LCH.Clearnet Group Limited Results 2011

10 February, 2012

LCH.Clearnet Group Limited (LCH.Clearnet) today announces its results for the year ended 31 December 2011.

Financial highlights

• Underlying net revenues up 16% to €387.2 million (2010: €335.0 million)
• Underlying operating profit up 81% to €106.9 million (2010: €58.9 million)
• Clearing income up 16%
• Net investment income up 21%
• Strong volume growth across all key business areas
• Tier 1 capital ratio of 17.3%
• Expansion of multi asset offering - FX ready to launch and CDS service to be enhanced in 2012

Operational highlights

• Appointment of new CEO and investment in senior talent
• Implementation of a transformation plan to position the Group for further growth in a changing regulatory and competitive environment
• Development of a single infrastructure across group to eliminate costly duplication
• Successful resolution of MF Global default (closed market positions with a combined notional value of over €14.7 billion); no recourse to Default Fund
 
Commenting on performance Ian Axe, Chief Executive, said:

“We had a successful year in which underlying revenues were up 16% and underlying operating profit was up substantially by 81%. This is testimony to the strong growth in our core exchange clearing business as well as our fast growing OTC business.

Since my appointment in April last year I set a clear goal of transforming this business into an efficient, commercially minded organisation focused on risk management.  We believe that will be the winning combination in an increasingly competitive and complex environment.  I am pleased to say that we have made some major strides towards that objective this year, eliminating duplication, increasing our leadership position in OTC derivatives and bringing together our collateral and liquidity management functions into a single focal point.”

Click here to view the full 2011 Report and Accounts

Click here to view the press release as a pdf

Ends

*Underlying operating profit and underlying net revenue are defined in the business review on p12.

About LCH. Clearnet

LCH.Clearnet is the leading independent clearing house group, serving major international exchanges and platforms, as well as a range of OTC markets.  It clears a broad range of asset classes including: securities, exchange traded derivatives, commodities, energy, freight, interest rate swaps, CDS and euro and sterling denominated bonds and repos; and  works closely with market participants and exchanges to identify and develop clearing services for new asset classes.

A clearing house sits in the middle of a trade, assuming the counterparty risk involved when two parties (or members) trade.  When the trade is registered with a clearing house, it becomes the legal counterparty to the trade, ensuring the financial performance; if one of the parties fails, the clearing house steps in.  By assuming the counterparty risk, the clearing house underpins many important financial markets, facilitating trading and increasing confidence within the market.

Initial and variation margin (or collateral) is collected from clearing members; should they fail, this margin is used to fulfill their obligations.  The amount of margin is decided by the clearing house’s highly experienced risk management teams, who assess a member’s positions and market risk on a daily basis.  Both the soundness of the risk management approach and the resilience of its systems have been proven in recent times. LCH.Clearnet is regulated or overseen by the national securities regulator and/or central bank in each jurisdiction from which it operates.