IG Group Profit Up 25% On Spring Volatility Spike

Spread betting provider IG Group Holdings PLC (IGG.LN) this morning reported that fiscal year profit will be 25% higher on the year following a spike in volatility in the forex and equity markets during the spring, when traders were grappling with the consequences of an unfolding debt crisis in Europe.

The company, which accepts spread bets on the financial markets through its flagship IG Index site allowing customers to benefit from falling as well as rising prices, said it had benefited from unstable markets in the last few weeks of the year, boosting client activity and the rate of new accounts opening. ‘The final quarter, despite starting with low levels of volatility, showed strong revenue growth, up 24 percent on the corresponding period of the previous year,’ said a company spokesman in a trading statement on Wednesday. The company added that although it is difficult to predict future trends in volatility or customer reaction to changing economic conditions, new customers are opening accounts and it is well-positioned for future growth. Account opening in the final quarter rose to 21,500 new accounts compared with 18,750 in the same period a year ago.

IG Group said it expects to report an adjusted pretax profit of roughly £157 million for the year to May 31, on revenue 16% higher at £298 million. Adjustments include a GBP5 million cost associated moving its London office, IG said.Analysts forecast fiscal-year pretax profit of between £126 million and £153 million on revenue of between £283.2 million and £298.4 million, according to FactSet.

Revenue surged 24% on year during the final quarter of the fiscal year, aided by 21,500 new accounts. UK revenue increased 17%, while final quarter revenue from IG’s Australian unit rose 65%, IG said.

It repeated its USA exchange business, Nadex, is in discussions with a number of brokers about offering clients access and efforts to connect third party trading platforms to Nadex are at an early stage.

Comments: So it appears that random movements in foreign currencies has helped to lure clients to trade more whilst also helping IG to gain new customers. It is interesting to note that on the so-called ‘flash crash’ on a particular day in May, when the Dow Jones lost 1,000 points, IG Index saw 55% more transactions than on its previous record day and a spike in account openings.

Tags: IG Group, IG Index, igindex

This entry was posted on Wednesday, June 9th, 2010 at 8:10 am and is filed under Financial Updates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.