JSE reports flat half-year profit, with income from share trading under pressure

The JSE Limited, the entity that operates Africa's largest stock exchange, reported flat net profit amid various challenges.

The bourse operator reported a net profit after tax of almost R493 million for the six months ending in June, unchanged from the previous year, and no interim dividend was declared.

Headline earnings per share (HEPS) fell by a marginal 0.2% year-on-year to 606 cents in the first half of 2024, though net cash generated from operations rose 3% to R502.6 million.

Operating income was up 4% to R1.5 billion as the JSE's efforts to diversify revenue streams amid ongoing delistings bore fruit. This includes its Information Services business — which includes promotion, licencing and sale of data and statistics — and JSE Investor Services (JIS), which provides, among other things, share registry services.

Most business segments reported growth in revenue for the period, with JIS revenue up 29%, commodity derivatives revenue up 25%, and revenue from bonds and interest rate trading rising 8% year-on-year.

Though revenue from overall capital markets was more or less flat at R529 million, income from equity trading fell 12% to R212 million for the period as capital flows continued to shift offshore, with more domestic investors seeking out foreign assets.

Global investors also reduced their exposure to South Africa, a factor likely exacerbated by uncertainty ahead of the 29 May general election.

Stable performance

"The JSE delivered a stable performance in the first half of 2024 despite lower equity trading activity and a challenging economic environment," CEO Leila Fourie said in the JSE's results.

"These results reflect the benefit of diversification across our business segments and asset classes, alongside progress in growing non-trading revenue. After a slow start to 2024, value traded in our equity market recovered in the second quarter, with the trend extending into July. Higher trading activity has been underpinned by positive market sentiment stemming from the outcome of the national elections and the formation of the Government of National Unity."

Non-trading income of R593.4 million for the period under review means almost 39% of the JSE's operational income now stems from non-trading activities. Though capital expenditure fell marginally to R29 million, the JSE said it remains focused on protecting the core business as well as growing new business lines.

The group also said its balance sheet remains robust, with the cash balance at end-June at R1.8 billion, excluding a bond investment of R485.3 million.

On track

The rise in total operating expenditure more or less tracked inflation, increasing by 6.4% year-on-year to R1 billion.

The bourse continues to expand its range of sustainability-linked products, with eight new sustainability bonds listed during the half-year, taking the total to 76 listed sustainability bonds.

The JSE said it is on track to complete its core market data-to-the-cloud transition by year-end and said there has been good progress in the development of central clearing for the bond electronic trading platform through JSE Clear.

The group echoed the views of other major listed entities in South Africa, saying the positive post-election sentiment bodes well for the economy and said it is forging ahead with its strategy to modernise legacy systems, expand its range of products and services, enter new markets, and strengthen its operational capabilities.

"Overall, we are pleased with the progress we have made as we continue to improve our infrastructure performance over time," Fourie said.

Shares in the JSE, publicly valued at about R9 billion, were down almost 2% on Wednesday morning, but have gained almost 13% in the past year.

-FIN24-