IG Group: August’s market meltdown boosts revenue
IG Group has reported a jump in quarterly revenue after a worldwide meltdown in financial markets last month, which gave its clients more opportunities to trade.
The FTSE 250 online trading platform posted a total revenue of £278.9m for the three months to 31 August, up 15 per cent from £242.9m during the same period last year.
IG, which provides investing and spread betting services, said the increase reflected higher revenue per client “supported by elevated volatility across a range of asset classes in early August”.
That period saw financial markets across the US, Europe, and Asia rocked by a massive sell-off triggered by Japan’s central bank, which raised interest rates and fears of a US recession following weaker-than-expected job data.
The VIX index, a so-called “fear gauge” of the stock market’s expectation of the S&P 500’s volatility, hit its highest level since the start of the Covid-19 pandemic in 2020. Markets have since calmed following more well-received economic readings.
IG’s net trading revenue swelled to £242.1m in the three months to August, compared to £208.5m a year prior. Meanwhile, its options trading arm, tastytrade, saw revenue jump 17 per cent to £55m.
The firm took in £36.8m in net interest income, up from £34.4m a year before. Of this, £13.7m related to over-the-counter derivatives, £18.4m to exchange-traded derivatives and £4.7m to stock trading and investments.
The performance could suggest a turnaround from the second half of last year, when IG’s boss blamed “unexciting markets” for a nine per cent revenue fall and 21 per cent adjusted pretax profit drop.
IG said on Thursday that client cash balances in its US business remained broadly flat at $1.9bn (£1.5bn), while balances outside the US rose roughly £0.1bn to £2.6bn over the quarter.
The firm’s shares rose 1.7 per cent in early trading on Thursday following the trading update. Its stock price has gained 27 per cent so far this year.
In July, IG announced a £150m share buyback programme, which it expects to complete by the end of January.