The Tel-Aviv Stock Exchange Reports the Financial Results for the Third Quarter of 2023
TASE Doubles the Profit: Net Profit in the Third Quarter Exceeds NIS 18 Million, Compared to NIS 9 Million in the Corresponding Quarter Last Year
TASE Promoting a Buyback Plan valued at NIS 50 Million
Ittai Ben Zeev, CEO of TASE, said today: "Before I address the reports, it is impossible not to address the tragic events that happened on October 7 in Israel. While the entire nation grieve, Israel is fighting a war that has been imposed on us to rescue the hostages and make sure that such atrocities can never happen again. Our thoughts are with the fallen and we pray for the safe return of all hostages.
TASE concludes another strong quarter, marked by continued and sustained organic growth in both revenue and profit across all core activities.
The stability and continuity of TASE constitute a strong anchor for Israel's capital markets. Therefore, following the October 7 attack we swiftly mobilized to ensure the opening of the market on the 8th, while maintaining the safety and security of our employees. I would like to note that, since the outset of the events, local institutional investors have demonstrated their confidence in the Israeli economy, with a strong response to the very successful debt issuances by the State of Israel and support of the Israeli shares, which helped moderate the price drops triggered by the events. For the first time since the beginning of the year, in November retail investors renewed their purchases of mutual funds on local shares. Also, we are already seeing a more positive response from the foreign investors, most notable of which is Novo Nordisk's announcement of becoming an interested party in the TASE share, with an 8.5% holding after the purchase.
We have confidence in the strength of the Israeli economy and constantly work to diversify TASE's growth channels, increase the international visibility of TASE and the Israeli companies and bring in additional investors and market participants, as reflected in the recent addition of new TASE members."
TEL AVIV, Israel, Nov. 21, 2023 /PRNewswire/ -- The Tel-Aviv Stock Exchange Ltd. (TASE: TASE) today announced its financial results for Q3 2023 that ended on September 30, 2023.
The principal trends and data of the capital market since the beginning of the year and since the outset of the war:
Since the break-out of the war, the Israeli Government has significantly increased its debt issuances in order to fund the wartime expenses. In view of the high costs of debt issuance on the global markets, most of the debt was raised on The Tel Aviv Stock Exchange, with a strong response by Israeli institutional investors. So far, the debt issuances have been very successful, totaling NIS 8.4 billion in October, 1.2 times the planned amount. Another, larger, issuance of NIS 14 billion is planned in November, compared to a monthly average of NIS 5.6 billion from January to September 2023.
T-bill issuances since the beginning of the war totaled NIS 68 billion, on top of the NIS 304 billion raised since the beginning of the year until the end of September. The average daily trading volume of T-bills reached NIS 1.7 billion since the outset of the war, compared to an average of NIS 1.4 million from January to September.
Debt raising on the corporate bonds market was also strong, due to the companies' debt refinancing through marketable bonds, despite the higher interest rate. The business sector raised since the beginning of the year until the end of September NIS 62.8 billion in issuances and private placements of bonds to the public and to institutional investors - compared to NIS 70.4 billion raised in the corresponding period last year, and since the outset of the war to date the companies raised an additional NIS 5.2 billion.
In the wake of the war, some foreign investors and retail investors pulled out of our equity market and we saw a decline in the equity market. However, the decline was nowhere near the level experienced at the beginning of the Covid-19 pandemic. This is a testament to the financial maturity of the Israeli investor. Local institutional investors used the opportunity to access local shares offerings at more attractive valuations and increased their exposure to the Israeli equity market by 2.9 billion shekels. This is on top of the NIS 3.1 billion shekels increase in their holdings in the first nine months of the year. The contribution of the local institutional investors and the share purchases since the outset of the war have also helped moderate the sharp price drops on the capital market. For the first time since the beginning of the year, in November retail purchases of mutual funds have resumed. Also, we are seeing in November, a more positive response from the foreign investors, most notable of which is Novo Nordisk's announcement of becoming an interested party in the TASE share with an 8.5% holding.
Share trading volumes increased to an average of NIS 2.2 billion since the beginning of the war to date, compared to an average of NIS 2 billion in the first nine months of the year. Bond ADV since October 7 also increased to NIS 4.3 billion up from NIS 3.7 billion January-September. Since the beginning of the year until the end of September, the average daily trading volume of shares was NIS 2 billion, compared to NIS 2.4 billion in the corresponding period last year, and the trading volume of bonds was NIS 3.7 billion, compared to NIS 3.5 billion in the corresponding period.
Continued implementation of the strategic plan and upgrading of the capital market
Enhancement of liquidity - The reform of the TASE indices was launched in early November, aimed to improve the indices and boost their AUM, significantly enhancing liquidity for both the companies and the capital market. The reform of the bond market is also gaining traction – starting on December 3, the minimum order size will be reduced for government bonds, corporate bonds and T-bills, following the successful reduction of the minimum order size for shares last year. Also, to improve the public's access to COCO bonds, their minimum order size was reduced and credit card companies can now issue COCO bonds, alongside the banks and the insurance companies.
Increasing foreign investors' activity and increasing the number of TASE members - TASE announces today the approval of one of the two international clearing houses operating in Europe, Clearstream Banking S.A., as a CSD custodial member of the TASE Clearing House (the second clearing house, Euroclear Bank, joined TASE as a custodial member already in September 2019). Clearstream is wholly owned by the holding company, Clearstream Holding AG, which is owned by Deutsche Borse AG. The company, based in Luxemburg, specializes in the provision of clearing, custodial and other auxiliary services for trading in securities, including the clearing of local and international financial assets in more than 60 markets worldwide.
Additionally, Altshuler Shaham has been recently approved as a TASE member and a Clearing House member, and today the Board of Directors of TASE approved the acceptance of altshare, a fintech software company, as a new TASE member. The company will be offering trading services to close to 120,000 end customers in Israel and overseas, also engaging investors outside its customer base, helping enhance the competition in the Israeli capital market.
It should be noted that fintech company, Blink, began operating as a TASE member a week ago, and TASE is confident that more significant members will join in the coming months, thereby enhancing competition and improving the access of local and international investors to Israeli companies and securities.
TASE also reports on the status of the Company's share buyback plan. Since the initiation of the buyback plan in May 2022, until shortly after the reporting date, TASE purchased a total of 10.2 million shares for a consideration NIS 186 million, at an average price of NIS 18.25 per share, representing 9.9% of the Company's issued share capital. This concludes all of the buyback plans approved by the Board of Directors. In light of TASE's surplus liquidity of NIS 195 million, strong financial performance, organic growth and steady cash inflow, as also demonstrated this quarter, the Board of Directors of TASE has instructed the management of the Company to present to the Board of Directors for approval of a buyback by way of tender offer for up to NIS 50 million and the publication of specifications in accordance with the provisions of the Securities Regulations (Tender Offer), 2000. It is hereby clarified that, to date, a tender offer buyback has not yet been approved and will be presented to the Company's Board of Directors for approval in the coming weeks.
Highlights of the results for Q3 2023:
Revenue in Q3 2023 totaled NIS 95.5 million, compared to NIS 86.0 million in the corresponding quarter last year, an increase of 11%, with growth across all activities. Revenue from trading and clearing commissions totaled NIS 36.95 million, an increase of 11% compared to the corresponding quarter, stemming from the increase in revenue from T-bills, a 4% increase due, inter alia, to the higher trading volumes, the increase in T-bills issuances and the cancellation of the maximum commission on OTC transactions. Another 4% increase is due to revenue from mutual funds, and a 2% increase results from the increase in the trading volumes of derivatives. Listing fees and levies totaled NIS 20.49 million, a 3% increase compared to the corresponding quarter in 2022, Clearing House services increased by 10% to NIS 19.2 million, and data distribution and connectivity services increased by 26%, totaling NIS 18.1 million.
The costs in Q3 2023 totaled NIS 72.1 million, compared to NIS 68.8 million in the corresponding quarter last year, an increase of 5%. The increase in costs is due mainly to the increase in employee benefit expenses and computer and communication expenses, which was partly offset by a reduction in the marketing expenses.
Net financing income in Q3 2023 totaled NIS 2.0 million, compared to net financing expenses of NIS 4.1 million in the corresponding quarter last year. The transition to financing income this quarter resulted from a negative return of 0.1% on the Company's investments in marketable securities' portfolios comprising Israeli government bonds, compared to a negative return of 2.2% in the corresponding quarter last year, as well as from the raising of the Bank of Israel interest rate, which increased the interest on the deposits.
The profit in Q3 2023 totaled NIS 18.2 million, compared to NIS 8.7 million in the corresponding quarter last year, an increase of 109%. The increase in profit was due mainly to the increase in revenue and the transition to financing income.
The adjusted EBITDA in Q3 2023 totaled NIS 38.4 million, compared to NIS 30.5 million in the corresponding quarter last year, an increase of 26%, stemming mainly from the increase in revenue.
The adjusted profit in Q3 2023 totaled NIS 20.1 million, compared to NIS 8.8 million in the corresponding quarter last year, an increase of 127%, stemming mainly from the increase in revenue and the transition to financing income as a result of the higher returns on the Company's investments in marketable securities' portfolios comprising Israeli Government bonds, compared to the corresponding quarter last year, and the increase in the interest on deposits.
Equity as of September 30, 2023 totaled NIS 615.6 million, compared to NIS 686.4 million as of December 31, 2022, a 10% decrease. The decrease in the equity is due mainly to the buyback of Company shares in an amount of NIS 153.7 million, net of a profit of NIS 62.5 million accrued in the first nine months of 2023 and the excess consideration received from historic shareholders within the framework of the TASE ownership restructuring, in an amount of NIS 12.8 million during the period.
This notification does not supersede that stated in the periodic financial statements of the Company, which contain the full and accurate information.
The revenue of the Company from trading and clearing is affected, inter alia, by the number of trading and clearing days. In the third quarter of 2023, there were 61 trading days, similarly to the number of days in the corresponding quarter last year. In the first nine months of 2023 there were 183 trading days, compared to 186 days in the corresponding period last year, a 1.6% decrease. Presented below is information on the quarterly breakdown of trading days:
1 A custodial member is a member that manages the assets of its clients on TASE and receives TASE's clearing and custodial services, but may not trade on TASE. Joining TASE as a custodial member allows Clearstream to open a securities' account at the TASE Clearing House, through which it can directly provide custodianship services for Israeli securities to its clients in Europe and worldwide.
SOURCE The Tel Aviv Stock Exchange Ltd.