HK Exchanges Has 68% Jump in Commodity Profit as Trade Fees Rise

  • Revenue from trading fees, tariff climb 51% from year earlier
  • Profit expands as metal volumes drop for first time since '09

Hong Kong Exchanges & Clearing Ltd., owner of the London Metal Exchange, posted a 68 percent increase in profit from commodities last year as expanding fees from trading countered the first decline in metals volume since 2009.

Earnings before interest, taxes, depreciation and amortization surged to HK$1.19 billion ($153 million) from HK$706 million the previous year, the bourse said in a statement on Wednesday. Commodities revenue climbed 36 percent to HK$1.74 billion, including HK$1.40 billion from trading fees and a so-called trading tariff, 51 percent more than 2014, it said.

Hong Kong Exchanges, which bought the LME for $2.2 billion in 2012, increased fees on the world’s largest metals bourse last year to boost profits and fund investment. LME volume fell 4 percent to 169.6 million contracts in 2015 as returns on raw materials slumped to the lowest level since the 1990s.

The performance in commodities contributed to record net profit at the group level. Net income jumped 54 percent to HK$7.96 billion last year, up from HK$5.17 billion a year earlier, the exchange said. The group defines its commodities segment as covering the LME and Asia commodities contracts traded on the Futures Exchange in Hong Kong.

Hong Kong Exchanges will use the LME’s strength in physical commodities to expand the reach of its global benchmarks in Asia, especially in mainland China, and to help develop physical benchmarks, the bourse said.

The LME Index of six base metals fell 24 percent last year for its worst annual performance since 2008 as economic growth in China, the world’s biggest consumer, slowed to the weakest pace since 1990.

— With assistance by Alfred Cang

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