CMC Markets forecasts FY2021 net operating income to exceed upper end of market consensus

Online trading services provider CMC Markets Plc (LON:CMCX) today issued a trading update for the three months to June 30, 2020 (Q1 2021).

CMC says that, in Q1 2021, its entire business has continued to perform very well, with client trading activity remaining around double that of the same period in the prior year. This is in line with the report delivered on June 11, 2020, when CMC Markets posted its FY20 results. Client income retention for the period is materially higher than the 82% reported in H1 2020 and stockbroking net trading revenue also continues to benefit from the market conditions. Client acquisition and active client numbers remain at elevated levels.

As a result, net operating income for Q1 2021 is in excess of that reported for H1 2020 of £102.3 million.

The Board is confident that, even in the event that more normalised client trading activity returns, with the strong underlying performance of the business, 2021 net operating income will exceed the upper end of current market consensus.

As at July 2, 2020, the Group compiled Full Year 2021 consensus is as follows:

• Net operating income of £245.9 million, ranging from £239.1 million to £255.5 million;
• Profit Before Tax of £85.2 million, ranging from £75.8 million to £93.5 million.

Let’s recall that, for the full year to March 31, 2020, CMC Markets reported net operating income of £252 million, mainly fuelled by significantly improved CFD trading revenue performance through higher retention of client income throughout the year following changes to the Group’s risk management strategy and higher gross client income mainly as a result of high market volatility in the latter part of Q4 2020. This was complemented by significant growth in the stockbroking business, through a combination of a full year of revenues from the ANZ Bank white label stockbroking partnership, higher market volatility in Q4 2020 and successful product launches.