in the last six months. The slow economy knocked down JSE Group earnings by 18%.

This is according to the stock exchange’s financial results for the six months ended June 30, 2017. The group earnings after tax was down 18% to R419m and operating revenue declined 8% to R1.1bn. A silver lining was that the group managed to contain cost growth to 1%, with total expenses amounting to R644m.

Earnings before interest and tax was down 20% to R453m. Earnings per share decreased 18% to 490.9c. Headline earnings per share dropped to 16% to 488.9c. The group managed to pay a dividend of R486m during the six-month period.

The JSE reported a positive cash balance of R1.98bn, outflows of R61.66m and R537.04m were reported for investing and financing activities respectively.

In its report the JSE said it would “re-engineer” its cost base, operating model and its business structure to respond to the changing regulatory and technological developments in the financial services industry.

A total of R97m has been committed to capital expenditure. This will be used to improve the functionality of a project to integrate the JSE’s trading and clearing systems, the group said. All of the currently planned investments and capital requirements for the year can be funded from the group’s resources, the report confirmed.

The JSE will be focussing on positioning itself for a “competitive exchange landscape” and implementing cost saving initiatives.

The group will also complete programme activities of its Integrated Trading and Clearing (ITaC) this year which should go live in 2018. It will also focus on including the electronic trading platform for government bonds, among others.

Twin Peaks

The Financial Sector Regulation Bill (FSRB) and the amendments to Financial Markets Act will impact how the JSE is regulated as well as the cost of operating in a regulated environment, the group said.

As such, the JSE is ready to meet the known draft regulatory capital requirements. It is also “exploring opportunities” to provide products and services to enable “capital relief” to clients, the group said. 

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