Thomas Wellauer, Chairman of the Board of Directors (right), and Jos Dijsselhof, CEO (left).
The year 2022 brought fundamental changes to the financial markets, most notably driven by the return of inflation and the increase in interest rates. The war in Ukraine, the energy crisis, recessionary trends, resurgent strains in China-US relations, and continuing instabilities caused by the pandemic posed new challenges to the financial markets and SIX.
SIX actively adapted to this changing environment, and continued to build on its growth strategy. We further invested in our technology, our products and services, and our people to build the systems and infrastructures for the future of finance, while upholding strict cost control. We adapted our short-term plans, while our business strategy and our diverse product portfolio have evidenced the company’s resilience.
Our diversified business model proved its strength once again.
Group Net Profit Increased
Despite the increasing macroeconomic challenges, we delivered solid results and increased Group operating income by 2.1% year-on-year at constant currencies. Operating earnings before interest, tax, depreciation and amortization (EBITDA) reached CHF 397.7 million, down 5.7% year-on-year in reporting currency and 0.9% at constant currencies. Earnings before interest and tax (EBIT) of CHF 243.9 million are 65.7% above the previous year’s level due to one-off effects in 2021 related to the stake of SIX in Worldline and the full acquisition of the REGIS-TR trade repository. Net profit increased substantially from CHF 73.5 million in 2021 to CHF 185.0 million in 2022.
With continuous investment in SIX Digital Exchange (SDX) we further strengthened our role in the pioneering field of distributed ledger technology-based infrastructure. Over the past year, we have been focusing on interoperability between SDX and existing infrastructures to build the migration path for market adoption of new technologies. The acquisition of the European trade repository REGIS-TR was completed, and we expanded numerous services in our international custody business. The Financial Information business unit launched a product offer for regulatory risk data and services in connection with the EU Sustainable Finance Action Plan. In our Banking Services business unit, one of the highlights of the year was the nationwide rollout of the Swiss QR-bill. The recovery of cashless payments and ATM transactions as well as the new generation of debit cards were important drivers for additional growth.
Continuing the Growth Strategy
Growth remains a prerequisite for successfully operating a global platform business. From an industry point of view, SIX operates in a dynamic and attractive market. In October 2022, the Board of Directors confirmed the strategic direction of SIX, taking the new macroeconomic situation into consideration. The new environment requires even more careful examination of uncertainty factors, such as interest rates, inflation, and currency fluctuations. To react more flexibly to market opportunities for further growth in the international capital market infrastructure business, we realigned our legal structure as per 1 January 2023. The three business units of Exchanges, Securities Services, and Financial Information are now consolidated under the roof of the newly formed SIX Exchange Group Ltd. At the same time, the Banking Services business unit will fully concentrate on providing critical solutions in the interest of the Swiss financial center. Both entities continue to operate under the umbrella of SIX Group.
Joining Forces for Sustainable Financial Markets
As a provider of financial market infrastructure, SIX is in an optimal position to act as a key player in the development of sustainable financial markets because we are trusted, central, and neutral. In 2022, we launched a new sustainability strategy, refocused our activities, and strengthened our governance over sustainability. Since January of this year, we have established the new position of Head Sustainability, reporting directly to the Executive Board. Furthermore, we have committed to reducing our carbon footprint to net zero by no later than 2050, in line with the Science Based Targets initiative (SBTi).
With our new sustainability strategy, we are accelerating positive change for a sustainable future.
Changes in the Executive Board
At the beginning of December, Dieter Goerdten succeeded Marco Menotti as Head Banking Services. Before joining SIX in 2018, Dieter Goerdten worked for Swiss banks on the development and launch of innovative products and services for over 20 years.
After 14 years on the Executive Board of SIX, Thomas Zeeb has decided to leave SIX at the end of January 2023. Christoph Landis, currently Head IT, will lead the Exchanges business unit on an interim basis. He was responsible for the Swiss Exchange unit from 2015 to 2018 and has been a member of the Executive Board of SIX ever since.
Roger Fankhauser joined SIX as General Counsel in May 2022. He is in charge of the newly established entity that incorporates the Legal, Group Corporate Secretary, and Regulatory Affairs departments at SIX and is part of the extended Executive Board.
We will continue to deliver excellent services to our clients and bring innovative products to the market. Pioneering digital assets along the entire value chain and building more bridges between the distributed ledger technology of SDX and the traditional markets remains a focal point. We will also expand our ESG product range, based on new tech-based solutions for aggregating, analyzing, delivering, and reporting data.
Cost efficiency remains a top priority. We will further optimize our cost base by leveraging the largely fixed-cost nature of the business, cost synergies from the BME acquisition, and other targeted cost measures. Bolt-on acquisitions and partnering opportunities will continue to strengthen our portfolio. We expect a revenue increase of > 4% p.a. in the medium term, driven by initiatives such as SDX and digital assets, revenue synergies from BME, and opportunities in Financial Information.
We know that the past year has posed challenges to all participants in the financial markets, our shareholders and partners, our clients, and our employees. We express our sincere thanks to all of you for your great collaboration through these times of extended uncertainty, and are looking forward to working with you in driving forward the transformation of the financial markets.
Dr Thomas Wellauer