NGX Group boosts revenue from transaction fees, treasury investment income

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Nigerian Exchange Group Plc reported revenue of N6.799 billion for the full year ended December 31, 2021, as against N6.019 billion in 2020 representing a 12.9 per cent increase amidst a challenging macro-economic environment, rising inflation, and depreciation of the naira against the U.S. dollar.

The revenue was enhanced on the back of transaction fees and treasury investment income despite inflationary pressure.

The Group’s Annual reports showed that transaction fees contributed 42.59 per cent growth of the revenue to N2.896 billion from N2.836 billion in 2021 while treasury investment income followed with 19.76 per cent of the revenue with N1.343 billion from N1.279 billion in 2020.

Transaction fees or charges represent a basic cost of investing and they are typically charged anytime a bid or offer goes through. All charges are a percentage of the purchase or sales consideration.

Treasury Investment Income includes income from bonds, treasury bills, and fixed deposits with banks.

With the decision of the Central Bank of Nigeria (CBN) to increase the interest rate by 15.5 per cent it is expected that the NGX and other investment institutions reap more income from treasury investment.

The MPC had voted to increase interest rates to a 15.5 per cent as the apex bank fights rising inflation.

The Central Bank, during its last two MPC meetings, increased the interest rate from 11.5 per cent to 14 per cent, and subsequently to 15.5 per cent to fight rising inflation, which has shot above 20 per cent.

According to investment experts, when the interest rate is low, speculators tend to move their funds from money market instruments to the stock market for higher yield, just as they move from stocks to other asset classes, especially money market instruments when the interest rate is high.

The Group recorded improved performance across its revenue and income lines, which resulted in growth in operating profit to N281.8 million from an operating loss of N93.96 million recorded in the full year 2020 on the back of 13 per cent (N779.5 million) growth in total expenses.

EBITDA increased by 16 per cent to N2.89 billion from N2.5 billion with a margin of 42.6 per cent. Profit for the period was up 22 per cent to N2.2 billion from N2 billion in 2020.

The group recorded a growth in total assets of 7.9 per cent in 2021 to N37. 9 billion, driven by a 41.0 per cent increase in investment securities to N14.4 billion from N10. 2 billion in 2020and 18.7 per cent growth in associates from N12.4 billion to N14.8 billion in 2021.