IG Group shares dip as clients opt to hold positions amid millpond market conditions
Shares in IG Group slumped after it reported a fall in revenue and a drop in active client numbers, as lower market volatility resulted in fewer trades.
In the three months to December – the third quarter of the firm’s year – revenue at the trading platform fell seven per cent to £239.3m.
This was driven by an 18 per cent fall in revenue in IG Group’s over-the-counter derivatives business.
“Lower market volatility in the period resulted in a lower revenue per client, with active clients down 8 per cent,” the company said.
Market volatility often encourages more dealing as investors see the potential to make money quickly.
In the nine months to December IG Group’s active clients were down 5 per cent at 335,400, reflecting “quieter market conditions”.
Its shares were trading over seven per cent lower on Wednesday morning.
However, the London-based trading platform’s revenue climbed five per cent year-to-date to £758.4m.
It said interest income was an “important driver” of revenue growth in the period. US interest income was £32.7m, up from just £600,000 in the same period last year. Non-US interest income swung to £17.4m from a loss of £1.2m last year.
IG Group said “the benefit of our diversification strategy is becoming increasingly evident”, with its exchange traded derivatives business posting strong growth in both Europe and the US.
The group also maintained the level of client money balances during the period.
“The group delivered a good revenue performance in a quieter period of market activity, with strong growth from our high potential markets, showcasing the benefit of our diversification strategy,” the company said.
It said its full year revenue and profit will match market expectations and reaffirmed its medium-term revenue and profit margin guidance.