Deutsche Boerse Earnings: Net Interest Income Continues To Form a Nice Tailwind; Guidance Improved

Wide-moat Deutsche Boerse DB1 reported second-quarter EBITDA of EUR 733 million, up 25% compared with the same period a year ago and ahead of the EUR 703 million expected by the consensus collected by Deutsche Boerse. We maintain our EUR 180 per share fair value estimate.

Cyclical tailwinds continue to boost Deutsche Boerse’s operations as further interest-rate hikes in the United States and across Europe lifted net interest income (EUR 178 million in the quarter versus EUR 29 million last year). This trend has been offsetting lower volatility in trading and clearing in the second quarter, after multiple quarters of volatility-driven strong results in this segment. Commodities stood out positively as declining collateral requirements supported higher power trading activity, although these trends should be viewed as temporary as well. Excluding cyclical tailwinds, the exchange group showed a solid performance in data and analytics, with net revenue up 5% in environmental, social, and governance and 39% in analytics owed to client contract renewals. Securities services had a good quarter in settlement (up 10%) and custody (up 5%).

Operating expenses came in 9% higher than a year ago, driven largely by inflationary costs and investments into the business.

As we mentioned last quarter, Deutsche Boerse is set to hit the higher end of its guidance range, both in terms of revenue as well as EBITDA. Given a positive outlook for the remainder of the year, the group now expects to exceed EUR 4.7 billion and EUR 2.8 billion in net revenue and EBITDA, respectively.