IG's quarterly trading revenues disappoint, but client numbers rise
By Oliver Haill
Date: Thursday 21 Mar 2019
(Sharecast News) - IG Group's revenues fell 12% in the third quarter compared to the second as the online trading platform continued to adjust to new regulations and lower levels of volatility in financial markets in the last two months.
Revenue of £108m was generated in the three months to 28 February, continuing to contract from the £122.1m in the three months to end-November.
The quarter was well down on the strong third quarter of £152.9m from a year ago, as it was the second quarter after ESMA's new regulations were imposed on offering CFDs and binary options to retail customers.
For the nine months of raw financial year to date, net trading revenue of £359.0m is down 15% on the previous year, with the effect of ESMA and a drop-off in interest in cryptocurrencies.
Looking at the results by region, UK revenue was down 16% quarter-on-quarter and EU revenue down 13%, though client numbers were up 1% and 2% respectively. Asia Pacific client numbers were up 1% but revenues down 9%, while over-the-counter leveraged clients increased by 1% to 84,200, with US and share dealing client numbers both up equally. The
Lower revenues were blamed on market volatility, which was high in December but reduced significantly in January and February. The VIX volatility index peaked at over 36 in December and is 13 on the day of results, while its currency volatility equivalent hit +9 in December and has since fallen to +6.
Client recruitment remains strong, with 7,742 new OTC leverage clients placed a first trade in the quarter, following 7,553 in the previous quarter.
IG also launched a new retail FX business, IG US, and a new German subsidiary, IG Europe, in January and expects to launch its multilateral trading facility, Spectrum, before May.
Further on the outlook, IG said the effect of market volatility was difficult to predict accurately but it continues to expect that revenue in FY19 will be lower than in FY18, with cost guidance unchanged for a similar level to the £290m total operating costs spent last year. The board also expects to maintain the 43.2p per share annual dividend until the group's earnings allow the resumption of progressive dividends.
IG shares fell more than 7% on Thursday morning to 506p by 0943 GMT.
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