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B3's quarterly profit skyrockets as volatility spurs record trading volumes

B3 SA – Brasil, Bolsa, Balcão more than quadrupled its net profit year over year in the second quarter as the stock exchange operator saw record-high trading volumes amid ongoing market volatility.

Net income attributable to shareholders for the period came to 724.4 million Brazilian reais, up 343.6% from 163.3 million reais earned a year earlier. On a recurring basis, net income was 857.8 million reais for the second quarter, up 80.3% from 475.7 million reais in the year-ago period.

Total revenues increased 28.4% year over year, to 1.39 billion reais in the quarter from 1.08 billion reais. Revenues from the Bovespa segment grew 47.7% annually to 399.4 million reais in the quarter, while revenues from its BM&F segment grew 38.6% to 395.1 million reais.

"In the second quarter of 2018, volumes reached all-time high levels in both equities and derivatives markets, mainly pushed by increased volatility," CEO Gilson Finkelsztain said in a statement. "Such uncertainty also explains the recent recovery in volumes of OTC derivatives. These records led us to our best quarter ever in terms of revenues and EBITDA."

Expenses, meanwhile, fell 20.9% year over year to 531.6 million reais. Adjusted expenses grew 4.2% to 237.2 million reais from 227.7 million reais in the year-ago period.

Additionally, expenses related to the B3's merger with Cetip SA – Mercados Organizados declined to 15.0 million reais in the second quarter from 145.3 million reais a year ago.

In reporting the results, B3 reaffirmed its 2018 guidance for several cost metrics, including its estimate for expenses tied to the Cetip combination to total between 55 million and 75 million reais. It also still expects adjusted expenses to come in between 960 million and 1.00 billion reais, and for revenue-linked expenses to hit between 200 million and 220 million reais.

As of Aug. 9, US$1 was equivalent to 3.81 Brazilian reais.