Cici Shi

Hong Kong Exchanges and Clearing's (0388) net profit rose 18 percent to HK$11.86 billion in 2023 from a year earlier despite a disappointing fourth-quarter amid a sluggish market.

The net profit was the second best on record, apart from 2021 when it had an "exceptional" year.

The bourse operator raised the second interim dividend by 6 percent to HK$3.91 per share, bring the full-year distribution to HK$8.41 apiece.

Its shares were down by 0.82 percent yesterday, amid the news that net profit in the fourth quarter shrunk by 12.8 percent year-on-year.

Revenue and other income for 2023 increased 11.16 percent to HK$20.52 billion, and net investment income was 2.6 times higher than the previous year.

Cash and bank deposits accounted for almost 90 percent of total net investment income. The income from it grew more than doubled compared to 2022, benefiting from high interest rates.

The surge in investment income compensated for the drop in turnover.

Average daily turnover on the stock exchange narrowed 16 percent to HK$105 billion, while trading fees and trading tariffs fell 18 percent.

Stock Exchange listing fees and clearing and settlement fees also fell by 98 percent and 12 percent respectively.

The increase in profit and revenue was also supported by its diversified strategy. Despite a 16 percent fall in the turnover of the cash market, the volume and turnover of derivatives and exchange traded funds, and Northbound Bond Connect hit record highs.

Outgoing chief executive Nicolas Aguzin said he was proud of the strategies and initiatives the bourse has put forward, and said he had no regrets during his tenure. He expected geopolitical tensions and macroeconomic challenges to likely remain, and said the bourse is cautiously optimistic about this year.

Revenue and profit were pressured by the weak market in the fourth quarter. Revenue and other income dropped 7 percent year-on-year to HK$4.86 billion, partly attributable to reduced trading and clearing fees from cash and derivatives markets.

The average daily turnover slumped by 28 percent yearly to HK$91 billion.

Co-chief operating officer Bonnie Chan Yi-ting takes over as the new chief executive today.

In other news, 62 percent of Hong Kong's brokerage firms say they recorded a net loss last year, and over one-quarter plans to cut businesses this year amid the weak market, a survey by the Hong Kong Securities Association showed.

HKEX boosts dividend as net surges 18pc