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IG Group Revenues up by 8% in Q4 2013

Jun 11 2013
By

No, in fact you did not misread the headline, nor did you fall asleep for six months and miss Christmas. UK broker IG Group has, indeed, published its trading metrics for Q4 2013 (and the entire past year, too), simply because it operates with a fiscal year ending in May. So, having cleared that up, let's get down to business – and business was apparently quite good, since the broker's revenue is up by 8% in comparison with Q3. 

 

Total revenue for the period between the beginning of March and the end of April came up to £104.3 million, as opposed to the £96.2 million we saw between December 1 and March 1. Though most of this is profited from UK customers, who make up about half of IF Group's client base, it has to be noted that the broker has done quite well in Japan, where its revenues have gone up by 41%, from £4.1 million to £5.8 million. This is largely owed to the market movements in the yen and Nikkei we saw in April and May. The Cyprus bail-in is another factor in Forex brokers' favor this quarter. But probably the biggest profit-driver this April was the huge Gold sell-off we witnessed in the middle of the month, which pushed Forex trading volumes and revenues sky-high

 

 

Unfortunately, year-on-year metrics are significantly lower than expected and desired. This is a bit of a puzzler, since IF Group revenues reportedly rose by 18% during the previous quarter. Revenue for the second half of the fiscal year is up by 13% at £192.9 million from £171.3 million in 2012. So how come then overall revenue is down by 1% compared to last year?

 

 

The only logical explanation presented by the broker in the official press release is that the strong second half of the year wasn't able to make up for the slow months experienced by everyone in the Forex industry at the end of 2012. The good news is that, thanks to some timely management cuts in operating costs and IG Group’s successful defense in an insolvency legal case with Echelon Wealth Management, the broker's profit before tax (PBT) is up in comparison with last year. So, despite the slightly lower revenues, the company has managed to stay out of the red. And, of course, there is the fact that IG Group did invest quite a lot this quarter in opening new offices and purchasing a number of domains as part of its re-branding process.

 

Nonetheless, the numbers could be better, especially judging by what we've seen other brokers do during the same period. I mean, FXCM recently came out with metrics of its own and reported a whopping $390 billion worth of profit in May alone, or $17 billion daily! The broker's retail volumes were up by 7% from April, and the year-on-year increase was by 28%. In institutional Forex trading, volumes grew even higher, by 39% compared to the previous fiscal year!

 

Still, despite its rather modest achievements this quarter and year, IG Group has actually managed to keep its outlook positive. The broker expects a rise in 2014, based mostly on the reduction of operating costs. We have also been promised significant business expansion, both globally and in the company's offering for traders. Combined with the completion of the re-branding process started this year, these factors will, hopefully, spell success in the long run.

 

 

About IG Group

 

IG Group Holdings plc is a United Kingdom-based company. The IG Group is a global provider of contracts for difference (CFDs) and spread betting to retail investors. IG, through its main brands, IG Index and IG Markets, provides over 14,000 spread betting and CFD products on a range of financial markets, including Forex, stock indices, shares, commodities, binaries, options and interest rates. IG Group Holdings plc, the parent of the IG Group, is listed on the London Stock Exchange. The IG Group employees approximately 1,000 people worldwide and has offices in the UK, France, Spain, Portugal, Germany, Italy, Sweden, Netherlands, Luxembourg, Japan, Australia, South Africa and Singapore.

 

TAGS: ig group  metrics  revenues 

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