London Stock Exchange lifts income 9% in first quarter

London Stock Exchange delivered a solid increase in total income in the first quarter as it battled to keep its merger with Deutsche Börse on track and neared completion of sale of Russell Investment Management.

Despite expressions of interest from US-based rivals, the LSE said it was "advancing" the recommended merger with its German peer, preparing shareholder documents on the deal as well as preparatory work on approvals needed for the transaction.

Though those tasks may prove a distraction for directors, the group operations almost all performed strongly despite testing market conditions during the quarter.

First-quarter group income from continuing operations rose 9% to £387.6m, with particularly encouraging growth from over the counter (OTC) clearing, the FTSE Russell indices business and capital markets.

Including FTSE Russell, the Information Services arm lifted revenues 10%, or 7% on an organic and constant currency basis.

LCH drove revenues up 14%, or 12% at constant currencies, with 22% revenue growth in OTC thanks to higher client trades in the SwapClear global clearing service for OTC interest rate swaps and good growth in volumes of OTC credit default swaps (CDS).

Capital Markets revenues rose 8%, or 6% at constant currency, with growth said to come from all areas of the division.

The only blot on the copybook was a 18% decline in revenue from technology services, though this was argued to mainly be the result of the timing of customer deliveries.

Chief executive Xavier Rolet hailed LSE's strong start to the financial year, particularly the underlying growth achieved in each of our core business areas.

"We also continued to make good progress integrating recent acquisitions, developing innovative new products and expanding services and partnerships in line with our successful open access strategy."

Looking ahead, the company said the growth achieved at LCH and in the Information Services division, particularly at FTSE Russell, demonstrated the "strong ongoing demand" for its services, while the good performance of the capital markets business was also felt to be encouraging.

On Deutsche Börse, Rolet said: "This presents a compelling opportunity to expand our business in an industry-defining combination, creating a global markets infrastructure group. With substantial cost synergies and multiple opportunities to extend our product offerings, we believe this transaction offers significant value and benefits to customers and shareholders"