LCH.Clearnet triples annual profits - FT.com LCH.Clearnet has almost tripled its net profit in the past year as the clearing house, which is soon to be majority owned by the London Stock Exchange, is gearing up for a capital increase in the coming months. The London and Paris based group, in which the LSE is set to take an up to 60 per cent controlling stake by the end of this month, said its net profit rose to €59.7m from €21.2m in the previous year thanks to higher revenues and a flat cost base. Its net revenues grew by almost a quarter to €426.2m, driven by an expansion of over the counter business and a better performance in commodities. Operating profit before impairment and non-recurring items grew by 89 per cent to €127.5m. Ian Axe, the transatlantic clearing group's chief executive, said growing revenues and profits had bolstered its financial stability in the past year. "These results helped to strengthen our balance sheet, hire the best market talent, invest in improving risk management and technology and fast track our expansion plans in the US with the acquisition of IDCG," he said. The group said it was preparing a €300m capital increase straight after the planned majority takeover by the LSE, in a move to comply with European regulators" recommendations for higher capital levels for clearing houses. "We are in the process of talking to our shareholders about the capital increase and We are confident we will exceed any technical requirements that come from the new regulations," said Jacques Aigrain, LCH's chairman. He described 2012 as a "year of transformation" for the group amid Europe's sovereign debt crisis and extensive global regulatory reforms for clearing houses. LCH.Clearnet acts as an intermediary between two parties in a trade, ensuring the deal in the case of a default. It clears a string of asset classes that range from commodities to swaps and euro bonds. Its SwapClear business cleared $340tn in notional interest rate swaps last year, strengthening its position as the dominating leader in a market where it mainly transacts with broker-dealers. Mr Axe said LCH would this year expand its strategic partnerships in Europe, the US and Asia after the nearing LSE takeover would remove "the M&A uncertainty of the previous eight years." He added that the group planned to extend its futures clearing capabilities by including futures on swaps and well as commodities futures contracts.