Good afternoon, ladies and gentlemen, and welcome to the Deutsche Börse AG analyst and investor conference call regarding the Q3 2022 results. At this time, all participants have been placed on a listen only mode, and the floor will be open for your questions following the presentation. Let me now turn the floor over to Mr. Jan Strecker.
Welcome, ladies and gentlemen, and thank you for joining us today to go through our third quarter 2022 results. With me are Theodor Weimer, Chief Executive Officer, and Gregor Pottmeyer, Chief Financial Officer. Theodor and Gregor will take you through the presentation, and afterwards, we will be happy to take your questions. The link to the presentation material for this call has been sent out via email, and it can also be downloaded from the investor relations section of our website. As usual, the conference call is recorded and will be available for replay afterwards. With this, let me now hand over to you, Theodor.
Thank you, Jan. Welcome, ladies and gentlemen. The times we are currently living in continue to be quite unprecedented. After the strong first quarter, we were expecting at Deutsche Börse a normalization of activity throughout the year. What we saw instead was an even acceleration of growth throughout the year 2022. In the end, the third quarter turned out to be our strongest quarter ever from a net revenue perspective. The main driver for the 12% cyclical net revenue growth we have seen in the first nine months is the beginning cycle of rising interest rates. In the United States, we have meanwhile reached a Fed target range of 3%-3.25%. In September, the ECB raised rates in Europe to a level that we last saw back in 2011.
This has resulted in greater trading and hedging needs for our clients in almost all asset classes, as well as growth of the net interest income of our security service business, which had been depressed for so many years. This is the new area, as we call it, and as I was referring to at our last investor day in June, which adds additional cyclical opportunities to our consistent delivery of secular growth. Combining the two, we are now expecting organic growth rates of 7%-9% on average per annum from this year onwards through the current cycle. Organic growth will continue to be complemented by M&A with the same approach as previously.
In the third quarter, the situation on the European gas markets has continued to fuel the activities in commodities, but we are now also starting to see some negative effects of the market uncertainty in our European power product complex, which saw declining activity. Very encouraging to see is the continued strong secular net revenue growth, which amounted to 8% in the first nine months. This is really the result of the many initiatives to win new clients and market share, as well as introducing new products and services over the last couple of years. This also continues to be our top priority because the current strong cyclical tailwinds are not going to last forever. The development in 2022 also underscores the quality of our business portfolio. The strong results are not just driven by single businesses, but by double-digit net revenue growth in almost all business lines.
On the operating expense side, we are faced with an unusual combination of drivers that have resulted in higher cost growth compared to our initial guidance. Foreign exchange effects have gotten stronger throughout the year and are expected to affect us well into next year. But this item is overcompensated by the positive FX impact on our net revenue. While we don't see headline inflation numbers in our overall operating cost yet, the 4% we are currently looking at are certainly an elevated level compared to past periods. Finally, the favorable financial development and relative share price performance has resulted in an increase of the provisions for variable and share-based compensation. In total, net revenue in the first nine months increased by 23% and amounted to more than EUR 3.2 billion. The EBITDA increased by 24% to around EUR 1.9 billion.
Since the overall development in the first nine months so far exceeded our initial expectations for 2022, we are further increasing our guidance for the full year 2022. Our expectation now is to exceed EUR 4.1 billion of net revenue and EUR 2.3 billion of EBITDA. This might sound conservative to some of you, but you guys know us, we are all cautious management people and rather want to underpromise and overdeliver than the opposite. With that, let me now hand over to you, Gregor, to present the financial results in greater detail.
Thank you, Theodor.
On page two, we show the details of the results for the first nine months. All segments have contributed double-digit growth rates to the overall net revenue development. Three out of four segments even achieved organic net revenue growth rates of more than 20%. As part of the net revenue, the net interest income across the group has roughly tripled compared to the previous year. On the one hand, this was driven by much higher collateral levels in financial derivatives and especially commodities. On the other hand, the net interest income of security services has started to meaningfully benefit from higher U.S. and now also European interest rates. The results from financial investments saw a small negative contribution from our Fintech fund investment in the third quarter and amounted to EUR 29 million for the first nine months.
For the full year, we are now expecting a positive contribution, but might see a further small decline. In terms of operating costs in the first nine months on page 3, we saw several different drivers. First, M&A effects, which declined compared to half year one and amounted to 5%. They were still mainly driven by the ISS acquisition. Second, the FX effect from the stronger US dollar increased and resulted in a 3% operating expense increase. This was obviously also beneficial to the net revenue development, particularly in the data and analytics segment. This brings us to the more meaningful constant currency organic operating cost growth of 8%. On the one hand, it was driven by inflationary effects from building operations, general purchasing and higher staff costs.
On the other hand, we had to continue to increase the provisions for variable and share-based compensation in the light of the favorable financial development and relative share price performance. This brings me to the details of the third quarter results on page 4 of the presentation. While the secular growth remained at high levels and slightly above our expectation, cyclical tailwinds have accelerated in the third quarter compared to the first half of this year. The cyclical growth was driven in particular by market volatility and hedging needs of our clients in financial derivatives, commodities and FX products. In addition, and as expected, the net interest income has become a more material growth driver for security services. The M&A effect has again had minor impact in the third quarter since they were only driven by some of the smaller, more recent acquisitions.
The explanations I just provided on the operating cost development in the first nine months can generally also be applied to the third quarter. While the M&A impact on the operating cost has become smaller compared to previous quarters, the impact from variable and share-based compensation has increased. Furthermore, we saw an increase of project costs and some additional IT investments in cloud technology. The result from financial investments in the previous year included a positive valuation effect of EUR 32 million from the minority investment in Clarity AI as a result of the financing round with SoftBank. In the third quarter, depreciation and amortization included some one-off effects from software impairments, and the financial results included higher interest from our bonds outstanding, in particular from the hybrid bond that was issued in March, as well as some FX effects.
I am now turning to the quarterly results of the segments, starting with data and analytics on page 5. We saw good organic net revenue growth levels across all business lines in the segment. This was driven by the continuing trend towards ESG, new clients and higher market activity for the index licensing business. The other line, which is mainly the ISS Market Intelligence business, included some inorganic growth from the acquisition of Discovery Data. Most of our direct US dollar exposure is in the data and analytics segment from the ISS and Axioma subsidiaries. The constant currency net revenue growth in the third quarter was still very strong with 19%. The EBITDA in the previous year's quarter included the gain of around EUR 32 million from the revaluation of the stake in Clarity AI that I mentioned before.
Adjusted for this effect, the EBITDA has increased by 33%. Let me turn to slide 6 and the trading and clearing segment. The trading and clearing segment continued to benefit from higher volatility and increased client hedging needs. The financial derivatives business of Eurex was as strong as in the first quarter. This was driven by high growth in all product lines and in particular by the increased margin fees. They amounted to EUR 34 million in the third quarter. In commodities, we achieved another record quarter because of the increased trading and hedging needs of our clients in gas products and due to the higher margin fees. At the same time, the situation in European energy markets increasingly became a headwind for net revenue with power products in Europe. They declined by 11%.
In the cash equity business, we saw headwinds from elevated levels of retail participation last year, which has normalized this year. In addition, one of our peers has increased liquidity payments this year, which resulted in some market share declines for all incumbents in Europe. As a result of higher volatility, the demand for foreign exchange products was significantly higher compared to previous quarters, and we achieved our by far best quarter ever, with a net revenue increase of 33%. In the fund services segment on page 7, the continued onboarding of new clients more than offset the cyclical headwinds from the market performance, especially in equity products. In addition, we saw the inorganic contribution of the Kneip acquisition, which was closed at the end of March. In the operating expense base of the segment, we saw a few one-off effects in the quarter.
They're related to the integration of Kneip and the preparations for the carve-out of the fund service business from Clearstream. It's also encouraging to see that the momentum of new partnerships has continued. HSBC has chosen Deutsche Börse as its global partner for fund order holding, safekeeping, settlement, and distribution for a very meaningful fund portfolio. Our security services segment on slide 8 saw a significant acceleration of growth in the third quarter. Headwinds from equity market performance and lower retail participation were overcompensated by solid levels of fixed income issuance activity, plus the FX effect on assets under custody denominated in U.S. dollar and the collateral management business with the growth of more than 30%. In addition, the net interest income has increased more than six-fold compared to last year.
This was driven by much higher US interest rates and for the first time in more than a decade, increasing European interest rates. Furthermore, the cash balances have increased by roughly 30% compared to the previous year. The last page of today's presentation shows our guidance for 2022. We have already increased our guidance twice this year. However, these increases were rather qualitative than quantitative. Since the third quarter developed significantly above our even more recent expectations, we have now increased our net revenue guidance to more than EUR 4.1 billion and the EBITDA guidance to more than EUR 2.3 billion. Depending on the cyclical development in the fourth quarter, those numbers look conservative, but we want to be on the safe side.
Since most of the operating expense drivers we have seen in the first nine months are also expected to impact our cost base in the fourth quarter, we are currently expecting operating costs of slightly more than EUR 1.8 billion for the full year. This expectation is a result of the combination of the different operating cost drivers I've outlined before. We consider some of them to be more temporary in nature and would expect some easing of the cost pressure going into next year. This will also help us to address all sorts of potential net revenue scenarios next year against the tougher 2022 comparables. This concludes our presentation. We are now looking forward to your questions.
Ladies and gentlemen, if you would like to ask a question, please press nine and star on your telephone keypad. We kindly ask all participants to limit their questions to one per person. Please press nine and star now to state your question. The first question comes from Arnaud Giblat from BNP Paribas Exane. Over to you.
Good afternoon. My question's on interest income. Clearly we all understand how it works at Clearstream, but it's a bit more obscure at how an NII works at Eurex and ECC. I was wondering if you could spend a bit of time explaining the growth there. I mean, is it entirely coming from increased cash balances, or margining? How sustainable is that increase in margining? I suspect it's certainly linked to the volatility, but can you hold a higher level of margining for some time? Could you talk about the net interest margin? Is that linked to short-term rates? I mean, how does a NIM work for those businesses? Thank you.
Yeah. Thanks, Arnaud, for this question. Obviously, the net interest income is an important line item now in our P&L and gets even more important in the future. It's different in our Clearstream business compared to our clearing business. Starting with Clearstream.
Here, you have heard that the customer cash balances even increased to roughly EUR 18 billion. This interest income we achieve here with increased interest rates or Fed fund rate is 3%-3.25% and will most probably further increase over the next weeks and months. Here you can basically multiply it. Saying additional 1% on EUR 18 billion, it's another EUR 180 million NII at Clearstream. That's the concept here. With regard to the two clearing houses, so Eurex Clearing and ECC, here the model is different from a P&L perspective. Here we get roughly a fee-based income on the margins, right? The margin at Eurex increased to a level of EUR 130 billion-EUR 140 billion.
Now it's much higher compared to previous year due to increased volatility and due to the successfully increasing of our OTC interest rates for business. Here we have an increased basis, and the same is basically true for the clearing house ECC, so for our commodities business at EEX. Here we have seen in the past or one or two years ago, it was EUR 5 billion roughly margin requirement here and collateral we had available, and more than 90% is euro cash, basically. That increased now to a level of EUR 50 billion-60 billion, so it's ten times higher. Obviously here we get also some fee income. This is the concept and the question, how sustainable is that now?
On the one hand side, I would say at Clearstream, we expect as a market that continue to increase rates for the Fed and even for the ECB, at least for the next months. That will further strengthen our NII at Clearstream. On the other hand side, if rates continue to increase, there's a higher probability that our customer cash balances will decrease, and we will see. So far it did not decrease so far until end of September. From a logical perspective, it should continue to decrease as there's a high incentive for the treasuries and the banks to do efficient cash allocation. With regard to the margins at EEX and ECC, they won't drop on a short-term basis.
That's much more stable for at least the next months, right? I wouldn't say for the next years, but it's much more stable than potentially the customer cash balances could be a little bit more volatile.
Thank you very much.
The next question comes from Michael Werner from UBS.
Thank you very much. Thanks for the presentation, Gregor Pottmeyer and Theodor Weimer. Just a question, following up on the costs, in terms of the EUR 1.8 billion, you know, kind of targeted for this year. If we think about that, how much of that is kind of, you know, costs that are being brought forward from next year? And if you can just clarify, you know, just in terms of the last statements you made in your prepared remarks about, you know, how we should think about the cost base as we look out to 2023. I suspect, you know, the EUR 1.8 billion should allow you to still generate operating leverage next year. Is that correct?
Yeah. Thanks, Michael. I think the cost topic is an important topic. That's good that we can a little bit elaborate on that. I think this year is a very specific year with effects we hadn't even not planned for, right? We had planned for this M&A, right? As we were aware of that. That cost increase shouldn't be a surprise. The FX impact, 3%+, I think that's a little bit of a surprise. The good thing on a P&L perspective is that FX impact will be compensated by higher impact on the net revenue. At Xetra, stronger US dollar is positive for Deutsche Börse, that shouldn't be a concern at all for all of us.
We are more focused on what we say as operating organic cost calls on a constant portfolio basis, so on constant FX basis. That's roughly the 8% fee we have to talk about. Here we have two elements. The one is the inflation. That's roughly 4%. I think that's even good because the general inflation is 8%. You are aware of that. That's even below that level. It's more than we originally expected when we made up our plan. This component I would assume will continue to be there also in next year.
The other, let's say, 4% increase share-based payments and specifically bonus, right? That is due to our very successful performance in this year, and so we pay higher bonus than originally planned. This is obviously not sustainable, so having a much more tougher year next in 2023, most probably bonus could even go down compared to the plus 4%. Taking these four components, M&A, FX, inflation and compensation, just the inflation part will continue to happen next year. All the others could disappear. M&A, we will finally see, but it really will disappear. But the variable compensation could be even lower, so it would be a decrease in next year.
To cut a long story short, this 16% cost growth what we have seen here, in our guidance, we expect a similar growth in Q4. That's why we say it's slightly above EUR 1.8 billion. For 2023, we do not expect at all double-digit cost growth, so it will be clearly single digit, from today's perspective, where we just have to deal with this inflationary aspect. Obviously we are currently in the process of doing the budgeting and therefore we have some scenario planning and we are also able to deliver on a contingent cost base.
From my perspective overall, that exceptional development in 2022 from a cost perspective, 2023 will come back to a level you are used to see in the past.
If I may, if I may add, Michael, Theodor here, right? Gregor is saying now from a technical point of view, what happened this year, what can you expect next year? I can fully underscore what Gregor said. From a strategic point of view, I always said, and I stick to this statement here today again, but I always said the cost growth rate should not be higher than the secular growth of the company. As Gregor pointed out in his presentation, we are growing 8% secularly this year, and our cost rate, organic cost rate increases exactly 8%, right? Next year, there was a question what you can expect is, if the organic growth rate is in the range of 5, 6% or whatever, or 7%, right?
You take it as a commitment of the CFO and CEO that we say we stick to this commitment, right? Costs shall not overrun taking the FX aside and the M&A aside, shall not overrun organic growth rates on the revenue side, secular growth rates on the revenue side.
Thank you very much, guys. Appreciate it.
The next question comes from Andrew Coombs from Citigroup.
Good afternoon. Thank you for taking my questions. Just firstly, just to come back to the costs. You talked about some temporary costs that are dropping away next year. Can you just elaborate and quantify what those temporary costs are? Second question, when I look at your Eurex revenue per contract, that seems to have surprised positively. Perhaps you could talk about some of the pricing dynamics there, whether that was change in pricing or whether that was just mix effect, between the different asset classes and contracts. Thank you.
Yeah, Andrew, thanks for the question. Yes, with regard to the temporary development of the cost, so I already elaborated when I answered Michael's question a little bit on that, but to be more precise here. They are basically, as said, easily four times 4% cost increase. The variable compensation is definitely of temporary nature or is related to this more than 20% top line and bottom line growth. No one expects the same development next year having that higher starting point. Most probably, the variable compensation will go down compared to this year's development.
Out of this +4% or +5%, you will see minus something most probably, right? That's why we say that's definitely temporary in nature. Then the FX is temporary in nature because now if you have as a starting point from a US dollar perspective as an average slightly above parity, yes, it could even go down a little bit further, but the big jump you have seen now and therefore the FX impact, if it does not completely disappear, is much smaller compared to this year. M&A, that depends whether we are doing additional M&A, yes or no. As a conclusion, only the inflationary impact will continue to happen next year.
With regard to your second question, Eurex revenue per contract, so that's obviously just depending on the product mix, right? If there are traded more products where we have higher revenue levels, then that contributes obviously positive if you do an average calculation on Eurex. A substantial change of the revenue per contract on product level does not happen.
Okay. Just to cross point, 'cause I think what you're referring to as temporary is some of the temporary growth factors rather than the temporary absolute cost contribution. Because unless FX rates change or unless you were to divest one of the businesses you've acquired, that's obviously here to stay going into next year. Perhaps I can push you on that variable compensation component. Exactly how is that calibrated and calculated, as a percentage of your revenue and EBITDA growth? How much of your overall personnel expenses does that account for?
Overall, bonuses are at the level of 10% of our operating expenses. The level is definitely above the level we have planned for, right? If we exceed our plans by more than 20%, then obviously, the bonus level is much higher. Now it depends on the variability of the salary. Obviously, the highest variability you see on the executive and on the management board level, and the lowest you see on the staff level.
On average, there's obviously a fluctuation of, let's say, 20%-30% out of this number, whether we are very successful or whether we are in line with our plan or even if we are below our plan.
That's helpful. Thank you very much.
Next up is Benjamin Goy from Deutsche Bank.
Yes. Hi, and good afternoon. A question on EEX and the European Commodity Clearing in particular. Maybe you can speak a bit more about the stress you see in the system. Are we past the peak after the government supports or various government support measures? Maybe a bit on the short term, and then what does it mean for medium to long term? Do you think this issue of counterparty risk is a real accelerator for your market share or more a steady, continuously structural story of taking market share from OTC players? Thank you.
Okay. What we currently see is that we passed the peak, right? We have seen in the peak times and the margin, the collateral I think is the best indicator for that. It was in the range of EUR 100 billion. Today it's more in the range of EUR 50 billion-60 billion. You see that. The reason for that is that we have seen over the last weeks that gas and power prices decreased significantly, right? People think now that we are able to manage the next winter at least, right? That's why the prices are going down, and that's obviously good.
That's the stress out of the system is decreasing here and hopefully that will continue to happen. I think for us, and we are proud that we are really able to manage even in that stress situation, our EEX exchange and our clearing house here at EEX. We were able to work together with all the market participants, and the market participants were able to deliver the necessary collaterals. Even with the German government and even on the European level, we are in close discussion, and they are strongly supportive to help that markets are open and that we have a clear market-led solution here.
Even if you see some discussion around pricing cap or and so on, the basic logic still is that, if government or European Commission would like to see a cap, that this will be compensated by the government, so the data between the market price and the cap price. That helps us to continue to help here the market solutions here. With regard to the medium- to long-term aspect, currently we see due to that stress in the system that our market share even increased. In the European power derivatives market, it's currently 58%. A year ago it was 40 or 40 plus or something like that.
It's now 58%. What we also see is that trading volume is going down. I told you that the power derivatives revenue in Q3 decreased, so just the trading fees by 11%. It's going down. The reason for that is, if you have to put in a lot of collateral and margins obviously, your flexibility to trade a lot is certainly limited at that point of time. What we expect for the mid- to long-term view is that this will recalibrate. We expect that our margins and collateral requirements will go down.
That the trading activity will continue to increase and the secular growth drivers from our perspective are all intact. With regard to renewables, and carbon certificates and hydrogen markets and so on. That's all positive for us. For the mid to long term we expect this will come back to a normal situation then trading activity will increase, margin will go down, the fee income on the margin will go down and overall we think we are well prepared, without this extraordinary impact today to grow double digit also for the next year.
Theodor, yeah. Thank you.
The next question comes from Kyle Voigt, from KBW.
Hi, good morning. Obviously there's very strong revenue growth at 30% in the quarter. Just wondering, could you more specifically provide the FX in the third quarter and how much FX added to the revenue growth? You also disclosed 8% secular revenue growth for the third quarter specifically in your financial statement. Can you clarify whether any of that secular growth includes an FX benefit or is that purely constant currency as well?
Yeah. The second part is quite clear. Secular growth is without FX impact. The FX impact we include in the cyclical growth. Your first question, what is the FX impact on our revenues? On our cost side it's roughly 3% and on our revenue it's in the range of 1%-2% so 1.5, something like that.
Okay. That was for the third quarter specifically, Gregor?
Yeah. It's specifically also true for the third quarter.
Okay, thank you.
The next question comes from Bruce Hamilton from Morgan Stanley.
Hi, thanks for taking my question and thanks for the presentation. I guess just thinking about M&A activity. Clearly looking into 2023 it looks like after a banner year this year it's gonna be a little bit more challenging potentially from a cyclical standpoint. Does that mean, does that likely accelerate some of your M&A plans? I mean obviously there's some notable sort of valuation decreases in the, in the fund platform space, for example. Perhaps if you could outline where you think looks kind of most interesting on this sort of non-organic side and then just remind us where you are in terms of your sort of current balance sheet leverage and therefore capacity to do deals, from sort of balance sheet as of today or year end. Thank you.
Thank you Bruce. Let me take the first one and the capacity shall be taken in by Gregor as always. Let me share with you a couple of observations which are certainly not new to the majority of you on the M&A side. It's very clear the M&A market has changed fundamentally over the last 12 months, not only in the tech side but particularly in the tech data side where we are particularly interested in. Right, point number 1 everybody understands that the interest rates have increased the capital cost, right? Therefore per se M&A you have to be even more selective. Point number 3 from my point of view some 12 months ago even less, right? The market, M&A market has been a pure sellers market, right?
The sellers basically said I'm willing to sell if, and then they demanded and requested high numbers. This has also fundamentally changed. We are now seeing clearly a buyer's market and, the fact that we are, potentially a very sought after, strategic buyer we receive lots of inbound calls. That's point number four from my point of view you need to differentiate between private and public market developments. On the public market side valuations as you said Bruce have come down significantly already. On the private side I don't know what happens but as you can imagine some of the holders of the private, side, private asset side they still dream of, the good old days some, 8 months-18 months ago.
They have not, some of them might not have realized that valuations have changed, that the market has fundamentally changed. Therefore what we currently see is lots of opportunities right? I need to state also very clearly we can become and we are even more selective given the situation that we are and you listen to what we have said today we can look back and also look forward to the next quarter. We have pretty strong results, financial results. Nobody right is forcing us to be very aggressive on the way and last but not least with regards to certain areas you were mentioning hinting in a certain direction of course we do not comment on any specific M&A targets but you can be assured we are very reasonable. We are not under pressure.
We are highly selective and determined to do, if we do deals we do good deals and if you simply look at what happened on the data side especially on the ISS side that's a big positive, right? Of what we can report here for the year 2022.
Your second question with regard to the balance sheet, obviously, you are aware that S&P just confirmed our AA rating because we are able to come back to the agreed thresholds at year end without doing further M&A so that was positively confirmed also from S&P. Here you can see that we are back in a situation to have financial flexibility because we are very cash generative every year, more than EUR 1.5 billion cash we generate every year. Funding is not a limitation or refinancing is not a limitation for our M&A activity.
We have enough headroom here available from a cash perspective, from an additional debt perspective or from even some equity perspective where we have treasury shares and authorization. Also from structuring an M&A deal, there's not always a need that we need additional cash. We can also bring in some assets, doing some joint venture or partnerships, as we have done for instance with Qontigo in our stocks business. Overall from a funding refinancing perspective, there are no limitations for M&A deals.
That's very helpful. Thank you.
The next question comes from Philip Middleton from Bank of America.
Yeah. Once again, thank you very much for the presentation today. Just to round out the cost discussion, I entirely understand how you're segregating the costs between some things which are obviously gonna drop away, like the variable comp, and some things which have happened but are outside your control, the inflation. Are you saying that there's a cap at the rate of inflation, which is your organic growth or because you used to talk about operating leverage sort of being built into the model. Is that still the case, or how should we actually think about operating leverage in the current environment?
Yeah. Thanks, Philip, for specifically asking that operating leverage topic. Overall, we show on our existing portfolio strong operating leverage, right? If you take, for instance, our Eurex business or even our trading and clearing business and comparing the EBITDA margin last year compared with this year, then you see a nice increase. For the existing business, we are able to show operating leverage and the old formula for whether we trade 15 or 10 million contracts a day, there are no additional costs with regard to that. We are able to show that even in some times with a little bit more in inflation.
That's a clear commitment of us as a management team. When you do this operating leverage on a group level, there are additional aspects why we are not able to show an increased EBITDA margin. First is that we currently doing M&A in an area where we achieve, so for instance, with regard to ISS, in the range of EBITDA margin of 30%-35%. It's clearly above the 58% or so what you see as an average. This dilutes basically our M&A margin. Secondly, last year we had a strong at equity result of some EUR 85 million, and this year so far it's roughly EUR 30 million. Here we also lose some on a group level perspective.
From operational perspective, we are strongly committed to continue to show operating leverage in our existing business.
The next question comes from Tobias Lukesch from Kepler Cheuvreux.
Yes. Thank you very much for taking my question. One on the secular growth, the 8% you pointed out in Q3. Could you elaborate a bit on it again, maybe also allocating a share to Eurex especially? I mean, overall, you guided for kind of 5%. You demonstrated that over the past 3 years year to date, you achieved 6%. How should we think about the 8% and how much is really, you know, coming from Eurex and what the other growth segments that we're talking about? Thank you.
Eurex is also in the range of 8%, unlike like the average on group level. How do we calibrate the secular growth? In principle, we consider secular growth if we are able to increase our market shares, if we win new market segments, if we build up new products, and here we don't, with regard to new products, we don't say just a new product out of this year because the product cycle is, let's say, 5 years-7 years.
We go back five to seven years and say, "What are the new products here?" We consider still, for instance, at Eurex, to give you some examples, that we say our derivatives on MSCI level is just that's a product or Total Return Futures we define as a new product or still dividend and volatility derivatives. Just to give you a few examples. All the revenue increase we are able to achieve in this new product category. This we show as a secular growth. That's basically true for all the other segments. We have here a clear distinction.
What we say is that's basically more a sustainable level. This is 8% and then we say this 12% on a cyclical basis. That's that is just specifically linked to the specific situation this year with this higher volatility, and that depends basically what we'll see in the next year. The secular growth is defined as a sustainable growth rate also for the future.
Given the fact that you were also emphasizing new clients and also market share gains in the various segments, is it fair to assume that this kind of 8% secular growth is something you're not worried about over the next quarters or could even be accelerated? I mean, what is your kind of view on that development?
Yeah. You are aware that on our Investor Day end of June, we guided at least 5% secular growth rate, right? And that's what we definitely targeting for and what we are committed to deliver also for the next year. This 8% is above our average year and my guess would be even in Q4, we would have good chances to deliver this 8%. For the next 3 years-5 years, things like that. Our commitment is to achieve at least 5% secular growth.
Very clear. Thank you.
The next question comes from Johannes Thormann from HSBC.
Good afternoon, Johannes Thormann. Some follow-up questions, please. First of all, on the NII dynamic, what do you think as you have given a broad range between EUR 5 billion-EUR 50 billion margin calls, what is a normalized collateral or margin level in energy business? At what point in time in Clearstream do you think you have to share upcoming rate hikes with the customers? Regarding the M&A pipeline or your thoughts on the change in the market, just would be great to know if the dynamic have hindered talks and postponed talks, or have they actually intensified discussions? Thank you.
I'll start with the first question and Theodor will take the M&A question. With regard to NII, what is the right level at our clearing house, commodity clearing house, ECC? It's difficult to judge, I think. Yes, I told you two years ago it was EUR 5 billion, and now it's EUR 50 billion-60 billion. I don't think that it will come back to the EUR 5 billion, right? It's difficult to guess whether for the next 3 y ears-5 years, right, what is the right number here. I think it will be a double-digit billion EUR amount because we continue to grow. It's really difficult to judge.
On a short-term basis, it won't go down sharply to EUR 5 billion. That's what we do not expect and the situation in gas and power is obviously not solved, even if it's currently a little bit relaxed. It's by far not solved, and you will see high volatility also in 2023. I don't think that margins will go significantly down. Your second question with regard to sharing NII with us at Clearstream, that we will see, right? The higher the amounts are we will achieve, the more we have also to consider to talk to our clients.
So far, up to now, we do not share, but at a certain point in time, I think, there will be the need also to share.
Johannes Thormann on the M&A side, whether it's an answer, whether the overall environment is hindering discussions, I can be very smart and refer to the M&A market globally as such, right? It's pretty clear M&A shrunk significantly. I would say, without saying anything beyond what I'm saying, right, on our side it's rather such that, the level of inbound calls, the level of ideas which we are getting is rather enhanced.
Okay, thank you.
Next up is Ian White from Autonomous Research.
Hi. Thanks for doing the presentation. Just a couple of follow-ups from my side, please. First up, I think earlier you said there is a sort of a one-off software impairment that's impacting depreciation and amortization this quarter. Could you just call that out for us, please, in terms of how much that was? Sorry if I've missed it in the presentation or the release, but that would be helpful. Just secondly, on M&A, I think you said on a call earlier this year, you were perhaps less focused on fund services M&A due to sort of strong organic progression there. Am I right to take from your earlier remarks on this call that you might be more open to inorganic growth in fund services now?
How does the carve-out of the fund services business from Clearstream help to enable M&A, if at all, please? Thank you.
The first question is very easy. This one-off software is roughly EUR 5 million. The second question with regard to M&A, I think you are aware of this carve-out in our investment fund service business. That's continuing to be right on track, right? We are able to deliver what we want to achieve. 2023 is the year where we are able to achieve our targets, and therefore we would be also prepared to do partnerships in that way when we want to.
It's from an M&A perspective, it's difficult to judge what customers would like to do because customers have always three opportunities to work together with Deutsche Börse investment fund services. They can easily connect to our platform. They can outsource. These two elements we show as an organic growth. Thirdly, they can sell the business, right? With regard to HSBC, that was basically an outsourcing contract, right? Very successful, have won that. With regard to Kneip, there was a decision that we wouldn't want to buy the business or and the Kneip as an owner wanted to sell.
That's why we say in principle, fund services is of high interest to Deutsche Börse, whether it's organic, inorganic partner approach. Therefore we are open and flexible and with regard to preparing all until the end and fulfilling that in 2023, this carve out for this fund service business, we are even more flexible to do partnerships.
Thank you.
Now we're coming to the next question, and it comes from Haley Tam from Credit Suisse.
Hi there. Thank you very much for the presentation and for taking my question. Quick follow-up on costs, if I may, and then a question about the cash equities market. In terms of cost, can I just pick up, I think you said earlier that you had a 4% impact of inflation in the nine months so far, and you noted that was lower than the current rate of inflation. We should interpret this to mean that you are expecting there to be further inflationary impact in your organic cost growth next year, and that that will be within the parameters when you're thinking about the comparison to secular revenue growth. I just wanted to check on that, and any comments you might have there on, in terms of wage inflation in particular, I guess, would be particularly interesting to me.
In terms of the cash equities market, you did note there that you had seen some loss of market share, as had all other market participants, due to a competitor stepping up their liquidity payments. I just wondered whether you consider that a one-off shift in market share, or whether you are actually considering any plans to match those payments to win back share. Thank you very much.
Yes. With regard to your first question of cost and this year, 4% in inflation. My comment that inflation will not disappear is not to understand in the way that it will increase next year, right? It won't go down. We all do not know what are the final outcome and you specifically asked with regard to the wage increase. That's that we are in the process and just started that process to talk about with our works council and so on. No decisions are made. In principle, this 4% inflation most probably will not increase next year, but you will see a comparable number also in 2023.
Whether these are triggered by one-off payments to people or a regular increase, so that we will see how the final decisions will end, but I don't expect that the inflation will increase, at least not the 4% overall on personal costs, non-personnel costs and on average for Deutsche Börse across all locations. The second question with regard to the cash equity business. Yes, there's one aggressive competitor currently underway in Europe, and they make attractive liquidity programs, so they invest basically to win market shares. You can be sure that we obviously monitor that situation, that we are not happy with that development. We are currently in the process to implement counteractive measures to stop that.
You will see that within the next weeks and months.
Thank you. The cost answer was very clear. If I could be cheeky, just in terms of those counteractive measures, we should keep a close eye on your revenue yield then. Would that be the right interpretation?
It depends how the countermeasures look like, right? Is it about processes, functionalities? Is it about the market model? Is it about a temporary liquidity program? It really depends on the single concrete countermeasures, but you can be sure that we won't accept that situation.
Very clear. Thank you.
The follow-up question comes from Michael Werner from UBS.
Thank you. I appreciate the follow-up. You guys have been highlighting you expect about 1% tailwinds to revenues coming from pricing power. I was just wondering if your thinking about that has changed. You know that was in a low inflation environment. Now that inflation has picked up, have you changed your thoughts about pricing as we look at over the next couple of years? Thank you.
We cannot hear you right now.
Oh, so sorry. I was muted, so sorry.
No. No tricks here. From a pricing perspective, the impacts you currently see on the revenue this year and next year, the pricing impact is more than 1% currently. Also we use the opportunity to increase prices, but we don't do it always straightforward, let's say on trading fees. We talk about volume rebates, rebate schemes and there are or introducing service fees and so on. There are different ways how to do that, but the current impact is higher than the 1% you have seen in the past. Looking forward medium to long term, our focus is still unchanged. Our focus is having attractive liquidity platform, having the lowest spread as possible being benchmarked.
Our focus is on winning market shares, winning liquidity and not using the pricing power. Even if the pricing mechanism is currently higher than the 1% on a mid- to long-term basis, I would expect to keep that 1% limit.
Thanks, Gregor.
All right. This was the last question for today. Thank you very much for your participation. If there's anything else, then please feel free to reach out and have a good day.