CMC Markets raises targets following profit surge
Spreadbetter CMC Markets has reported a jump in net operating income for the first half and raised its full-year target as traders adapted to changes following a regulatory clampdown on high-risk bets.
The figures
CMC Markets said its net operating income rose 45 per cent for the six months to 30 September, hitting £102.3m.
This rise was driven by a higher contract for difference (CFD) revenue per active client, which climbed 45 per cent to £2,047 and an 164 per cent increase in stockbroking net revenue.
Raising its forecasts, the company said it now expects net operating income for the full year to exceed £180m.
The trading platform’s profit before tax surged 318 per cent from £7.2m to £30.1m during the first half.
CMC reported a 252 per cent increase in earnings per share, which rose from 2.7p to 9.5p, and announced a 2.85 dividend per share.
The company said its operating expenses rose 13 per cent during the period to £71.2m due to increased investment in its stockbroking business and higher variable remuneration.
CMC’s shares were up 3.80 per cent at 131p in mid-morning trading.
Why it’s interesting
This morning’s results show that CMC is firmly on the road to recovery after the implementation of stricter regulations governing high-risk bets hit its business last year.
The spreadbetter’s profit had plunged 90 per cent last year after a crackdown by the European Securities and Markets Authority (ESMA) on CFD platforms.
CMC said active European client numbers fell 17 per cent during the first half, driven by clients leaving as a result of the ESMA changes. CFD net client income also dropped 28 per cent.
The company is moving to diversify its operations to reduce its reliance on CFD, and has partnered with ANZ Bank to provide an investment platform.
What CMC said
“I am pleased with the strong first half performance. This time last year we had the uncertainty of regulatory change overhanging the sector with the client response to the changes in minimum margin levels unclear. A year on, we are seeing clients adapt, maintaining their interest in the products and the trading platforms we offer,” said chief executive Peter Cruddas.
“It is clear that we are becoming more than a CFD business with income also being derived from technology partnerships, such as the ANZ deal,” he added.
“This is an exciting area of the business which will continue to grow through further planned partnerships and ongoing investment to improve the offering.”
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