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MarketScreener Homepage  >  Equities  >  Bolsa de Valores de Sao Paulo  >  B3 S.A. - Brasil, Bolsa, Balcão    B3SA3   BRB3SAACNOR6

B3 S.A. - BRASIL, BOLSA, BALCÃO

(B3SA3)
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B3 S A Brasil Bolsa Balcão : ER 3Q20

11/12/2020 | 05:11pm EST

3Q20

CONFERENCE CALL (ENGLISH) 10 a.m. (Brasília) / 8 a.m. (NYC) Brazil: +55 (11) 3181-8565

+55 (11) 4210-1803 Toll Free: +1 (844) 204-8942Dial-In: +1 (412) 717-9627

Password: B3

Webcast:

https://choruscall.com.br/b3/3q20.htm

CONFERENCE CALL (Portuguese)

11 a.m. (Brasília) / 9 a.m. (NYC) Brazil: +55 (11) 3181-8565

+55 (11) 4210-1803

Password: B3

Webcast:

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B3 ANNOUNCES RESULTS FOR THE THIRD QUARTER OF 2020

São Paulo, November 12, 2020 - B3 S.A. - Brasil, Bolsa, Balcão ("B3" or "Company"; ticker: B3SA3) reports today its third quarter 2020 (3Q20) earnings. Total revenues reached R$2,535.5 million, a 48.6% increase over the same period of the previous year (3Q19), while recurring EBITDA totaled R$1,665.7 million, up by 50.1% year-over-year (yoy). The company's recurring net income1 totaled R$1,143.2 million.

MESSAGE FROM B3´S MANAGEMENT

In the third quarter of 2020, we began to see a gradual relaxation of social distancing restrictions and a controlled reopening of the economy, even as uncertainties remain regarding possible new Covid-19 waves.

In a scenario of low current inflation, and with the authorities' intention of stimulating economic activity, monetary easing measures continued to advance during the period, with the basic interest rate reaching its lowest historical level in August (2% p.a.). This intensified local investors' willingness to seek alternatives to diversify their portfolios. Since the beginning of the year, the number of retail investors in our depository has increased by 84%, reaching 3.1 million accounts in September, a significant growth that spurred higher volumes traded on our platforms, in line with the trend we observed in the first half of 2020. We also started to note the recovery of the vehicle financing market, which in September posted the best monthly performance year to date.

During this time of strong volumes, we continued to operate with most of our teams working remotely, prioritizing the availability and stability of our platforms, reaffirming our commitment to excellence and operational resilience, and strengthening our position as a safe and robust infrastructure for our clients and the market.

We also continued to work on operational improvements and on delivering of new products and features on our platforms, namely: in the listed segment (i) the securities lending trading screen, (ii) US dollar tie trade, and (iii) soybean futures; on the OTC market (iv) new instruments covered by our CRI (real estate receivables) and CRA (agribusiness receivables) calculator. Also, as part of our institutional initiatives we launched (v) new features and content in our Financial Education Hub website (edu.b3.com.br), which aims at stimulating financial education and encouraging the development of the capital market in a sustainable and conscientious way.

In August, CVM decided to extend for another 12 months the trial period for the RLP (Retail Liquidity Provider) platform launched a year before. RLP is an innovative and successful solution developed collaboratively with clients and regulators, to better serve derivatives trading in the retail market. B3's role and support in the development of this product reinforces our alignment with our clients, without compromising the market's safety and integrity.

Additionally, we made progress on our corporate philanthropy actions focused on mitigating the effects of coronavirus on society, through donations made both by B3 and B3 Social, a non-profit association in which B3 is a founding member. Since the beginning of the year, we have donated around R$30 million to initiatives in the health, food, micro entrepreneurship, and community business areas. We expect to reach total R$50 million in donations by the end of 2020.

Sustained high volumes on our platforms contributed to a solid financial performance and strong cash generation in the third quarter. Revenue growth combined with disciplined expense management resulted in higher margins, reflecting our operational leverage. In line with our objective of having an adequate capital structure for B3, we issued local bonds in the amount of R$3.55 billion (August), and retired our Global Notes of US$612 million (July), reaching a gross debt to recurring EBITDA level of 1.2x at the end of the quarter. Additionally, during this quarter we settled a legal dispute involving the bankruptcy estate of Spread Corretora for a total of R$140 million. The total amount under discussion (R$379 million as of 6/30/2020) had been provisioned for in the company's financial statements and the settlement had a positive impact on several lines of our income statement, as shown on page 4.

Income statement summary

(R$ million)

3Q20

3Q19

3Q20/3Q19 (%)

2Q20

3Q20/2Q20 (%)

Total revenues

2,535.5

1,706.6

48.6%

2,129.1

19.1%

Net revenues

2,288.8

1,529.8

49.6%

1,908.3

19.9%

Expenses

(648.5)

(677.7)

-4.3%

(733.4)

-11.6%

Financial result

(26.4)

(5.5)

382.5%

(11.4)

131.6%

Net income

1,136.5

719.6

57.9%

891.8

27.4%

Adjusted expenses

(216.1)

(280.9)

-23.1%

(275.3)

-21.5%

Recurring EBITDA

1,665.7

1,109.4

50.1%

1,419.2

17.4%

EBITDA margin (recurring)

79.2%

72.5%

672 bps

74.4%

487 bps

Recurring net income

1,143.2

851.0

34.4%

1,012.0

13.0%

Guidances for 2020

  • REVISED: Indebtedness (YE20) up to 1.2x Gross Debt/recurring LTM EBITDA (previous: up to 1.5x) (1.0x in 2019);
  • REAFFIRMED: CAPEX2 budget from R$395 million to R$425 million (R$279 million in 2019);
  • REAFFIRMED: Revenue-linked expense budget from R$170 million to R$200 million (R$239 million in 2019);
  • REAFFIRMED: Adj. operating expense3 budget from R$1,125 million to R$1,175 million (R$1,074 million in 2019);
  • REAFFIRMED: Depreciation and Amortization budget, including amortization of intangible assets, from R$1,030 million to R$1,080 million (R$1,030 million 2019); and
  • REAFFIRMED: Payout of 120% - 150% of accounting net income (130% in 2019).

1

Reconciliation on page 6.

2

Exclusive of investments in connection with the business combination with Cetip.

https://ri.b3.com.br/en

3

Expenses adjusted by: (i) depreciation and amortization; (ii) long-termshare-based incentive program-principal and charges; (iii) business combination with Cetip; (iv)

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION

provisions; and (v) revenue-linked expenses.

OPERATIONAL PERFORMANCE

All comparisons in this document are in relation to the third quarter of 2019 (3Q19), unless otherwise stated.

Listed

In the third quarter of 2020 (3Q20), the listed segment performance continued to be driven by the volatility in financial and capital markets arising from the effects of the COVID-19 pandemic and by the low interest rate environment, both in Brazil and worldwide.

Equities

3Q20

3Q19

3Q20/ 3Q19 (%)

3Q20

3Q20/ 3Q20 (%)

Cash market

ADTV (R$ million)

28,759.7

17,147.2

67.7%

28,300.4

1.6%

Margin (bps)

3.992

4.281

-0.290 bps

3.955

0.037 bps

Average market capitalization

(R$ billion)

4,233.8

4,146.9

2.1%

3,565.7

18.7%

Turnover Velocity

Annualized (%)

169.1%

102.5%

0.666 bps

197.6%

-0.285 bps

Options market (stock/indices)

ADTV (R$ million)

606.1

305.2

98.6%

600.9

0.9%

Margin (bps)

12.732

13.530

-0.798 bps

12.394

0.338 bps

Forward market

ADTV (R$ million)

207.9

207.8

0.1%

144.7

43.7%

Margin (bps)

13.004

13.000

0.004 bps

13.041

-0.037 bps

Future stock indices

ADV (thousands of contracts)

2,659.2

1,565.0

69.9%

2,356.6

12.8%

Average RPC (R$)

0.994

1.006

-1.3%

1.057

-6.0%

Number of Investors

Average (thousands)

2,980.1

1,348.8

120.9%

2,534.7

17.6%

Securities lending

Average open positions (R$ billion)

75.1

60.2

24.8%

67.1

11.9%

Note: ADTV stands for Average Daily Traded Value; ADV stands for Average Daily Volume; RPC stands for Revenue per Contract; and bps stands for basis point; market turnover results from dividing the volume traded on the spot market in the period by the average market capitalization for the year.

The equities segment experienced a 67.7% growth in the cash equities market's ADTV and a 69.9% increase in stock indices futures contracts' volumes. In the cash equities market, this increase reflects a higher turnover velocity, which reached 169.1% in the quarter. For the stock indices futures contracts' market, the performance can be attributed to the continued growth in trading of mini contracts, particularly by individual investors and by High Frequency Traders (HFT).

The trading/post-trading margin in cash equities was 3.992 bps. The 0.290 bps decrease is mostly explained by the discounts given to the market in accordance with B3's pricing policy4 in force and by the greater participation of day traders, who pay lower fees. The average RPC of the stock indices futures contracts in the period remained practically unchanged.

The average number of active investors in the equities depository grew 120.9%, mainly due to the increased interest in diversifying investments in a lower interest rate environment. Through our incentive programs, B3 continues to support brokerage firms that focus on attracting new customers to the market.

FICC

3Q20

3Q19

3Q20/ 3Q19 (%)

2Q20

3Q20/ 2Q20 (%)

Interest rates in BRL

ADV (thousands of contracts)

2,718.6

2,926.3

-7.1%

2,822.0

-3.7%

Average RPC (R$)

0.954

0.823

15.9%

0.851

12.1%

Interest rates in

ADV (thousands of contracts)

238.5

367.3

-35.1%

257.3

-7.3%

USD

Average RPC (R$)

2.371

1.701

39.4%

2.491

-4.8%

FX rates

ADV (thousands of contracts)

1,015.4

754.3

34.6%

979.2

3.7%

Average RPC (R$)

5.265

3.884

35.6%

5.317

-1.0%

Commodities

ADV (thousands of contracts)

15.9

8.5

87.8%

10.1

57.1%

Average RPC (R$)

2.203

2.051

7.4%

2.177

1.2%

Total

ADV (thousands of contracts)

3,988.4

4,056.4

-1.7%

4,068.6

-2.0%

Average RPC (R$)

2.142

1.475

45.2%

2.033

5.3%

The average daily traded volume totaled 4.0 million contracts, down 1.7%, reflecting mainly the decrease of 7.1% in ADV of interest rate contracts in BRL and of 35.1% in ADV of interest rate contracts in USD, which were partially offset by the 34.6% growth in ADV of exchange rate contracts, particularly the mini version of these contracts. Average RPC for the segment grew 45.2%, influenced primarily (i) by the 37.3% appreciation of the USD against the BRL in the period, with a positive impact on the RPC of FX Rate, Interest Rate in USD and Commodities contracts, since they are priced in US dollar, (ii) by the higher share of FX Rate contracts in the mix and (iii) by the increase in longer-term Interest Rate contracts in BRL, which have a higher RPC.

4

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION

According to the table of fees in force in 3Q20, marginal discounts are granted to the entire market whenever the month's daily average traded volume (ADTV) exceeds the levels of R$9 billion, R$11 billion and R$13 billion.

OTC

Fixed Income Instruments

3Q20

3Q19

3Q20/3Q19 (%)

2Q20

3Q20/2Q20 (%)

Bank funding (total in R$ billion)

3,289.0

2,406.8

36.7%

2,812.1

17.0%

New issues

Other (total in billion)

179.2

143.8

24.6%

217.5

-17.6%

Bank funding (average in R$ billion)

2,044.1

1,430.5

42.9%

1,929.6

5.9%

Outstanding balance Corporate debt (average in R$ billion)

697.1

640.5

8.8%

693.1

0.6%

Other (average in R$ billion)

711.1

640.1

11.1%

773.8

-8.1%

Number of investors (average in thousands)

1,343.1

1,130.5

18.8%

1,273.8

5.4%

Treasury Direct

Stock (average in R$ billion)

67.6

65.0

3.9%

66.0

2.4%

During the quarter, the volume of new issues and the outstanding positions of bank funding instruments showed a 36.7% and 42.9% increase, respectively, mainly as a result of the growth in issues of Bank Deposit Certificates and Interbank Deposit Certificates, which represented 58.4% and 38.1% of all new issues, respectively. Additionally, the average outstanding balance of corporate debt increased by 8.8%, which demonstrates the increasing relevance of the local debt capital market as a source of financing for companies in Brazil, with leasing debentures accounting for 29.3% of outstanding balance (vs. 32.6% in 3Q19).

Treasury Direct also recorded a positive performance, with a 18.8% increase in the number of investors and a 3.9% increase in stock. B3 offers an incentive program for brokerage firms to increase their number of investors and outstanding positions in this product. This incentive program is revised on a yearly basis, and the targets established for the year were adjusted to consider the results obtained in 2019. Additionally, B3 and the National Treasury announced in Jul/20 that, as of Aug/20, Treasury Selic custody fee will be waived for the first R$10 thousand invested.

OTC Derivatives and Structured Operations

3Q20

3Q19

3Q20/3Q19 (%)

2Q20

3Q20/2Q20 (%)

Issues

(total in R$ billions)

2,409.5

2,681.8

-10.2%

3,540.9

-32.0%

Outstanding balance

(average in R$ billions)

4,137.1

2,646.6

56.3%

4,018.8

2.9%

Note: does not include Outstanding position of OTC derivatives with CCP.

The registration of new issues on the OTC derivatives and structured notes market decreased 10.2%, mainly due to a reduction in registration of Swap contracts and other derivatives5. Despite the fall in new issues, average outstanding balance increased 56.3% during the quarter, since most of these contracts are referenced in US dollars.

Infrastructure for Financing

3Q20

3Q19

3Q20/3Q19 (%)

2Q20

3Q20/2Q20 (%)

Number of vehicles sold (thousands)

4,697.2

4,913.1

-4.4%

1,768.4

165.6%

SNG

Number of vehicles financed (thousands)

1,527.0

1,581.6

-3.5%

870.3

75.5%

% Vehicles financed/vehicles sold

32.5%

32.2%

0.3 pp

49.2%

-16.7 pp

Contracts System

Contracts added (thousands)

875.6

967.9

-9.5%

487.8

79.5%

% Contracts added/vehicles financed

57.3%

61.2%

-3.9 pp

56.0%

1.3 pp

The number of inclusions in the National Liens System (SNG) decreased by 3.5%, impacted by the drop in economic activity resulting from the quarantine implemented in Brazil from Mar/20 onwards, in order to contain the spread of the COVID-19 pandemic. However, when compared to 2Q20, we see an increase of 165.6% in the number of vehicles sold, showing the first signs of recovery for the sector, as the government starts to relax social distancing measures and economic activity resumes. In the Contracts System, the number of transactions in 3Q20 was 9.5% lower, reflecting the decreased number of vehicles financed, combined with a reduction in B3's market share, which totaled 57.3% in the quarter.

Technology, Data and Services

3Q20

3Q19

3Q20/3Q19 (%)

2Q20

3Q20/2Q20 (%)

Monthly utilization

Average number of customers

14,176

13,335

6.3%

13,868

2.2%

CIP

Number of electronic cash transfers

372,533

218,289

70.7%

299,206

24.5%

(TEDs) processed (thousands)

The average number of clients that pay the monthly utilization fees related to services in the OTC segment was up by 6.3% resulting mainly from growth of the asset management industry in Brazil. The number of TEDs processed increased by 70.7%, resulting mainly from the change in habits of bank customers during the COVID-19 pandemic.

5

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION

Includes BOX, Flexible Options, Derivatives Contracted Abroad and Derivatives Linked to Loans.

INCOME STATEMENT

Revenues

Total revenues: R$2,535.5 million, 48.6% higher reflecting stronger performances in all segments, with the exception of the Infrastructure for Financing business.

Listed: R$1,682.4 million (66.4% of the total), up by 48.0%.

  • Equities and equity instruments: R$1,120.5 million (44.2% of the total), a 52.4% increase in the period.
    Trading and Post-Trading:R$985.8 million (38.9% of the total), a 57.9% increase reflecting the growth in volumes traded in cash equities and stock indices future contracts.
    Depository:R$42.1 million (1.7% of the total), up by 11.8% in the period. The 120.9% increase in the average number of accounts in the depository was partially offset by the reductions in revenue generated by the incentive program to expand the individual investor base in the equities market, which totaled R$56.5 million in 3Q206 (vs. R$17.1 million for 3Q19).
    Securities lending:R$50.4 million (2.0% of the total), a 21.6% increase resulting from 24.8% higher average financial volume of outstanding positions.
    Listing and solutions for issuers:R$42.1 million (1.7% of the total), up by 33.4%, mainly as a result of the higher number of public offerings in the quarter, which raised R$41.3 billion (13 IPOs and 12 follow-on) in 3Q20 versus R$28.0 billion (13 follow-ons) in 3Q19.
  • FICC: R$562.0 million (22.2% of the total), up by 40.0%, resulting mainly from the appreciation of the US dollar, which had a positive impact on the RPC of FX rate contracts, Interest rate contracts in USD and Commodities contracts.

OTC: R$262.9 million (10.4% of the total), up by 9.5%.

  • Fixed income instruments: R$159.5 million (6.3% of the total), up by 6.2%, mainly due to the new classification of expenses related to the Treasury Direct (Tesouro Direto) incentive program. In 3Q20, revenue from Treasury Direct was R$40.4 million (market incentives related to this product totaled R$15.0 million in the quarter and are classified as revenue-linked expenses). In 3Q19, revenue was R$7.2 million (R$40.6 million in revenue and R$33.4 million in incentives classified as revenue reducers7). It should be noted that the growth in new issues and outstanding balance of bank funding products is not fully translated into revenue growth due to the new pricing policy announced in the beginning of the year. Following this pricing policy change, B3 waived some service fees related to volumes and included these services in the monthly usage service package (reported in the Technology and Access revenue line), thereby sharing part of its operating leverage with the market.
  • Derivatives and structured transactions:R$62.1 million (2.4% of the total), an increase of 28.7%, despite the fall of 10.2% in the volume of new issues, due to the combination of the effects of i) the increase in average price of new issues due to the mix of contracts in the quarter, mainly swaps; and ii) the appreciation of the dollar against the real, as a significant part of the OTC derivative contracts' face values are in US dollar.
  • Other:R$41.3 million (1.6% of the total), down by 1.1% as a result of the Company's new pricing policy whereby part of the revenue related to the volume of services provided and maintenance of end users was transferred to the monthly utilization service, with a positive impact in the Technology and Access revenue line.

Infrastructure for financing: R$111.6 million (4.4% of the total), down by 19.0%. This drop can be attributed mostly due to the negative effects of the Covid-19 pandemic in the vehicle sales and financing market.

Technology, data and services: R$290.5 million (11.5% of the total), an increase of 51.1%.

  • Technology and access: R$190.1 million (7.5% of the total), an increase of 66.8%, especially due to growth in the monthly utilization revenue line, which was driven by (i) changes in pricing for the monthly utilization service package and OTC fees, as previously explained, and (ii) a 6.3% increase in the number of market participants accessing the OTC segment platforms and (iii) the annual price adjustment for inflation (IGP-M).
  • Data and analytics: R$61.0 million (2.4% of the total), an increase of 37.0%, which is mainly due to the appreciation of the US Dollar, given that 42.6% of this revenue was linked to the US Dollar in 3Q20.
  • Bank: R$13.2 million (0.5% of total), a 16.0% increase, explained mostly by the appreciation of the US Dollar in the period.
  • Others: R$26.1 million, (1.0% of total), a 16.8% increase.

Reversal of Provisions: R$188.1 million (7.4% of the total), mainly explained by the reversal of R$187 million provision relating to a legal dispute with Spread, which was settled in August.

The end of the legal dispute with Spread, upon settlement in the amount of approximately R$140 million, resulted in a provision reversal of R$239 million in 3Q20 and the exclusion of this liability from our financial statements, which at the end of 2Q20 amounted to R$379 million. This provision reversal was recognized in 3Q20 partly in the revenue line (non-recurring positive impact of R$187 million) and partly in the expense line (non-recurring positive impact of expense reversal in the amount of R$52 million), and also had an impact in the deferred income tax and social contribution line (R$81 million).

6 The incentive program to attract investors to the stock market offers bonuses in the form of partial exemption of custody fees for brokers reaching performance targets related to growth in the number of accounts and in the

balance deposited by this group of investors. Results of this program are determined and distributed on a semi-annual basis.

7

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION

Before the change in classification of these incentive programs as from 1Q20.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

B3 SA - – Brasil, Bolsa, Balcão published this content on 12 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 November 2020 22:10:05 UTC


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Financials
Sales 2020 8 124 M 1 535 M 1 535 M
Net income 2020 4 023 M 760 M 760 M
Net cash 2020 6 567 M 1 240 M 1 240 M
P/E ratio 2020 30,6x
Yield 2020 3,71%
Capitalization 122 B 23 274 M 23 079 M
EV / Sales 2020 14,2x
EV / Sales 2021 13,3x
Nbr of Employees 1 442
Free-Float 99,2%
Chart B3 S.A. - BRASIL, BOLSA, BALCÃO
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B3 S.A. - Brasil, Bolsa, Balcão Technical Analysis Chart | MarketScreener
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Technical analysis trends B3 S.A. - BRASIL, BOLSA, BALCÃO
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 66,43 BRL
Last Close Price 59,82 BRL
Spread / Highest target 27,0%
Spread / Average Target 11,0%
Spread / Lowest Target -44,8%
EPS Revisions
Managers and Directors
NameTitle
Gilson Finkelsztain Chief Executive Officer
Antonio Carlos Quintella Chairman
Cícero Augusto Vieira Neto Chief Operating Officer
Daniel Sonder Chief Financial Officer & IR Officer
Rodrigo Antonio Nardoni Gonçales Chief Technology Officer
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