Volatile market is a sure bet for IG Group as profits treble

Stockmarket volatility helped spread-betting firm IG Group treble its first-half profit, its latest update revealed.

And the firm is looking to this summer’s World Cup in Germany as a platform to take its sports gambling operation into the betting mainstream.

IG said punters betting on equity indices rose to record levels after October proved to be a choppy month for shares on world markets.

Chief executive Nat le Roux also said the company had seen an upswing in interest in financial binary volumes – a form of fixed-odds betting that has limited risk and limited reward. That helped IG, which takes spread bets on a number of events from share price movements to the number of corners in a football match, increase its pre-tax profit to £20.4 million, from £6.6m, in the six months to November 30.

Turnover during the six months grew by 31 per cent to £38.6m.

“Spread betting is growth business, and growth in the last six months has actually accelerated as stockbrokers have been referring clients to IG to use its platform,” UBS analyst Jason Streets said.

Mr le Roux said: “IG has continued to deliver substantial growth in turnover and profits in the first half of the year, underpinned by consistently strong levels of client acquisition and the sustained development of our financial businesses in both the UK and Australia.”

Mr le Roux also said that the firm’s sports betting division had “achieved good levels of growth”, with turnover up by 14 per cent despite the reporting period lacking any major football tournament.

And it is relaunching its sports binary business – originally launched in the summer of 2004 – in a more simplified form and on a dedicated website ahead of the World Cup, which kicks off in June.

Mr le Roux said: “We continue to develop a simplified, fixed-odds offering, which we hope will appeal to a larger audience than our existing sports products. Our intention is to launch this in the spring, in good time for this summer’s football World Cup.”

And he added: “The World Cup is the single most important thing for our sports business. For the first time we’ll be competing with the main internet sports bookmakers.”

IG also said that its plans to open a Singapore base were around a month behind as it waited to obtain authorisation from the Monetary Authority of Singapore, but said that it was on course for a February start.

However, the firm said its Australian office had a good six months, with sales nearly doubling on the year before.

Brokers expect IG to post full-year pre-tax profits of between £40m and £45m. IG said trading volumes were “strong” and account opening levels were “robust”.

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