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ASX share price on watch as profit surges 4%

ASX share
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The ASX Ltd (ASX: ASX) share price is on watch after reporting a 4.4% surge in net profit after tax.

Why is the ASX Ltd share price worth watching?

Underlying NPAT totalled $513.8 million with statutory NPAT climbing 1.4% to $498.6 million.

That saw the Aussie share market operator report a 4.4% increase in underlying earnings per share (EPS). Impressively, that is the 8th consecutive year of growth as EPS climbed to 265.4 cents.

The ASX Ltd share price could be on the move after also reporting a 4.5% dividend increase. The company’s dividends per share totalled 238.9 cents for the year including a 122.5 cent second-half distribution.

Operating revenue was up 8.6% to $938.4 million thanks to heightened trading activity in 2020. That follows a huge spike in average trading volume during the coronavirus pandemic and March 2020 bear market.

The largest business unit, Derivatives and OTC Markets, reported a 4.5% increase in operating revenue to $317.6 million.

Listings and Issuer Services had a strong year despite second-half challenges, with operating revenue up 7.3% to $237.1 million.

There was also strong growth across Equity Post-Trade Services (17.0%) and Trading Services (11.5%) to $127.4 million and $256.3 million, respectively.

ASX reported 7 million trades registered in CHESS with 24.5 million futures contracts traded in March 2020. $169 billion of bonds settled in Austraclear in the month, up 29% versus any previous pre-COVID daily settlement record from March 2019.

Total expenses climbed 9.0% to $286.2 million due to unexpected COVID-19 related costs while earnings before interest and tax (EBIT) was up 8.5%.

The Reserve Bank of Australia’s three interest rate cuts weighed on ASX’s interest income figures. That was evident in the Group net interest income decline of 67.5% to $7.6 million with a 15.1% in total interest income to $83.8 million.

Which segments are supporting the ASX Ltd share price?

The ASX Ltd share price will be one to watch this morning after reporting strong performance across its business units.

Total capital raised climbed 12.8% to $97 million with an increase in secondary capital offsetting a decline in IPOs. That was largely driven by a spate of equity raisings in Q4 2020 as companies looked to secure their balance sheets.

Cash market trading in 2H FY20 rocketed 52.4% compared to the previous year and was up 30.5% for the full-year.

ASX noted market trends had been accelerated by the pandemic. That includes increased reliance on technology and process digitisation. Data and security were also among the factors cited by the exchange operator.

Outlook

There was little in the way of guidance provided by management amid the current uncertainty. Market volatility and low interest rates look set to create more headaches in FY21.

However, the ASX Ltd share price could be in demand after reporting an increased dividend and its 10th consecutive year of consecutive EBIT growth.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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