Good morning ladies and gentlemen, and to those viewing via the webcast, a very warm welcome to SGX Group's FY 2025 full year results briefing. We will begin today's session with a presentation of our financial results by our CFO, Mr. Daniel Koh. Following that, our CEO, Mr. Loh Boon Chye, will share the business updates. We will conclude with a Q& A session later on with SGX Senior Management. Please wait for the microphone to reach you and do identify yourself before you ask any questions. It is now my pleasure to invite Daniel up on stage to present the financial results. Dan, please.
Good morning everyone and thank you for joining us today. It is a pleasure to share with you SGX Group's FY 2025 financial highlights of what has been a remarkable year of growth and momentum. As we celebrate our 25th anniversary this year, I'm glad to present a very strong set of results. Our multi-asset strategy has enabled us to achieve the highest revenue and net profit since listing. We delivered strong and sustained business growth across all operating segments, reinforcing SGX's position as a trusted multi-asset platform for clients raising capital, seeking investment opportunities, and managing risks. Revenues of equities cash effectively o ur stock exchange surged by 19%, driven by robust investor interest and increased investment flows. Our derivatives franchise achieved robust growth with the highest ever annual volumes in FX, commodities, and China A50 index futures.
One in five derivative contracts is now traded T+1 session, which is a clear testament to our global appeal and almost round-the-clock accessibility. SGX FX, which is our OTC FX business, delivered solid performance with the year-on-year ADV growth outpacing peer exchanges. We continue to drive growth through disciplined capital allocation. The Board has proposed raising the final quarterly dividend to $0.105 per share, up 17% year-on-year. This leads to a 9% increase in our FY 2025 total dividend, up $0.03 to $0.375 per share. Furthermore, given our confidence in the group's long-term sustained prospects, the Board proposed a steady dividend increase of $0.0025 every quarter from FY 2026 to FY 2028, which I will elaborate on subsequently. First, let's look at some highlights of FY 2025. Group net revenue increased by 11.7% to $1,298 million, driven by broad-based growth across all operating segments.
Group expenses on an adjusted basis increased by 1.6%, while adjusted group NPAT has increased 15.9% to $610 million. Our margins also grew, with adjusted operating profit margin and adjusted NPAT margin improving by 4.2 points and 1.7 points respectively. As mentioned earlier, top-line growth was broad-based with highest contributions from Cash Equities, Derivatives, and SGX FX. Our Equities Cash segment delivered impressive growth, fueled by strong investor enthusiasm as the STI posted a 19% one-year return, outperforming other regional benchmark indices. Net revenue increased by $62 million or 19%, and SDAV increased 26.5% to $1.34 billion, the highest in four years with year-on-year growth outperforming our ASEAN peers. This performance was supported by increased investment flows from both institutional and retail investors into all segments, including index stocks, REITs, and small and mid- caps.
Our derivatives franchise achieved several record volumes across currencies, commodities, and equities, driven by our focused efforts in expanding client coverage and deepening liquidity. SGX remains the primary venue for global investors seeking exposure across Asia's dynamic markets. Total net revenue from our derivatives suite grew $44 million or 9%, driven by 17.2% growth in derivatives daily average volume across all asset classes. The growth was also supported by our efforts in expanding client participation T+1 session and driving cross selling. Our SGX FX business continued its strong momentum. Net revenue grew $23 million or 25%, with average daily volumes increasing by 28% to $143 billion. This was fueled by our continued efforts to expand and deepen our client base across both buy side and sell side segments. The business contributed around 5% to group EBITDA for the full year compared to 3% a year ago o n improved operating leverage, let me now elaborate on the group's net revenue performance across our four operating segments. Our FICC segment grew $25 million or 8.6% and accounted for 25% of total revenue. I had touched on OTC FX earlier for the exchange traded currency segment. We remain as Asia's largest regulated currency futures exchange by volume and number of product offerings. These contracts hit record monthly volumes several times during the financial year, reflecting strong market demand and the effectiveness of our platform supporting clients in managing their currency risk. For the commodities segment, the increase in revenue was diversified across iron ore, rubber, and petrochemical contracts. The equities cash revenue growth was driven by the higher SDAV mentioned earlier and higher average clearing fees. The segment grew $62 million and contributed 30% to our total revenue.
Equity derivatives revenue increased by $42 million or 13.8%, driven mainly by the volume increase in our flagship FTSE China A50 and GIFT Nifty contracts. This segment contributed 27% of total revenue, platform, and others. Revenue increased by $7 million or 3% primarily due to higher colocation sales and repricing of data and connectivity services. This segment accounted for 18% of total revenue. Moving to adjusted expenses, our focused cost discipline with 1.6% increase year on year or $9 million will enable greater flexibility for investments in FY 2026. Staff costs increased by $9 million or 3% primarily due to higher variable bonus provision in line with higher profitability. Technology expenses, depreciation, amortization, and others were comparable year- on- year. Adjusted expenses are $12 million lower than reported expenses because this excludes the amortization of intangible assets and one-time fees.
Adjusted earnings reflect our underlying core performance by excluding non-cash adjustments and one-off items which I will further elaborate upon. First is a net fair value gain of $48 million mainly from our investment in a private equity fund managed by Seven Ridge which holds the company Trading Technologies. The fund entered into a binding agreement to sell TT on 24th July 2025. The transaction is expected to complete upon fulfillment of customers' conditions required. Our investment is recorded at fair value. Second, we took an $8 million impairment of purchased intangibles and the associated companies due to underperformance given their non-cash nature. These are removed here for the purpose of adjusted earnings. Third, we recognize a one-off gain of $8 million on the sale of our financial investment in the Philippines Dealing S ystem which we had already announced in the first half 2025 results.
Finally, we had a further adjustment of $10 million from the same items I mentioned in the adjusted expenses. Our balance sheet is robust, positioning us well to pursue future growth opportunities and deliver returns to shareholders. Gross debt decreased $40 million due to firstly U.S. dollar bond revaluation as the U.S. dollar depreciated and secondly lower lease liabilities. Our leverage ratio remains at a low level of 0.8 x and interest coverage ratio decreased to 54 x from 77 x as explained in our first half results on the higher interest expense upon refinancing. Our strong balance sheet is a testament to our financial discipline and resilient operating model. Let me now focus on our capital management principles, how we strategically deploy resources to fuel organic growth, future-proof our business, and deliver sustainable shareholder returns.
Our top priority remains driving top line organic growth with a medium term revenue growth target of 6%- 8%. We are actively reinvesting in product innovation, sales capabilities, and technology to improve our clients' trading experiences and expand our market reach. In line with this growth ambition, FY 2026 expenses are expected to rise by 4%- 6%, consistent with our guidance for low to mid single digit percent increase over the medium term. Beyond organic growth, we will invest strategically to future proof our business and sharpen our competitive edge through modernizing our technology infrastructure for scalability, resilience, and innovation. As previously guided, CapEx investment will be capped at 7% of operating revenue over a cycle. In FY 2026, we expect to invest $90 million- $95 million in CapEx spending and M&A. We continue to explore value accretive bolt-on acquisitions that complement SGX Group's core strengths.
Last but not least, delivering sustainable and growing returns to shareholders remains a cornerstone of our capital management approach. We are committed to total shareholder return while delivering sustainable dividend growth. Given our strong performance this year and reflecting positive growth momentum, the Board is pleased to propose an increase in dividends this year and a continued step up in the next three years. The Board has proposed raising the final quarter's dividend by $0.015 to $0.105 per share, subject to shareholder approval at the AGM. This marks a 16.7% annualized increase, reflecting the strong earnings growth this year. Total dividends for FY 2025 will be $0.375 per share, up 8.7% from FY 2024. We are also pleased to announce a steady dividend increase of $0.0025 every quarter from FY 2026 to FY 2028, subject to earnings growth.
The chart on the right illustrates how we will continue rewarding shareholders who will enjoy the $0.07 increase and then $0.04 increase in the following years. Our revised dividend proposal underscores our commitment to value creation and disciplined financial stewardship. Thank you for your continued trust and support. With that, let me now hand over to Boon Chye, our CEO, who will deliver the strategic business updates. Thank you.
Good morning everyone. Thank you for joining us this morning. FY 2025 was a defining year for SGX Group, marked by our strongest performance on record. We achieved our highest ever revenue and net profit. We saw broad based growth across all operating segments. This performance was driven by disciplined execution of our multi- asset strategy, deeper client engagement, and targeted innovation across our product shelf. Our results reflect not just operational performance but the increasing relevance and resilience of our platform. They underscore our growing global connectivity and reinforce our position as Asia's trusted international Multi- Asset Exchange. Let me begin with some highlights from the year. A key driver of our success was our responsiveness in helping global clients navigate a dynamic operating environment.
As trade tariffs and geopolitical changes reshape investment flows, our clients turn to our highly liquid solutions to manage volatility and seize opportunities across Asia. Against this backdrop, our derivatives daily average volume, or DDAV, grew 17% year- on- year to 1.3 million contracts. Volumes traded during T+1 session grew at an even faster pace of 36%, reflecting the increasing usage of our products by global participants. Over the past two T+1 volumes have grown at a CAGR of 23%, underscoring our role as a round the clock liquidity hub for global investors. The continued growth T+1 activity reflects our active engagement with the broader client base in the West and beyond Asia. Through our conversations with clients, it was clear that they needed to respond swiftly to global market developments and manage risks more effectively.
To support this need, we enhanced trading continuity and intraday liquidity by narrowing the T+1 sessions for equity derivatives. As a result, our clients now benefit from 15 more minutes of continuous T+1 session, a meaningful enhancement especially in volatile market conditions. Our client centric approach is delivering results. This has been instrumental in broadening product adoption across our multi asset suite. Moving away from the supply side of our derivative suite, let me now give some highlights on the demand side. In FY 2025, through effective client engagement, 6% of our direct trading accounts added at least one more asset class to their portfolio, a sign of growing confidence in our offerings.
This growth highlights the tangible value clients gained from trading multiple products with us, supported by platform-wide margin offsets and capital efficiencies, which help them optimize capital and diversify seamlessly on a single platform. Our cross-selling efforts have resonated strongly with clients who value synergies across asset classes. This is especially evident in our flagship China and India product suites, as investors seek broader exposure to Asia's largest emerging markets. We intensified our push on China-themed products, leading to increased adoption of our CNH and iron ore products alongside our A50 product. Similarly, adoption of our India suite has strengthened, with more clients trading both our GIFT Nifty and Indian rupee contracts. In FY 2025, trading volumes from both the U.S. and Asia rose meaningfully. This reflects not just macro capital flow trends but also the strength of our global distribution and client relationships.
Our client engagement efforts have also been successful in the OTC FX business, where our global reach has expanded to 12 cities and over 200 institutional clients. With increased client adoption and participation, coupled with new product development, average daily volumes for OTC FX rose 28% to $143 billion, the fastest year-on-year growth amongst peer exchanges. SGX FX is now amongst the top three exchange-backed OTC FX venues, a significant achievement in a relatively short span of time. As a result, OTC FX net revenue rose 25%, whilst its contribution to Group EBITDA increased from 3% to 5%, reflecting improved operating leverage while staying ahead of the curve by delivering unique access to multi-asset liquidity, advanced trading workflows, and proprietary data and analytics tools for institutional FX clients. The spirit of product innovation is central to our strategy.
Across our businesses, we are focused on expanding our products with targeted solutions that capture new opportunities in derivatives. Our latest addition was the launch of the Brazilian Real Futures in partnership with B3, marking our first emerging market currency futures outside of Asia. The product has seen healthy traction. In the first month of launch, we hit a peak of 38,000 lots traded in a single day. With competitive spreads, we hold the majority of the market share during Asian hours. The Brazilian Real Futures provide investors with efficient exposure to commodity-linked strategies. The product also unlocks cross-selling opportunities via the Brazil-China trade corridor and uniquely addresses the liquidity gap for investors in Asia and Europe during Brazilian aftermarket hours. We also expanded our Pan Asia Index suite with the launch of the Micro FTSE Taiwan Index Futures contract.
This was designed for investors seeking more precise exposure and cost-efficient access to Taiwan's equity market, a market that has seen heightened activity on the back of structural demand for AI and digitalization. While it is still early days, this launch reflects our responsiveness to emerging investor needs for more granular thematic access points. We have seen an uptick in volume with June average daily volumes hitting almost 2,000 lots and a single-day high of over 10,000 lots. Lastly, turning to cash equities, another segment that performed strongly in FY 2025, cash equities contributed 45% of our overall revenue growth this year. SDAV rose 27% year- on- year to $1.34 billion, the highest in four years, outpacing our regional peers.
Through our efforts to deepen market participation and the tailwinds from the MAS Equity Market Review Group to boost vibrancy, we started to see a significant improvement in stock market liquidity and volumes not just in the index stocks but also in the small and mid- caps. At the same time, we have been curating a diverse product shelf that enables investors to diversify their portfolios across asset classes, geographies, and themes. For example, we added more names to our Singapore Depository Receipts suite, enabling investors to implement varied strategies and achieve portfolio diversification across the region. We've also expanded our ETF suite to help investors tap into different opportunity sets in Asia. Overall, our ETF market demonstrated strong growth with AUM crossing $14 billion for the first time, a 32% year- on- year increase.
Turnover rose 47%, reflecting sustained investor interest and the growing adoption of ETFs as the vehicle for regional diversification. These developments highlight our commitment to innovation and our ability to respond to evolving needs of investors across Asia. Our multi-asset strategy, shaped and sharpened over the years, remains a key pillar of our growth. It has powered our growth and will sustain our medium-term momentum. We enter FY 2026 with readiness and a clear growth agenda. Our strategy is anchored on our resilient multi-asset business model, which has proven to capture growth opportunities across market cycles. While market conditions may stabilize following the earlier economic uncertainty and volatility, capital flows into Asia are likely to remain strong, and we are well positioned to capitalize on this across regions and products. Let me unpack how we intend to deliver on our medium-term revenue guidance of 6%- 8% CAGR, excluding treasury income.
First, we'll build on the upward trajectory of our OTC FX and derivatives business while on track to achieve low to mid-teens percentage growth in the OTC FX business, with a middle to high single-digit percentage to group EBITDA contribution. This growth will be driven by enhancing technological functionalities, developing new products, and expanding our proprietary trading algorithms and strategies across multi third-party platforms to strengthen our order management capabilities. With our focus on product innovation, sales capabilities, and technological enhancement, we are in a strong position to increase platform adoption across both buy and sell side clients. Second, we will strengthen the network effect of our core derivatives business. The breadth and depth of our ecosystem, along with the cross-asset synergies of our offerings, allow us to scale efficiently through client acquisition and distribution.
We will strategically expand our product shelf by advancing our China and India corridors, broadening access across ASEAN 2 and also other emerging markets. Additionally, we'll continue to pioneer new asset classes to solidify our position globally. Third, we are accelerating the momentum in our cash equity business even as our STI hits new highs. We are deepening our product shelf with more innovative products, including exploring the development of new categories of structured products. Our IPO pipeline is also at its strongest in years. On top of this momentum, the MAS Equity Market Review Group serves as a powerful tailwind and catalyst. The renewed focus on Singapore equities has been positive. As the review group initiatives are progressively rolled out, we look forward to the measures laying a stronger foundation for our stock market to grow sustainably.
Looking ahead, we will continue to build out a high-quality multi-asset product shelf, identifying opportunities across asset classes, geographies, and teams. With a focused sales strategy and targeted client acquisition efforts extending beyond Asia, we are well positioned to deepen client partnerships and grow our global footprint. Finally, to complement our organic growth, we will explore opportunistic investments including bolt-on acquisitions that are strategically aligned with and value accretive to the group. For our growth to be sustainable, we are concurrently strengthening our platforms through operational excellence to ensure resilience and reliability, scalable technology to support growth for ourselves and our clients, and advanced data and analytics to develop value-added services. Overall, these investments will create a future-ready infrastructure to support our multi-asset global expansion. Even as we actively invest to drive sustainable growth, we will manage our expenses with discipline.
We are confident of our ability to deliver exceptional and long-term value to our shareholders. Like Dan mentioned, we propose to steadily increase dividends by $0.0025 every quarter from FY 2020 to FY 2028 subject to earnings. This reflects our commitment in delivering sustained earnings through advancing our multi-asset strategy. In closing, FY 2025 was a milestone year for SGX Group. Our multi-asset strategy is delivering and the foundation is strong for the next phase of growth. We will grow with discipline, innovate with purpose, and execute with clarity. Always focus on delivering long-term value to our clients, shareholders, and the broader financial ecosystem. Thank you very much. My colleagues and I will now take questions both to our guests in person here and those online. Thank you. Yes, Nick.
Thank you very much. Two questions for me. The first is just on your dividend, and I think investors will appreciate the clarity on the trajectory there. You talk about it being subject to e arnings, I just wonder if you could give us a little bit more clarity on that. Is there an upper range of what you would accept in terms of dividend payout ratio?
Do you think about it in terms o f earnings, or do you think about i n terms of cash flow per share? Just trying to get a sense o f what would need to happen to e arnings do not hit that trajectory. My second question is just on sort of a broader strategy thing. A lot of interesting themes you sort b rought up there. We're seeing this de-dollarization trade. We're seeing diversification. I just wonder if you could talk a little bit about what opportunities you s ee for the group from that over the next two or three years.
Thank you, Nick. On your first question, first, our balance sheet is strong. We want to take a very disciplined approach to capital allocation. The medium term guidance of a 6%- 8% revenue growth, as I unpack that in terms of accelerating the growth in our OTC FX business alongside our derivatives business. At the same time, you mentioned the Equity Market Review Group. We've clearly seen positive momentum into the stock market, in particular institutional and retail flows into the mid- cap stocks. Our index stocks, our REITs, have always traded very well. What has obviously changed is the mid- cap stocks. On top of that, you also mentioned in there, clearly there is shifting investment capital flows. We're seeing that our business model, multi asset strategy, is a beneficiary of that. More of our customers are adding more asset classes to their portfolio.
We look at this alongside our clear growth agenda. Volumes in July have continued along a similar trajectory. We will release our July stats next Monday. The strong balance sheet, disciplined allocation, and our clear growth agenda gave us confidence of giving the FY 2026 to 2028 dividend guidance. Your second question was around the equity market review and what flows we see on the dollar.
Yeah, maybe I can add to the dividend story. Can you hear me? Yeah. Thanks for the question, Nick. We do look at the total shareholder return, so focus not so much on yield and payout ratio. Right. We are a listed company. Right. We do need to put that caveat in there because we do need to go to a board. We're confident in ability to deliver the step up in dividends. In this day and age, who knows what will happen. I mean we hit another COVID situation and all that. We always need to have that caveat in there. We're confident in our ability to deliver the dividend growth.
Your second question on opportunities in the shifting global macro, many for the group. First, the diversification theme. Clearly, that suits and reinforces our multi-asset strategy. We have seen flows moving between different asset classes, adding more asset classes for diversification. We have clearly seen an increase T+1 session and then the round-the-clock liquidity. Alongside with our very liquid FX futures and OTC FX business, it just allows investors to think about other currencies to put their investments into. We're optimistic that in this shifting environment there would be opportunities that we can capture. Part of the strength of the SGX Group is our responsiveness to trends and, importantly, clients' demand requirements and working alongside with our clients. Yeah, please.
This is not going to be new to us in some sense because we spend a lot of time trying to think around the corner. The example I would use is the CNH contract. At the time of design, we made the observations that one day somebody needs to be the largest RMB CCP in the world. Nobody had done CCP clear RMB clearing, and somebody has to acknowledge that RMB is not admissible on CLS. You can't net with dollars. That was the design criteria for our contract 10 years ago, and that's why today it's the number one contract. We think very, very hard about tooling and instrumentation needs, and we think very, very hard about price discovery and then risk transfer. An example that we just saw overnight is the price of the kilo bar of gold.
There's a locational price, and we've always thought very, very acutely about what is the locational price and what is the role of Singapore Exchange in offering an incremental piece of price discovery and risk transfer. That will hold true across our software stack as well as our product design and our clearinghouse design.
Maybe I'll just provide a data point. I think this is in relation to our cash market. If you look at our ETF suites, we have about 12 ETFs that hold Singapore underlying assets. This could be STI stocks, could be the government corporate bonds, and then S- REITs. They're about 40% of our AUM. If I look at it, of the net inflows year- to- date, close to just above $700 million, which is substantial, and it's quite even in the sense that about $300 million went to the STI, the two STI ETFs, another $350 million to our fixed income, the Singapore fixed income. I think that reflects somewhat the investor appetite, and I think market observations are that single as a safe haven currency, a place where it's predictable and where you know you can get attractive risk-adjusted returns.
I think that's been reflected in what I've seen in the stock market in the last seven months or so.
Thank you. Next question over there.
Hi, Tilan from Maybank. I've got two questions. The first one is you said you're optimistic about your IPO pipeline. Maybe if you can give us a little bit more color on what you're seeing in terms of, you know, what the pipeline is looking like, sectors and some sort of timing and things like that. That's my first question. The second question is when I look at your equity derivatives revenue business, that's actually come off in terms of momentum in the second half versus the first half. It's grown about 6% in the second half. It was about 20% in the first half. Is that more to do with, you know, overall markets coming back to mean or are you seeing some pressure in terms of your market share and some of the derivatives? Because I noticed the 225 is down quite a bit.
The SIMSCI is down quite a bit as well. I just want to get some color there. [audio distortion]
On the first one, and Boon Chye mentioned this, we're certainly much more positive about the outlook for the IPO pipeline. I know we've said that before in recent years, but some important things have changed. First, it's good to say this now on the back of a number of good deals that we saw in the past month. With the NTT DC REIT IPO, that was the largest IPO in a decade for us. It's also diversifying that REIT offering of ours into the digital infrastructure space. Infotech Systems IPO on Mainboard of a technology business, a SaaS business. We had Lum Chang Creations on the Catalist board, which has performed incredibly well post listing. Good momentum behind it. With China Medical System last month, we have a secondary listing of a sizable biotech life sciences business.
All of this is, of course, coming on the back of a number of these factors that Boon Chye already mentioned. The market is up, trading is up not just in the STI index but also in the smaller and mid cap segment below it. I would also say that Asia, Singapore, is benefiting from some diversification in global investment portfolios, and that's resulting in inflows that we're seeing in the region here. Of course, also the effects of the MAS Equity Market Review Group measures that are coming through, the EQDP deployment around the corner. All of these things are, of course, important. I would say there is definitely also more of a risk-on approach amongst investors. We're seeing more confidence around the rates outlook, more confidence around growth. That sets up well for what we are seeing in our pipeline.
That comes to the confidence, maybe to be a little bit more specific around that. We define the pipeline as companies that we know are working on a listing in Singapore. They've hired advisors, have started the preparatory work. There are more than 30 companies in our pipeline, and that's the sort of visibility that we have. Of course, there are many more companies beyond that that are still contemplating and sort of looking at the environment. I would say these companies are nicely split equally between mainboard companies and Catalist companies, so there's a spectrum of sizes. In terms of sectors, I would say also nicely diverse. I think we'll see more of what we saw in the last month, where we see different types of businesses come to market.
With that more confidence, a good number of those companies are already in discussions with Regco, including those that have already put in their docs.
On your second question, half and half total equity derivatives volume has tapered off a little. There's nothing that we've seen that makes us feel that this wholesale structural change in strategic asset allocation has tailed off. In fact, new themes which are hard to address are being addressed to us all the time. Last year it was emerging markets minus China. This year it's world minus U.S., Europe minus U.K. There's an infinite number of variations and in fact the thing that we're missing because our proposition always has been total waterfront, total portfolio equity and currency risk premium. We're already having to think about the next 20, 30, 40 equity risk premium products that help fill in the shelf and how to deliver that to the customer
The specific ones that you've cited, 225 and SIMSCI, the realized volume has come off, but then there's a lot more demand for H50, A50 and India should.
Shifting amongst countries within equity derivatives but also shifting amongst asset classes, half- on- half, a slight dip. As Michael explained, we saw that into commodities. I think our multi asset allows us to ride through the shifting investment flows that managers have. Thank you.
Yeah, maybe I could add to that. Right. In terms of market share, in terms of flagship products, the China A50 and Nifty, we're there. We're quite comfortable with our market share. Right. The metabolic rate is still high. It will vary according to episodic issues, but actually a key component is the number of trading days. In the second half, it was dramatically lower than the first half.
We should take two questions from those dialing in.
Maybe I will combine the questions on dividends. One is from Jayden of Macquarie. Why not do more now? The FY 2025 payout ratio is 62% relative to earnings and planned step up is to $0.525 in FY 2028. Why not do now? The next question related to dividends from Gurprit of Goldman Sachs. Thanks for the presentation, good to see the raised dividend per share guidance. How does management now think about balancing shareholder returns and bolt-on acquisitions? Seems relative to the consensus earnings 75%- 80% will be paid out as dividends. Are you not actively looking at targets to add on capabilities?
Let me try and take both in a combined way and then feel free to add in. Why not n ow? W e look at this on sustainable long- term growth and our aim is to really deliver growth to our stakeholders, our shareholders over a medium to long- term and want to balance that. Not just investing in our core businesses, we balance that also with returning capital in the form of a guidance over the next three years. We're looking to grow where there may be opportunities that we could do both on acquisition. The next question may come how are you going to fund that and how you look at your trajectory in your dividend. Our strong balance sheet and cash flow allows us to look at value accretive opportunities if we can bolt on to what we have.
I think FY 2025 has clearly demonstrated that the multi asset strategy that we have talked about for years is now coming true in an environment like that. It's not just FY 2025. We've seen shoots parts of that in 2023 and 2024 and we do look at this on a payout ratio. I think moving from our mid- single digit guidance that we did a year ago, we hope this gave our shareholders better clarity on the forward trajectory.
Yeah. Just to add to that, our investors are looking at us as a dividend camp growth stock. Many of our investors are telling us we are invested in you for growth. We always have to balance that out with regards to enhancing shareholder return but also investing in sustainable growth. What does that mean? As Boon Chye mentioned, organic growth and strategic growth opportunities, bolt-ons and all that. The thing I would say is the strong results this year have given us a platform and given us optionality with regards to how we can be funding any potential bolt-on opportunities.
Maybe to those of you here. And then after that over here. W e'll come to you next. Okay. Yeah, go.
Harsh Modi from JP Morgan. Thanks for the dividend pickup. That's long standing demand. Thank you for that.
I just want to understand your thought process slightly better. Should we just factor in this as absolute guidance, or is this the minimum you would pay, or is it the maximum you would pay? That's slightly unclear when you say subject to earnings.
I'm sure you like surprises o n the upside?
Absolutely.
That will be a response to you whether there's a guidance or minimum. I'm sure you like surprises to the upside, and that's what we like to aim for.
That's good to know because if I think about payout ratio to some of the earlier questions, it's around mid-70% and if I look at the last 15 years you have gone from 60% to 100% payout. Is there an upside risk to it? Is it more dependent on M&A that if you can't find a good place to allocate capital, then potentially you can increase your payout from your current guidance path? Is that how we should think about it?
I think we can use the capital if we were to look at inorganic growth in both, that's going to be one balancing about returning, paying shareholders more. Even if you don't find those opportunities, there are still tremendous opportunities in our core business and we'll invest in that. Obviously, the scale of those investments will probably be different versus organic and inorganic. There we go. Look at the timing. With that, we always look at this on the medium term. If we don't need as much of those for organic, which we'll still continue to invest, we will return more.
Great, thanks for that.
Just to add, our investors are telling us they look at total shareholder return from a one year perspective. As judged against the June 30 share price, one year TSR is at 64%, 63%, 63% three years, 74% five years, 100% over percent.
Right. That's something our investors are looking at, not so much just the dividend for the particular quarter.
Fair point. The stock has been absolutely one of the best performers. Second question on the treasury income impact with much lower rates, any quantification of how much would the low SORA and potentially dollar rate cuts impact your treasury income?
Thank you.
Should I take that?
Yeah, you can.
I was in trading before, so I'm not sure given the gap in number of years. I'll l et my CFO a nswer that.
Look, treasury income, again as an active trader, right? It's a function of two things, right? The collateral balances that we have and the interest rate environment. On the collateral balances that we have, insofar as we're still seeing heightened activity, margin balances, the interest rate environment, who knows, right? We have factored that into our thinking, we have layered in accordingly. It is a function of the market. Can't give any more guidance than we are factoring in what the market is pricing in.
No, that's fair and exactly that's the thing that you have very solid volume growth, multiple sources of collaterals, but rate decline has been quite brutal across currencies, especially SORA. As you put in the forward curve on top line, how much of departure from the 6%- 8% growth should we expect year- on- year, again all else constant. I know we are not going to hold you to that number, but some sense of treasury income because it's a pretty meaningful shift.
Sorry, just to clarify, our 6%- 8% is ex- treasury income, right? Ex -treasury income is always going to be separate from that.
What you're saying is what could subtract from that if your treasury income comes up, it's going to be a function of the yield curve, which is why we're guiding a three year XTI. You could have the shape of the curve impacting positively or negatively; in one year it may reverse a little bit. On the three year, we're looking at this as fairly averaging of how we think about potentially the curve .
And Harsh, w e're one of the world's largest yen clearing houses. It's not true to say that interest rates are coming down.
Efforts through Paul a nd his team globally bring more collateral to distribution because more usage of our platform. Thank you. We should come over here.
Hello. Hi, sorry, I'm Jovi from DBS Singapore. Thanks for the presentation. Just my first question here, just asking for more color on the potential acquisition. What types of markets or platforms do you think will help round out SGX's offering? Will any of these potentially help boost new equity listings or equity trading here?
Our commodities and maritime suite has clearly performed very well. There are lots of synergies in the freight index via Baltic, which is also a global index provider in the maritime space. Now, a couple of bulk commodities that is traded, cleared by SGX, that's clearly a space that we've seen in the shifting investment flows and how investors are looking at asset allocation. That's one area that I think there could be good sectorial growth, and if there are areas we can look at to invest, we will look at it. On the equity market, we're clearly working closely with the ecosystem, fund managers, whether they are going to be allocated part of the EQDP.
What we've also seen is the inflow into the mid- cap stocks, and then not forgetting obviously the GEM scheme, working with product issuers, and we're going to look at introducing more products around that.
Thank you. Just a second question here. With this strong set of results and the sense of confidence we're getting for potentially stronger years ahead, are we expecting higher staff costs in the form of higher bonus, higher pay for management? Thanks.
It's actually great that our town hall is our internal staff to answer your question. Look, the variable staff cost is going to be a function of performance. It can grow with performance, it can come down if the performance isn't great. On fixed staff cost, we have shown that we've been able to be disciplined in our hiring. More importantly, we're looking at workflow processes where our colleagues could take on more. We want to manage the growth of the staffing by looking at how operating leverage will come true.
Maybe one last question from online, Stan. Update on the crypto perpetual contract. What sort of timing are we looking at, and how will this contribute to our revenues? It's from Marcus of CLSA.
Okay, thanks for the question Marcus. I think we will probably want to wait another six months to give you a more thorough update. We've done a great deal of work. The timing is probably around year end, subject to a number of things. The critical path is really about making sure that there is market readiness because while it comes across purely as a payload, which is crypto, actually all the work is about the infrastructure required to deliver this new format. We're creating a new market category called the perpetual future, which doesn't really exist in the regulated futures space. A lot of the work we're doing is with customers, with intermediaries, with the post trade, and of course with the OTC market participants that we're trying to crowd into our space.
The timeline is as I indicated and once it's launched and goes live, I think we'll give you a more sort of fulsome update. Timing seems propitious. I mean that's on the news flow in the past week.
Okay, any other last question here?
Yes, I wanted to ask a question about the MAS Equity Market Review Group.
Could you share a bit a bout how SGX is working?
Because it's not Paul mentioned there's over 30 companies in the pipeline. By the end of this year, h ow many companies can we see listed on the SGX new listings? If you could also share more details about how you're working with the review group.
Yeah, maybe I have.
I'll do that at the end.
I'll look at the [Bunjin] too.
The suite of measures that have been announced so far have been targeted in a couple of areas. One would be in driving the demand side and of course we know the flagship $5 billion EQDP. That has been a series of actions that have been taken including selection of the managers and I think they will be important constituent of the stock market and we'll be working with them on a series of things including how they intend to deploy, how they may support some of the IPOs and in also working with possibly companies. We have seen the results of some of the large companies, large cap companies that have done well in capital management, that have done well in certain shareholder initiatives that have created value.
We think there are certain things that we can do in that area and ultimately if we create more companies that have higher liquidity, a valuation that better reflects their intrinsic value, I think that's a win-win situation for both the investing side and also the issuers. There is also a bunch of measures around the regulations which I think [Bujin] will touch on, trying to create that environment that's pro-enterprise without compromising on the quality of investor protection. The third bit is about the product shelf that we have. It's not just about the cash equities, it's not just about IPOs but the products and the ETFs, the SDRs. We know that Singapore investors are sophisticated and they trade globally. Nick's report, which was a good report, shows that 7% of Singapore's household financial portfolios, only 7% is in listed shares. OECD is probably about 20%, 30%.
I did read the report and half of what Singapore's portfolios are and clearly it's in overseas stocks. How do we bring some of this back? This could be in the form of ETFs, in the form of SDRs. We call it depository receipts. There's a whole range of things that we'll do. Lastly, we will also be looking at the quality of our market structure. Just a hint, I think when we look at things like board lot sizes, some of our index stocks have done pretty well. There's a strong case to argue that we can make them more accessible to the wider public and especially to the robo portfolios and so on. I think that will be something that will be taking action and I think the EMRG will be looking at this and then announcing them as a package in due course.
I'm not going to preempt that. I think it's important to look at t he efforts of the review group holistically. There's an enterprise part which Yao Loong has covered, then there is a regulatory part which is meant to complement that. The two parts are meant to complement each other. If you look at what's happening in terms of the efforts of the enterprise group, they have created a l ot more market discipline because we're going to see more institutional participation.
We believe that this will raise standards across the board, and this will complement the efforts at the same time on the regulatory side to streamline the IPO process as well as move towards a disclosure-based regime, which is more in line with the international developed jurisdictions. All these efforts complement each other without, as she said, compromising on our regulatory efforts. Surveillance will continue to be robust, whether it's trading surveillance or whether it's corporate surveillance. We continue to be very committed in employing our most effective and targeted tools and making sure that we are a fair, orderly, and transparent market.
On your last question, I thought we already did a pretty good job to give you some sort of number and now you need to know when. We can't say. We are also subject to market circumstances, of course. I would say when we sort of think about the number of 30, it also links back to the number of deals that we see happen in the market here before the downturn. We have confidence that that's a sustainable number and something that we can grow on from there. Having said that, I think 2025 calendar year is still a bit of a transition year. The first half was still pretty quiet and pretty slow. We see globally IPO markets reopening. Will we continue to see more activity into the second half? Yes, but think about that number as something for the medium- term and a sustainable number.
As deals happen, we hope to see others. As I said, there's plenty of others that are still considering their options and we are in contact with them and they will then get added to the pipeline as we get along.
Okay, thank you all. Appreciate your presence and attendance. Thank you.