CMC reiterates profit guidance even as trading activity picked up

abdelaziz Fathi

UK-listed brokerage firm, CMC Markets today published a trading update that says clients’ activity rebounded to healthy levels in September.

The upbeat report comes barely a few weeks after the spread better warned on profits after trading volumes waned during the summer.

CMC, however, reiterated its previous guidance for annual net operating income through March 2022. As previously guided, the figure is expected to come in between £250 million and £280 million if current market conditions continue for the rest of the fiscal year.

CMC anticipates its margin trading business to yield £100 million in net revenue for the H1 FY 2022 , half of the amount it earned in the previous year. The company’s non-leveraged net trading revenue is expected to be £24 million, nearly 19% of total revenues. The figure is also up 11% from the half year just ended.

Shares in the FTSE 250 company plummeted over a quarter at one point last month, which wiped off more than £300 million of its market cap after hitting their lowest level in just over a year.

Investors ditched CMC Markets’ stock after it warned that its annual net revenue is forecast to be in a range of £250 million to £280 million, sharply lower from more than £330 million it had set out in July.

CMC had a strong underlying performance earlier in the pandemic, which was enhanced by increased market activity in the first quarter. The company saw its shares shine earlier this year as the online trading platform operator doubled its annual net trading revenue, bolstered by the coronavirus-induced volatility.

This solid performance led CMC to get inducted into the FTSE 250, an index which measures the largest companies on the London Stock Exchange. The FTSE 250 Index is a capitalisation-weighted index, and lists the largest 101st to the 350th publicly quoted companies in the UK market.

Finally, CMC Markets updated investors on its joint venture in the stockbroking business with ANZ Bank’s share trading platform, ANZ Share Investing.

In a filing with the London Stock Exchange, the online retail broker said that it will close the acquisition of over 500,000 ANZ retail accounts in the next 12-18 months. With total assets exceeding AUD$45 billion, this is a strategic step to grow CMC’s equity brokerage businesses in the Asia-Pacific region.

The collaboration dates back to 2018 and initially allowed ANZSI’s clients to gain access to CMC’s technology, customer service and execution via an ANZ-branded stockbroking platform.

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