Thanks. Welcome to the Bolsa Mexicana de Valores fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ramón Güémez, Chief Financial Officer. Please go ahead.
Thank you. Good morning and welcome to Bolsa Mexicana de Valores fourth quarter 2023 earnings conference call. Before proceeding, I'd like to provide a brief safe harbor statement. This presentation contains forward-looking statements and information related to Bolsa that are based on the analysis and expectations of its management, as well as assumptions made and information currently available at Bolsa. Such statements reflect the current views of Bolsa related to future events and are subject to risk, uncertainties, and assumptions.
Many factors could cause the current results, performance, or achievements of Bolsa to be somewhat different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political, governmental, and business conditions, both in a global scale and in the individual countries in which Bolsa does business, such as changes in monetary policies, in inflation rates, in prices, in business strategy, and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary considerably from those described herein as anticipated, believed, estimated, expected, or targeted. Bolsa does not intend and does not assume any obligation to update these forward-looking statements.
I would also like to remind participants that today's call is being recorded, and a replay of this call will be available online on February 2015 at Bolsa's corporate website, www.bmv.com.mx. During this call, all figures are in Mexican pesos and compared to the fourth quarter of 2022 unless stated otherwise. This call is intended for the financial community only, and the floor will be open at the end to address any questions you may have.
Joining us for today's call are José-Oriol Bosch our CEO; Claudio Vivian, Chief Information Officer; Hugo Contreras, Chief Compliance and Regulations Officer; José Manuel Allende, Chief Capital Formations, Market and Information Service Officer; Roberto González, Chief Post-Trade Officer; Gabriel Rodríguez, SIF ICAP CEO; Alfredo Guillén, Managing Director of Equity Markets; José Miguel de Dios, Managing Director of Derivatives Markets; Rosa Crespo, Managing Director of Human Resources; Luis René Ramón, Director of Investor Relations; and myself, Ramón Güémez, CFO. I would now like to turn the call over to our CEO, José-Oriol Bosch .
Thanks, Ramón, and good morning, everyone. Thank you for joining us today to discuss the 2023 fourth quarter and full-year results for BMV Group. As you know, we announced our results yesterday afternoon, and copies of our press release are available at bmv.com.mx under Investor Relations. I will go over a couple of points that are important to consider when comparing 2023 versus 2022. Then I will walk you through the different divisions' results and finally open up to questions on the conference call line. First, the FX rate had a double impact in the quarter and full-year results. About 30% of BMV's revenue and 25% of its expenses are linked to the US dollar.
On the other hand, the strength of the Mexican peso had a MXN 136 million negative impact in revenue in 2023, mainly in information services and Indeval, while on the other hand, expenses were MXN 52 million lower than expected, mainly in technology and subcustody fees. The net negative impact on the EBITDA was MXN 84 million. Second, we recorded non-recurring revenue in both years. In 2023, we sold a property in Pachuca for a net effect of MXN 58 million, and in 2022, we registered MXN 134 million in Indeval, SIF ICAP. The net effect on the EBITDA was MXN 74 million, making 2022 a tough comparison. Therefore, we have presented an adjusted EBITDA. With that in mind, let's review the quarterly financial highlights. If you can go, please, to slide number three on the fourth quarter financial highlights.
The revenue was MXN 1 billion, up 5% because of non-recurring sale of property for MXN 58 million and impacted by lower trading in transactional businesses, fewer cross-border transactions, and an unfavorable exchange rate. Expenses were MXN 483 million, up 5% mainly due to technology upgrades, regulatory projects, and consulting services, as well as BMV's building renovations. EBITDA was registered at MXN 594 million, up 5%. Net income was reported at MXN 408 million, 8% above fourth quarter 2022. Earnings per share increased 9% from MXN 0.66 to MXN 0.72. On the next slide, we'll go over the results for the full year. The revenue was MXN 3.9 billion, down 4% mainly due to lower equity trading, fewer cross-border transactions, last year non-recurring revenue, as well as FX. Expenses were MXN 1.9 billion, up 5% explained by personnel, technology, and consulting costs.
EBITDA was registered at MXN 2.2 billion, down 10%, but after adjusting for non-recurring revenue, the EBITDA decreased 8% with an EBITDA margin of 56% versus 60% last year. Net income amounted to MXN 1.5 billion. Earnings per share dropped 8% from MXN 2.87 - MXN 2.65 per share. In face of persistent challenges in our operating environment, we have maintained costs under control and invested in technology to propel us forward. On slide five on the revenue by business line, the capital formation, or the listing of equity and debt, as well as its annual maintenance, contributed this quarter with 13% of BMV's group revenue. Transactional businesses, which consist of equity trading and clearing, derivatives trading and clearing, and OTC trading, generated 37% of revenue. Information services made up of data analytics, indices, valuation, and financial risk management services had a 19% weight.
Indeval, which is responsible for the custody, settlement, and global market services, mainly cross-border transactions, participated with 27% of revenue. Despite facing another challenging year, where restrictive monetary policy has been a tough competitor, our diverse and resilient business model has played a strong role. Lower equity trading and fewer cross-border transactions in Indeval had a negative impact, while information services and capital formation remained strong. Please turn to slide six to go over equity trading and clearing. Revenue in cash equities trading and clearing was down 12% when compared to the last quarter of last year. The average daily traded volume, the ADTV, at BMV was registered at MXN 13.9 billion. The local market was up 10%, while the global market decreased 26%. The investors' behavior is influenced by the strength of the peso.
The average daily traded volume on the BMV throughout the entire year amounted to MXN 15 billion, accounting for an 83% market share. For the total Mexican market, ADTV was registered at MXN 17.3 billion. That is a 3% drop for the quarter and -10% for the full year. The operating environment has been challenging for financial markets in Mexico and the world, and we can observe it by the decline in trading activity everywhere. However, we are optimistic about 2024 and expect a recovery in ADTV as the central bank changes its monetary policy. CCV revenue was down 9%, even though ADTV was only down 3%. This is explained by a higher number of cross-trades in the fourth quarter of 2023, which only need to be registered but not cleared. Let's go on the next slide to review derivatives.
Revenue in derivatives trading and clearing was down 15% in the quarter due to lower trading of dollar futures. Last year, clients closed positions for the March and June expirations. However, new positions are again being opened, allowing open interest to recover significantly between the June low and December 2023. Since dollar futures have been the main driver of next year, we are planning to list mini dollar futures in the coming months. On the other hand, interest rate swaps were very attractive in the last quarter given the uncertainty in the market. The total value of interest rate swaps, or notional value, increased 118% year-over-year. In Asigna, the average margin deposits were MXN 37 billion for the quarter and MXN 35 billion for the entire year, showing increases of 2% and 4% respectively.
On slide 8 on the OTC trading in SIF ICAP, OTC trading and value-added services made good progress with revenue reaching MXN 182 million, up 3%. SIF ICAP Mexico increased 15%, mainly explained by a reversal of a provision and higher trading of interest rate swaps. SIF ICAP Chile was down 3% because of negative foreign exchange effect. The Chilean peso was down 9% against the Mexican peso. However, there was higher trading in FX forwards and interest rate swaps in the period. On slide nine we have the figures for the capital formation. Listings performed strongly in both short-term and long-term debt markets, with revenue increasing 20%. In short-term debt, 302 issuances were placed for a total amount of MXN 62 billion, while in long-term, 34 issuances were registered for a total amount of MXN 110 billion.
I want to emphasize that in 2023, six companies in Mexico debuted in the Mexican market by issuing debt, with all of them choosing the BMV as their platform. Also, I am very glad to share with you that BMV finished the year with a 96% market share in number of listings, up from 92% in 2022. Furthermore, it is worth noticing that 40% of the total long-term debt issued in BMV was sustainable with thematic bonds and sustainability-linked bonds. We will continue promoting this market through our digital platforms and educational programs. As for alternative listings, Mexico Infrastructure Partners listed two CKDs for MXN 8.5 billion. In the equity market, there were no listings in the fourth quarter. However, we had a couple of follow-ons as Traxión, Fibra Soma , Fibra Prologis, and Fibra Nova during 2023.
Regarding maintenance, revenue was down 4% since the amount issued. It is not directly linked to revenue due to caps in our fees. The debt market is recovering, and we have facilitated larger issuances. However, the number of bonds reaching maturity has exceeded the number of new issuances. At the end of 2023, there are 485 long-term debt issuances compared to 482 in 2022. Moving to the central securities depository on slide number 10, Indeval revenue was down MXN 21 million in the fourth quarter, MXN 12 million because of a lower number of cross-border transactions and trades settled in the global market, and MXN 9 million due to FX, mainly in the global market services and global custody, whose fees are in U.S. dollar. Assets under custody increased 12% in the local market to MXN 33.6 trillion and 4% in the global market to MXN 1.6 trillion.
As announced previously, we are currently working to accelerate the settlement cycle to T+1 in May 2024, in line with the U.S. and Canada, to better serve market participants by offering a more efficient transaction and mitigating risk. Finally, on slide 11 on the information services, revenue reached MXN 181 million in the fourth quarter of 2023, up MXN 11 million, or 6%, mainly due to international clients, local retail investors, and valuation services at Valmer. Under a constant FX scenario, revenue would have increased MXN 24 million or 14% year-over-year. We foresee continued annual growth in this business segment driven by a strong international demand for our data. All in all, a good set of numbers in capital formation and information services. Nevertheless, equity trading and Indeval faced hurdles during this period due to the prevailing interest and exchange rates, leading to an impact on the traded value.
As mentioned earlier in the call, the strength of the Mexican peso had a negative impact of MXN 132 million on revenue in 2023. Going forward, we anticipate a shift in monetary policy trends, a more stabilized foreign exchange landscape, and increased activity across financial markets. We hope a positive outlook for 2024. Now, let's look at our operating expenses in slide number 12. Operating expenses in the fourth quarter and full year 2023 were up 5%, and I will go over the main items on a year-to-date basis. Personal expenses up MXN 40 million, or 5%, due to the net effect of annual salary increments at the beginning of the year and higher long-term variable compensation in 2022. Technology up MXN 42 million, or 13%, mainly due to updates in our technological platform as well as the segregation of post-trades infrastructure.
Consulting fees up MXN 23 million, or 26%, mainly explained by the assessment of third-party technological platforms in post-trade, as well as strategic and organizational culture consulting fees. Subcustody expenses were down MXN 35 million, or 39%, since Indeval was authorized as a qualified intermediary by the U.S. Internal Revenue Service and negotiations for improved commercial terms. Promotional activities or marketing were up MXN 8 million, or 24%, because of a greater number of customers and corporate events. It is important to note that foreign exchange fluctuations had a positive impact on expenses that amounted to MXN 52 million lower cost, mostly in technology and subcustody. Moving forward, we remain committed to cost efficiency, striving for greater operational leverage as we make strategic investments in technology to bolster the resilience of our platforms.
In slide number 13 on the summary, notably, 2022 makes for a tough period to compare with because of extraordinary revenue concepts and foreign exchange fluctuations. The appreciation of the Mexican peso against the U.S. dollar resulted in a negative impact of MXN 84 million, or -10%, on the EBITDA. However, after adjusting for non-recurring items, BMV's EBITDA was down 8%, and under constant foreign exchange rate, it decreased 4%. Despite facing a turbulent year marked by geopolitical conflict and restrictive monetary policy, we have made great progress in fulfilling our strategic objectives, maintaining a strong client focus, further developing a sustainable business, and evergreen technology platforms. In 2023, our capital expenditures in technology were MXN 188 million. That is MXN 116 million higher than last year, but in line with our investment plans.
Furthermore, a couple of weeks ago, we finalized a contract with Nasdaq to modernize our post-trade technology platform. The agreement expands Grupo BMV's longest-standing technology partnership with Nasdaq, established almost 10 years ago with the provision of the Mexican Stock Exchange Surveillance System. The strategic steps we have taken to accelerate the technological evolution of BMV Group will enable us to better serve our clients in the future. We remain committed to collaborating with financial authorities to advance the approval of our strategic projects, notwithstanding the electoral cycle. On a different note, during 2023, we bought back 8.7 million common shares under our buyback program, and we intend to maintain this approach going forward. Furthermore, yesterday, our board approved to recommend to the shareholders' assembly an annual dividend of MXN 2.12 per common share, or 80% payout.
That concludes my formal remarks, and I thank you for your time. And together with my colleagues, we will gladly answer any question you may have. Thank you very much.
Ladies and gentlemen, at this time, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. One moment, please. Only four for questions. And our first question comes from the line of Ernesto Gabilondo with Bank of America. Please proceed.
Thank you. Hi, good morning, Oriol, Ramón, and Luis René. Thanks for taking my call. I have three questions on my side.
The first one would be on revenues. So we have seen that in 2023, both have posted soft revenue growth impacted by different external factors such as FX and rates. However, do you think these trends could start to revert in 2024, especially considering that we will start at some point the easing cycle and also lower rates should lead to a potential depreciation of the peso? So can you share with us, if we have both trends on that direction, which would be the revenues that should benefit from both impacts? Then my second question is in terms of new listings. So far, we have seen positive activity, especially in the real estate sector. We have seen follow-ons and this to take advantage of the new sharing opportunities. However, I would like to hear if there are other sectors that you have in your pipeline.
And also, well, I would like to hear your point of view on why 3B was listed in the U.S. and not in Mexico, and what are you trying to do, or what will be the strategy to incentivize companies to list in Mexico? And then my last question is on the regulatory front. There's this new secondary sorry, this regulation on the new securities law is already approved, and now is the secondary regulation the next step, no? So I would like to hear from you when should we expect this secondary law to take place, and when do you see the entrance of multi-assets or hedge funds coming into Mexico? Thank you.
Thank you, Ernesto. Let me begin by well, good morning, and let me begin by the first question. Revenue, or what do we expect from revenue trends? We are expecting a better year.
Specifically, we don't expect the FX to appreciate further, and we are expecting to have more volatility. So this should impact the lines that were impacted in the previous year, specifically equity trading, equity clearing, and Indeval. Regarding your second question, I will pass it on to José Manuel. Good morning. Regarding pipeline and listings, as Oriol pointed, we had a very good year on the debt listings, on the long term, especially growing over 60% versus 2022. We still have companies willing to come for the marketing, seeing the market in the next, I would say, two to three months, maybe MXN 30 billion on the debt segment from different sectors: real estate, manufacturing, infrastructure. So we will still have activity on the debt segment. Regarding the equity, we may have some listings on the FIBRA, as you pointed, also some follow-ons on the FIBRA, the real estate sectors.
We may have some companies coming up from spin-offs, like the América Águilas football, and we're having also some SERPI requests in process that will be coming to market in the next month. Regarding the nearshoring, of course, the real estate is the most notorious segment that will be benefited immediately, and it's coming to the market to finance some of those needed. But we're seeing after that, some sectors on manufacturing or commercial may be willing to come to market to set up the infrastructure that will go around the real estate: schools, hotels, industrial plant segments, logistics. So I think it's the beginning of a good cycle that may do companies willing to come into the market.
Regarding securities market law, as we talked last quarter, it was approved, the securities market law, to make easier, cheaper, and faster the access and listing process for midsize companies through the oferta simplificada. In the last couple of months, we've been working with authorities for the secondary legislation definitions as to what type of companies will qualify for this oferta simplificada or the amount that could be placed on the market. We're trying to push the numbers up so a higher number of companies may qualify to access on this segment. We also have started additional educational programs such as the Cero a Bolsa program to help companies get involved in this financing process, to know requirements, benefits, and how to get started into the securities financing.
The idea is, what we heard from authorities is, to have the final consultation on secondary legislation in March, consider all these things that I mentioned, and hopefully, by the second quarter, everything will be in place and ready for approval. We think it's a good proposal. It may attract new companies to explore financing through the exchange, some that may now are not considering the bolsa. We still have work to do on other items such as the demand side, investor-based education. So we are optimistic on that. But the other part regarding multi-asset and hedge funds, that's included on the mutual fund law, and that secondary legislation will be discussed and implemented after we launch the securities market part for the oferta simplificada. So the hedge funds will take a little bit more time. And hi, Ernesto. Thanks for attending and for your question.
You were also asking about the 3B IPO. I would say that in general terms, and I have mentioned that a couple of times, we have a real and strong competitor that is the U.S. market. This is not just the case for Mexico. We have seen companies in Latin America doing its own IPO in the U.S. We have seen, even in the past days, companies from Europe moving the primary listing from a couple of days ago from U.K. to U.S. I think that this has been a global trend. Now, we have to compete with the U.S. Why companies are moving or doing the IPO in the U.S.? In my personal opinion, I think that the first reason is the valuation.
Comparing with Mexico, if we look at the valuation of the companies that are listed in the Mexican bolsa index, we are talking about 6 x EBITDA. If we look at the Dow Jones, the number is twice that. It's around 12 x EBITDA. And much higher if we look at the S&P 500 or the NASDAQ. In the particular case of Triple B, I think that it was like 25 x EBITDA placed in the U.S., and the comparable companies in Mexico should be around 12 x. So I think that the question would be why the valuations are much higher in the U.S. than in Mexico or in other countries. And I think that the reason is that the investor base in the U.S. is definitely much higher than in most of the countries, including Mexico. So we have to work on that. We have to work.
We have been in Mexico working in increasing the number of accounts, the number of investors, the number of participants working on financial culture and education. We have seen an increase in the number of accounts in Mexico, so now we have to translate that in more activity and better valuations. In summary, we have to be much more competitive to the U.S. in order to have the IPOs and to maintain the companies in our countries, and in our particular case, in the case of Mexico. Thank you.
Our next question comes from the line of Carlos Gómez with HSBC. Please proceed.
Hello. Good morning, and thank you for taking my question. The first one is about the Forex again, and you have given very precise numbers as to the impact of the Forex appreciation. Is this symmetric?
If we were to see a depreciation of the peso this year, would this be a linear function? Would we still see a reversal of what you lost last year, or is it no? Doesn't it work like that? And second, if you can give us an update on your data business. Thank you.
Carlos, yes, the impact on the FX would be symmetric. If we had a peso depreciation, we would expect a positive impact on revenues and negative impact on expenses, but a net impact overall. Rough numbers, I would say a one peso the dollar moving by one peso represents roughly MXN 50 million in EBITDA, rounding, obviously. Regarding your second question, we couldn't hear it properly. Could you repeat that, please?
Yes. My apologies. Could you give us an update about your data business, both in Mexico and outside? Thank you.
Sure.
I'll let José-Oriol l take that one on the data business.
Okay. Regarding data business, what has been growing importantly for the last year, maybe three, four years, we have been growing on over double-digit on revenues. It's on the real-time distribution data feeds, which have mainly been growing in foreign markets, especially in the U.S., a little bit in Europe. And that has been because of the investments we did some years ago by setting up a point of presence in New York by which we took our data into that data center where many of the high-frequency or institutional investors that trade Mexico get the data. And that has helped us also, specifically in the high-frequency trading clients, for them to get the data on low latency, to get their algorithms working, and route their orders through our channels or through the broker's channels.
And that has also improved a little bit the trading activity. So we're focused on keeping growing that segment of the business, which is the most profitable on the data segment. We are trying also to increase the presence of our data feeds on Europe through some agreements that we have set up with European exchanges to distribute our data to end users in Europe. Thank you so much. And our next question comes from the line of Edson Murguía with Suma Capital . Please proceed. Hi. Good morning. I have a couple of questions. The first one is related to the non-recurring sale of a property that you mentioned in the press release. Could you give us a little bit more color about this? Because, as you mentioned in the press release, it's for MXN 58 million.
Just trying to figure out if you are considering selling part of the properties or Bolsa or trying to figure out what will be the strategy behind that. The second, before my questions, let me congratulate you on the 25th anniversary of Mexico and all the achievements that you have done. But my question is regarding global markets. In many market participants are looking for options trading, what is the strategy of Bolsa regarding options if you compare it to other markets? And thank you so much. Edson, thank you very much. Regarding your first question on the MXN 58 million impact from the sale of a property, we had many, many years ago, the exchange had the idea of building a site, an IP site, and it worked for a while. And we had that property, and we sold it. It was a one-off thing.
We are not in a we don't have other properties around, and we're not planning to sell our current building. So it's really a one-off thing. There's no chance of a we're not in the real estate business in any way. And it was just an initiative from many, many years ago, back in the '90s. And regarding the options trading strategy, Mark is already smiling broadly. Thank you, Edson. Well, we have been working with the authorities to list the futures and options for the SIC stocks. So we believe that the option in the SIC stocks will be very important or very good for retail customers. So we have been receiving some interest for some participants to promote with the retail clients. So these kind of products can be very good for them.
So we think that options in the SIC stocks will be very good for the market.
Okay. Quick to clear. And my last question about it's a follow-up about the attractiveness of the Mexican market regarding 3B listing. Because I can understand what Oriol said already, but my question will be, this second part of the regulatory framework that you are expecting with the authorities to be ready by March 2024, are there more incentives? Why companies will be listed in the Mexican market rather than in the US market?
Yeah. I think that the hi Edson, I think that these changes in the law that were approved at the end of last year and the secondary regulation that we are working with the authorities, this is definitely going to make much more attractive.
The market in Mexico is going to bring new companies, and it's going to add companies that are not in the market today. But basically, this new regulation is giving a possibility for companies with lower requirements, with a faster process, with lower cost to come to the market. But in addition, I think that we are quite optimistic in Mexico for 2024 for several reasons. First, we are seeing that the Mexican economy is doing pretty well, especially in the north of the country. We are seeing a very strong fundamentals and a lot of investors coming to Mexico, not just but in addition to the nearshoring activity that we have seen and the geographical, demographic position that we have in Mexico. There is a great opportunity compared to other countries.
In addition, I think that for this year, we're also optimistic on the competition that we had last year on the interest rate market. At some point, we and the analysts are expecting that rates should start to come down following lower inflation. And in addition, this year, we could have some additional volatility because of elections, not just in Mexico, in Mexico and in June, and in the U.S. in November, and in other countries. So it could be a more volatile year than 2023. And this could be positive news for some of our activities as cash equity trading and CCP and CFD. So we are optimistic, Mexico, for 2024 for several reasons. Thank you.
Thank you so much. Quick to clear.
Thank you. At this time, there are no further questions. I'd like to turn the call back to José-Oriol Bosch Par for closing remarks.
Well, so once again, thanks to all of you for attending our quarterly conference call. Thanks for all your questions, and have a great day. See you next quarter. Thank you. Bye. Thank you. This concludes today's conference. You may now disconnect. Have a great rest of the day.