* LSE shares fall 1.6 percent
* Indices, clearing to drive bulk of growth
(Adds Rolet's comment on mergers, depositories)
By Noor Zainab Hussain and Huw Jones
LONDON, June 12 The London Stock Exchange
expects its indices and clearing businesses to drive
growth in core profit margin between now and 2019, the company
said on Monday, shrugging off concerns over the collapse of a
planned merger with Deutsche Boerse and uncertainty
LSE expects to increase its profit margin for earnings
before interest, tax, depreciation and amortisation (EBITDA) to
about 55 percent by 2019, up from 46.5 percent last year, it
said in a statement.
Chief Executive Xavier Rolet told an Investor Day event that
the "energised" and "globally competitive group" continued to
see growth and investment across all of its core businesses.
The bullish outlook comes despite the collapse of a merger
that was expected to help it compete better with rivals such as
Intercontinental Exchange Inc, and despite heightened
uncertainty surrounding Britain's intended departure from the
European Union in 2019.
Britain's future relations with the EU appear even less
clear after Prime Minister Theresa May's Conservative party lost
its majority in an election. Rolet made no mention of the vote
or its impact in his initial address.
Analysts have said the merger collapse showed big bourse
deals were off the agenda, but Rolet said asset managers,
pension funds and banks want an exchange group with a global
reach in a sector that is still a "construction site".
"There is nobody today that has a complete suite of global
businesses ... M&A is probably going to continue. In fact, it
never has stopped," Rolet said.
The exchange said it would cut costs by 50 million pounds
($63 million) annually until 2019, while operating expenses
would remain stable at around a 4 percent increase.
The bulk of growth will come from the group's FTSE Russell
indexes unit in a sign of how exchanges are diversifying from
their traditional trading platforms into what the
Intercontinental Exchange calls "content".
Rolet said there would also be double-digit revenue growth
at its the LCH clearing unit, despite threats from the European
Union to shift the clearing of euro denominated derivatives from
London to the continent after Brexit.
New EU securities trading rules known as MiFID II come into
effect next January to introduce more "open access" competition
Rolet said most exchanges hated it, but "this group will be
able to take full advantage of that regulation". The group
operates the Milan stock exchange and a clearing unit in Paris.
The LSE was looking at whether it should buy or build an
international central securities depository (ICSD) to have a
global collateral framework for customers, after the merger
collapse meant Deutsche Boerse's ICSD would not be part of the
group, Rolet said.
The upbeat outlook, however, failed to stop LSE shares
closing down 1.6 percent, when the broader market was only
($1 = 0.7891 pounds)
(Editing by Edmund Blair)