CMC Markets strikes upbeat note as income beats expectations
Online trading platform CMC Markets has lifted its full-year income expectations once again after its third quarter income beat predictions, as an increased focus on partnerships and professional traders pays off.
In a trading update on Thursday, CMC said third quarter net operating income came in above expectations, and that net operating income for the year would be ahead of market predictions of between £184.1m and £189.3m.
CMC Markets said the strong performance was driven by better retention of client income, which led to increased revenue per active client, despite lower client income due to weaker market conditions for much of the quarter.
“CMC’s performance continued to be strong during the third quarter. I am delighted that our strategy is delivering excellent results, as we continue to grow and diversify both our B2B and B2C businesses,” said chief executive Peter Cruddas.
CMC, alongside rival spreadbetters IG Group and Plus500, had seen an erosion in their client base following a crackdown on the sale of some high-risk bets to amateur clients by British and European regulators.
Recent updates from CMC have struck a more positive note, in contrast to IG, which this week reported a drop in profit following the introduction of the stricter rules.
In November, CMC posted a jump in net operating income for the first half, and emphasised that clients had begun to better adapt to the regulatory changes.
“We continue to have confidence in our ability to deliver further growth through platform partnerships and our strategy of attracting higher valued experienced clients. With the recent and forthcoming regulatory changes, we continue to believe this is the right strategy for the business going forwards,” he continued.
In today’s trading update, CMC said the fourth quarter of the financial year has started well.
Shares in the company, which trades on the FTSE Smallcap index, rose as much as 0.62 per cent in morning trading.
“This is a reassuring update and endorses the recent change in business model,” said Shore Capital analysts Vivek Raja and Paul McGinnis.
“What is more, CMC appears to have continued to retain more client income than the industry leader IG.”
CMC will post a pre-close trading update for the full year on 3 April.