By John McCrank and Mehnaz Yasmin
(Reuters) -New York Stock Exchange owner Intercontinental Exchange (NYSE:ICE) posted a rise in first-quarter profit on Thursday, driven by higher trading volumes in several asset classes as interest hike expectations and Russia's invasion of Ukraine raised market volatility.
Excluding one-time items like M&A costs, ICE earned $1.43 per share, edging past analysts' mean estimate of $1.42 a share, according to Refinitiv IBES data. Atlanta-based ICE runs futures and equities exchanges as well as clearing houses, data services and a mortgage software business.
ICE on Wednesday said it planned to acquire mortgage software firm Black Knight (NYSE:BKI) in a $13.1 billion deal, as it bets on a windfall from modernizing the mortgage process.
"The industry is so inefficient," ICE President Ben Jackson said of the mortgage industry on a call with analysts. "It is the most analog space and asset class that we've seen as we've been on our journey of taking businesses from analog to digital."
If regulators approve the deal, it would make ICE the biggest player in the mortgage software space, analysts said.
"The acquisition of BKI would allow ICE to fully digitize the mortgage origination and servicing experience from start to finish, and in the process, potentially reduce costs to lenders and originators by possibly as much as 50% over the long term," Jefferies analyst Daniel Fannon said in a client note.
On the exchange side, financial futures and energy futures volumes were up 24% and 14% respectively as sky-high inflation, Russia's invasion and expectations of interest rate hikes roiled markets, driving demand for portfolio protection.
Net income attributable to ICE rose nearly 2% to $657 million, or $1.16 per share, for the three months ended March 31 from $646 million, or $1.14 per share, a year earlier.
Total revenue, excluding transaction-based expenses, rose nearly 6% to $1.9 billion.