IG Group reports high trading volumes amid market volatility

UK online brokerage, IG Group Holdings issued an update on the final quarter of its financial year ending 31 May 2020 (Q4 FY20).

The company has observed exceptionally high volatility since the last week of February, creating market opportunities which its clients have responded to. Client trading volumes have risen exceptionally high and as a result the company’s revenue, driven by client transaction fees, has also been high.

The fluctuation in the market has persisted through March and April and the firm has seen continual high levels of trading activity and growth in the active clients’ numbers. The first 36 trading days of the 61 in Q4 FY20 brought estimated revenue of around £173 million. In comparison, the revenue in Q3 FY20 was £139.8 million, and revenue in H1 FY20 was £249.9 million.

IG Group office

IG Group observed that in the first 36 trading days of Q4, the new OTC leveraged clients, trading for a first time with the firm, were over 22,500. In the first three quarters of FY20 new OTC leveraged clients were 36,000.

The firm also revised its guidance regarding operating expenses. Previously, operating expenses, excluding variable remuneration, were expected to increase by around £30 million in FY20, to £290 million. Currently, the company predicts that its operating expenses, excluding variable remuneration, are set to increase by around £40 million in FY20, to £300 million. The increase in costs demonstrates 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.

IG also expects the charge for variable remuneration in FY20 to reach around £42 million, compared with £25 million in FY19, indicating a higher general bonus pool, in which the vast majority of the Group’s employees participate, and higher sales bonuses to front office staff.

IG Group has committed £5 million from its FY20 profit before tax to the IG Brighter Future Fund aiming to improve the educational opportunities available to the least privileged young people, many of whom have been impacted by the Coronavirus pandemic.

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

IG CEO, June Felix, said:

June Felix

During such a prolonged period of volatility, we’ve seen high volumes of clients choosing to trade markets with IG, reflecting our business resilience, our robust systems and our commitment to delivering the best possible trading experience.

We are encouraged with the resilience and performance of our employees in such challenging times for everyone. The IG Brighter Future Fund builds on our culture of supporting the local communities in which we operate, helping disadvantaged young people gain access to improved educational opportunities. We are thrilled to be able to build on our partnership with Teach First and forge ties with other new international partners to support the long-term education needs of children living through such an unsettling period.

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