IG Group profit sags as trading activity falls
IG Group’s revenue sagged three per cent over the last year as the firm struggled to bring in new traders to its core business as market volatility remained subdued.
In its results for the year to 31st May, the group said net trading revenue in over-the-counter derivatives (OTC) such as contracts for difference (CFDs) and spread betting fell by 10 per cent.
However, revenue from trading cash equities and other investments was flat, although higher interest income boosted overall revenue from this arm. Client numbers in the investment division fell four per cent, but assets under administration rose from £3.3bn to £3.9bn due to market performance.
Total active clients for IG Group fell from 358,000 to 346,200, while there were 69,900 ‘first trades’ throughout the year, down four per cent from last year.
Client activity in OTC derivatives dropped across every region except Singapore, with UK and EU trading revenue dropped by 14 per cent.
Tastytrade, the company’s US-focused options and futures trading platform, also reported growth. Revenue rose 23 per cent to over £200m. The business booked a 10 per cent jump in new trading revenue.
Overall, costs rose by four per cent and profit before tax dropped seven per cent on an adjusted basis. Earnings per share dropped five per cent. The company increased its dividend by two per cent to 46.2p for the full year.
Newly appointed CEO Breon Corcoran, who began at the firm six months ago, said: “IG Group has a sound position in large, growing markets, underpinned by an established brand and a loyal, high-value client base. However, I’ve also identified areas requiring change. We have lots of work to do to take IG Group to the next level and address the challenges we face.
“We operate in a competitive industry landscape that is changing rapidly. We must move at pace to get closer to our customers, give them the products they want more quickly, enhance efficiency, and add scale to win. My initial priorities are to increase client centricity, accelerate product velocity and develop our culture to increase ownership and accountability.
“I’m excited by the enthusiasm of our people and their commitment to delivering sustainable, stronger growth. I’m confident that we have a solid platform on which to build.”