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Results of operations

Report on expected developments – future development of results of operations

Given its diversified business model and multiple sources of revenue, Deutsche Börse Group continues to consider itself very well positioned and expects to see a positive trend in results of operations over the medium and long term. This expectation is based on, among other things, the structural growth opportunities that the company intends to exploit. The Group expects net revenue to increase further in the forecast period. This assumption is essentially based on a further increase of the contribution from its structural growth initiatives as well as from new growth opportunities (for details, please refer to the report on opportunities). Moreover, market speculation on future interest rate developments in the US and Europe may boost trading activity in interest rate derivatives at Eurex derivatives exchange in 2019 – while higher or potentially increasing US interest rates could lead to a further increase in net interest income from banking business in the Clearstream (post-trading) segment. Statements on the further development of equity market volatility, which increased significantly in the past financial year, are difficult to make at the beginning of 2019. On the one hand, the company continues to anticipate high uncertainty on the markets, among other things, due to numerous unresolved political issues. On the other hand, past experience has shown that too much uncertainty can also lead to market participants taking a very cautious stance, thus resulting in low trading volumes. The company expects a slightly more reticent market environment in the 2019 financial year compared to 2018, due to the slowdown in global economic growth, increased economic risks, and political uncertainties, especially in Europe.

As in financial year 2018, Deutsche Börse Group expects net revenue growth of at least 5 per cent from structural opportunities. This growth is driven by the Group’s investments which follow the objective to transfer market share from OTC to on-exchange trading and clearing and to further expand its positions in existing asset classes by introducing new products and functionalities (for details, see the report on opportunities). In comparison, the development of the business areas depending on cyclical factors largely depends on the degree of speculation regarding future interest rate developments in Europe and on the level of equity market volatility, potentially resulting in further positive or in a negative impact on the Group’s net revenue growth. Net revenue growth expected during the forecast period is based on adjusted net revenue of €2,770.4 million achieved in 2018.

Even if, contrary to expectations, the operating environment turns out to be worse than described above, and clients were to significantly scale back their business activities (particularly in the business divisions which depend upon the development of trading volumes), Deutsche Börse Group believes it is in a position to continue to do business very profitably thanks to its successful business model and cost discipline.

Within the scope of its growth strategy, Deutsche Börse Group pursues clearly defined principles for managing operating costs. The core element of these principles is to ensure the scalability of the Group’s business model. To this end, the Group continuously manages operating costs adjusted for exceptional effects relative to the development of net revenue. Essentially, the Group achieves the necessary flexibility in managing operating costs through two different initiatives designed to enhance operating efficiency. Firstly, the Group has implemented a continuous process to improve operating efficiency by focusing even more on client needs in order to further enhance the quality and efficiency of the services offered. At the same time, this results in simplifying Group-internal processes and saving costs. Secondly, the Group resolved a series of structural cost reduction measures in 2018, and has already commenced the implementation of said measures.

As at the publication date of this combined management report, the company expects that operating costs will be affected by exceptional effects of some €100 million during the 2019 financial year. The majority of these effects are attributable to costs incurred for restructuring and efficiency measures, costs incurred in connection with existing criminal proceedings, and to the integration of already acquired companies.

Given the expected increase in net revenue driven by structural factors of at least 5 per cent, and also given the scalability of the Group’s business model and its efficient cost management, the Group anticipates a growth rate of approximately 10 per cent for (adjusted) net profit for the period attributable to Deutsche Börse AG shareholders during the forecast period. Provided that stock market volatility does not decline significantly compared with 2018, growth of adjusted net profit for the period could also be somewhat higher. At the same time, growth of adjusted net profit for the period could amount to slightly below 10 per cent in the event of less stock market volatility than in 2018 – despite the possibilities of taking countermeasures with regard to operating costs. This assumption is based on an adjusted figure of €1,002.7 million for 2018. In addition, within the scope of its “Roadmap 2020”, the Group confirms its medium-term growth targets of between 10 and 15 per cent on average per year for the adjusted net profit for the period attributable to Deutsche Börse AG shareholders.

Forecast for results of operations 2019

 Based on 2018
Forecast for 2019
Net revenue from structural opportunities (excluding exceptional effects)


+ >5%
Exceptional effects impacting operating costs


~€100 million
Net profit for the period attributable to Deutsche Börse AG shareholders (excluding exceptional effects)


+ ~10%

Eurex (financial derivatives) segment

Deutsche Börse Group believes that, over the long term, structural growth factors will result in higher trading volumes on the market for financial derivatives in all product segments (see the report on opportunities for further details). In the short term, a further increase in equity market volatility could lead to a more pronounced increase in trading volumes, particularly with regard to equity index derivatives. Speculation regarding money market policy, especially in Europe, could also have a positive impact on interest rate derivatives trading.

Eurex will continue to systematically invest in expanding its product offering throughout the forecast period in order to take advantage of structural factors, such as regulation or changing customer needs. The focus of our efforts will be on the acquisition of new business which is currently neither traded on an exchange nor settled through a clearing house. Regulatory requirements, such as the provision entered into force in 2016 determining that OTC derivative transactions must be settled via central counterparties, can provide significant impetus. The Group plans to further increase net revenue from the OTC derivatives business in 2019. Over the medium to long term, the Group anticipates generating significant revenue with this business – not least due to the extra potential which might arise from uncertainty concerning the outcome of the ongoing Brexit process, and potential changes for the clearing of euro-denominated interest rate swaps which might emanate therefrom.

EEX (commodities) segment

Due to the continuously positive market environment for trading in power and gas products, the Group expects business activity in the commodities sector to continue to exhibit structural growth during the forecast period, e.g. by gaining additional market share at the expense of OTC energy markets and further increasing the share from renewable energy for power generation.

360T (foreign exchange) segment

In foreign-exchange (FX) trading, the Group expects rising demand for multi-bank platforms to further boost trading volumes on the 360T® FX platform in 2019. The platform has gained further attractiveness through the launch of fully electronic FX trading and clearing. During the current financial year, the company expects to increasingly realise the revenue synergies projected in the context of the acquisition of 360T.

Xetra (cash equities) segment

As well as enhancing its cash market offering, the company will continue to closely track changes in the competitive environment in Europe. It considers itself well positioned to retain its status as the market leader for trading German blue chips and to offer its customers across the globe an attractive range of products and services for cash trading in German and European equities and equities clearing. The stronger competition in the cash market means that further shifts in the market shares of all competitors cannot be ruled out in the next years. Net revenue in the Xetra (cash equities) segment will depend heavily on stock market cyclicality and volatility.

Clearstream (post-trading) segment

In the medium to long term Clearstream expects demand for its TARGET2-Securities (T2S) services to grow, thanks to increasing regulatory requirements and its strong position in the T2S network. Following Clearstream’s migration to T2S in 2017, the Group anticipates a moderate contribution from these activities to net revenue, however, not earlier than in the year 2019. This is partly due to the fact that connecting customers is taking slightly longer than originally planned. Another factor to impact Clearstream’s business in the forecast period will be central bank monetary policy. Despite the phasing-out of the ECB’s programme for purchasing government and corporate bonds last year, the interest rate policy could have a further dampening effect on securities issuance. If, contrary to expectations, monetary policy becomes more restrictive, this would have positive consequences for issuance and for net interest income in the banking business. As a significant portion of customer balances are denominated in US dollars, the ongoing trend of interest rate hikes in the US – initiated at the end of 2016 – will cause a rise in net interest income in 2019, at steady cash balance levels.

Although Deutsche Börse Group faces especially intense competition in the settlement and custody of international bonds, the company does not expect this to have a major negative impact on its net revenue or market share during the forecast period.

IFS (investment fund services) segment

The Clearstream subgroup covers all types of funds – from traditional investment funds to exchange-traded funds (ETFs) and hedge funds. Given that supervisory authorities are also calling for more efficient settlement and custody solutions in order to guarantee maximum security for client assets under custody, Deutsche Börse Group expects to acquire additional client portfolios. In line with this expectation, the IFS (investment fund services) segment anticipates continued growth in the forecast period, due to the attractiveness of its fund services.

With regard to its customer structure, the segment expects that consolidation in the financial sector will persist and that customers in Clearstream’s domestic and international business will merge. These larger customers would benefit from greater discounts, which could lead to a decline in average fees.

GSF (collateral management) segment

Central bank monetary policy will heavily impact collateral management in the forecast period, especially regarding activity in the repo business, but also in securities lending. Despite the phasing-out of the ECB’s programme for purchasing government and corporate bonds, the interest rate policy could have a further dampening effect on liquidity management. A positive product mix change could possibly partially compensate for this cyclical development. If, contrary to expectations, monetary policy becomes more restrictive, this would have positive consequences for the use of collateral and liquidity management services.

STOXX (index business) segment

The company anticipates that net revenue in the STOXX segment will further increase during the forecast period. This expectation is based on the continuous expansion of the product range in all areas and greater marketing of these products in growth regions. The Group’s index business is set to benefit from this development in particular. Moreover, the Group considers the significant structural growth in the market for passively managed assets as an additional growth driver that is expected to further strengthen demand for index licences for ETFs. In addition to distributing index licences, the Group also benefits from the growing investment volumes in these products. In this light, the Group believes it is well placed to increasingly extend the positioning of its globally focused range of indices to the Asian market.

Data segment

This segment aims to accelerate the expansion of Deutsche Börse’s technology leadership and expertise in the area of market data by pooling all relevant resources within the company in a dedicated, market-driven business unit. The goal is to open up new growth opportunities in the medium to long term. The segment also envisages additional growth from the Regulatory Reporting Hub, launched in 2018, in the forecast period. Developed in cooperation with the Group’s clients, the Hub offers a one-stop shop for solutions, helping clients to fulfil their reporting duties under MiFID II.


Changes in pricing models

Deutsche Börse Group anticipates sustained price pressure in some of its business areas during the forecast period. The company’s objective is to cushion this price pressure by continually improving its products and services and offering selective incentives for price-elastic business.

Over the long term, the average net revenue per unit (e.g. trading or clearing fees per transaction, or fees for custody services) is expected to decline slightly in all areas of the Group. This is a result of laddered pricing models that lead to a decline in income per unit as customers’ business activities increase.