Home Forex IG Group’s Earnings Take a Hit in Tough Market, Falling 32% in HY FY24

IG Group’s Earnings Take a Hit in Tough Market, Falling 32% in HY FY24

by admin

Softer
market conditions and lower volatility across asset classes translated into
lower revenue and profits for IG Group Holdings plc (IG) in the first six
months of the fiscal year 2024 (FY24).

Total
revenue declined 9% to £472.6 million from £519.1 million a year before. Net
trading revenue fell 19% to £402.4 million from £494.9 million reported in the
same period in 2023.

IG Group’s adjusted profit before tax declined 21% to £205.7 million from £260.7 million last year. The after-tax profit shrank even more, by 32%, to £154.8 million. Along with this, the earnings per share indicator also fell, shrinking from 49.7 pence to 38.9 pence.

The base of
active clients slightly decreased, dropping from 312,000 to 296,300. The
number of newly acquired clients decreased from 37,500 to 33,800.

H1 FY24

H1 FY24 adjusted

H1 FY23

H1 FY23 adjusted

Change

%

Adjusted change %

Total revenue(£m)

472.6

472.6

519.1

519.1

(9%)

(9%)

Net trading revenue (£m)

402.4

402.4

494.9

494.9

(19%)

(19%)

Total operating costs2
(£m)

310.4

281.1

279.9

256.8

11%

9%

Profit before tax3
(£m)

176.4

205.7

240.5

260.7

(27%)

(21%)

Profit after tax (£m)

132.7

154.8

194.9

211.3

(32%)

(27%)

Basic earnings per share (p)

33.4

38.9

45.8

49.7

(27%)

(22%)

Interim dividend per share (p)

13.56

13.26

2%

Are there
any positives? The adjusted profit margin remained strong at 43.5%. Net
interest income rose significantly to £70.2 million from £24.2 million,
driven by higher interest rates.

Moreover, the Acting CEO, Charlie Rozes, said that IG Group’s exposure to diverse revenue streams
will drive further growth as it executes its strategy. With the end of this month, the acting CEO will be replaced with a newly appointed permanent CEO, Breon Corcoran.

“It’s
encouraging to see the benefits of our diversification strategy paying off,
despite a mixed trading backdrop for our clients, driven by persistently low
levels of market volatility in Q1 and Q2,” Rozes added.

IG Launches Cost Savings
Program

At a time
when both pre-tax and after-tax profits were visibly shrinking, total operating
costs were on the rise. In the reported period, these costs amounted to £310.4 million, reflecting an increase of 11% compared to H1 2023.

The company
launched a cost savings program targeting £50 million in annual savings by 2026
to combat this increase. IG Group also reduced its regulatory capital
requirement 40% and returned capital to shareholders, repurchasing £149.2
million of shares.

“We’ve
taken action to control growth in the cost base, significantly reducing the
rate of cost growth from FY23, yet still making selective investments in the
business,” the CEO of IG Group explained.

Series of Changes in IG Group’s Leadership

In addition
to appointing a new permanent CEO, IG has made several other executive moves recently.

In
mid-January, Matthew Davidson was appointed as the new Chief Executive Officer
of IG’s Australia and New Zealand unit. Based in Melbourne, he has already
taken over the new role, which came as an internal promotion after working at
IG Group for 19 years.

Earlier
this year, Eren Eraslan announced his appointment as the Head of Northern
Europe at IG Europe GmbH, marking a career move reflecting his extensive
experience and leadership in the financial industry. Eraslan brings a wealth of
experience to his new position, with a remarkable track record in various
roles.

Additionally,
IG Prime, the institutional arm of IG Group, strengthened its team with the
appointment of Andrew Wood as the Institutional Sales Manager based out of IG
Prime’s Sydney office. Like most other major brokerage brands, IG offers
institutional services under the IG Prime brand, including technology,
platforms, products, and exchanges across nineteen countries on five
continents.

Softer
market conditions and lower volatility across asset classes translated into
lower revenue and profits for IG Group Holdings plc (IG) in the first six
months of the fiscal year 2024 (FY24).

Total
revenue declined 9% to £472.6 million from £519.1 million a year before. Net
trading revenue fell 19% to £402.4 million from £494.9 million reported in the
same period in 2023.

IG Group’s adjusted profit before tax declined 21% to £205.7 million from £260.7 million last year. The after-tax profit shrank even more, by 32%, to £154.8 million. Along with this, the earnings per share indicator also fell, shrinking from 49.7 pence to 38.9 pence.

The base of
active clients slightly decreased, dropping from 312,000 to 296,300. The
number of newly acquired clients decreased from 37,500 to 33,800.

H1 FY24

H1 FY24 adjusted

H1 FY23

H1 FY23 adjusted

Change

%

Adjusted change %

Total revenue(£m)

472.6

472.6

519.1

519.1

(9%)

(9%)

Net trading revenue (£m)

402.4

402.4

494.9

494.9

(19%)

(19%)

Total operating costs2
(£m)

310.4

281.1

279.9

256.8

11%

9%

Profit before tax3
(£m)

176.4

205.7

240.5

260.7

(27%)

(21%)

Profit after tax (£m)

132.7

154.8

194.9

211.3

(32%)

(27%)

Basic earnings per share (p)

33.4

38.9

45.8

49.7

(27%)

(22%)

Interim dividend per share (p)

13.56

13.26

2%

Are there
any positives? The adjusted profit margin remained strong at 43.5%. Net
interest income rose significantly to £70.2 million from £24.2 million,
driven by higher interest rates.

Moreover, the Acting CEO, Charlie Rozes, said that IG Group’s exposure to diverse revenue streams
will drive further growth as it executes its strategy. With the end of this month, the acting CEO will be replaced with a newly appointed permanent CEO, Breon Corcoran.

“It’s
encouraging to see the benefits of our diversification strategy paying off,
despite a mixed trading backdrop for our clients, driven by persistently low
levels of market volatility in Q1 and Q2,” Rozes added.

IG Launches Cost Savings
Program

At a time
when both pre-tax and after-tax profits were visibly shrinking, total operating
costs were on the rise. In the reported period, these costs amounted to £310.4 million, reflecting an increase of 11% compared to H1 2023.

The company
launched a cost savings program targeting £50 million in annual savings by 2026
to combat this increase. IG Group also reduced its regulatory capital
requirement 40% and returned capital to shareholders, repurchasing £149.2
million of shares.

“We’ve
taken action to control growth in the cost base, significantly reducing the
rate of cost growth from FY23, yet still making selective investments in the
business,” the CEO of IG Group explained.

Series of Changes in IG Group’s Leadership

In addition
to appointing a new permanent CEO, IG has made several other executive moves recently.

In
mid-January, Matthew Davidson was appointed as the new Chief Executive Officer
of IG’s Australia and New Zealand unit. Based in Melbourne, he has already
taken over the new role, which came as an internal promotion after working at
IG Group for 19 years.

Earlier
this year, Eren Eraslan announced his appointment as the Head of Northern
Europe at IG Europe GmbH, marking a career move reflecting his extensive
experience and leadership in the financial industry. Eraslan brings a wealth of
experience to his new position, with a remarkable track record in various
roles.

Additionally,
IG Prime, the institutional arm of IG Group, strengthened its team with the
appointment of Andrew Wood as the Institutional Sales Manager based out of IG
Prime’s Sydney office. Like most other major brokerage brands, IG offers
institutional services under the IG Prime brand, including technology,
platforms, products, and exchanges across nineteen countries on five
continents.

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