IG Group’s revenues jump amid exceptionally high volatility

Maria Nikolova

Revenue in the first 36 trading days of the 61 in Q4 FY20 is estimated to be around £173 million.

Online trading major IG Group Holdings plc (LON:IGG) today issued an update on trading in the final quarter of its financial year ending May 31, 2020 (Q4 FY20).

The brokerage notes that financial market volatility has been sustained at exceptionally high levels since the last week of February 2020, and the Group’s clients have responded to the opportunities such market conditions present, and client trading volumes have been exceptionally high. As a result, the Group’s revenue, which is driven by client transaction fees, has also been exceptionally high during this period.

The high levels of volatility have persisted through March and into April, and the Group has continued to see high levels of client trading activity and further increases in the number of active clients. Revenue in the first 36 trading days of the 61 in Q4 FY20 is estimated to be around £173 million. Revenue in Q3 FY20 was £139.8 million, and revenue in H1 FY20 was £249.9 million.

In the first 36 trading days of Q4 over 22,500 new OTC leveraged clients have traded with the Group for the first time, compared with the 36,000 new OTC leveraged clients in the first three quarters of FY20.

IG has also revised its guidance regarding operating expenses. The company has previously guided that operating expenses, excluding variable remuneration, are expected to increase by around £30 million in FY20, to £290 million. Today, the company forecasts that its operating expenses, excluding variable remuneration, are set to increase by around £40 million in FY20, to £300 million. The further increase in costs reflects the impact of the growth in the active client base and the high levels of client activity in Q4 and an increase in the provision for bad and doubtful debts.

In addition, the company expects that the charge for variable remuneration in FY20 will be around £42 million, compared with £25 million in FY19, reflecting a higher general bonus pool, in which the vast majority of the Group’s employees participate, and higher sales bonuses to front office staff.

The Board reiterates that it expects to maintain the 43.2 pence per share annual dividend until the Group’s earnings allow resumption of progressive dividends.

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