CMC Markets profit slumps 30 per cent in first half of the year on lack of trading activity

Caitlin Morrison
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CMC listed earlier this year

Profits dropped almost 30 per cent in the first half at online trading group CMC Markets, the group revealed today, due to a lack of client trading activity.

The figures

Profit before tax dropped 29 per cent to £18.8m from £26.5m, while net operating income was down four per cent to £75.5m from £78.9m.

Earnings per share fell 29 per cent to £5.1m from £7.2m.

The number of trades carried out in the six months to 30 September fell by nine per cent to 30.4m from 33.5m, while the value of trades was down 18 per cent to £911m from £1.1bn.

Shares were down 3.1 per cent at the open.

Why it's interesting

CMC, which listed on the London Stock Exchange earlier this year, said it experienced a lower level of market activity during the first half compared to the same period of last year - despite a " brief pick up immediately after the UK's EU referendum that proved short-lived". The firm said this led to "more limited trading opportunities" for its clients.

The quiet markets hit CMC in all three of its regional segments.

On a positive note, however, the business said recent world events had proven the strength of its ris management and balance sheet strength, as "demonstrated through a number of unprecedented events in the last six months, including the UK's EU Referendum and October's sterling 'Flash Crash', as well as the US presidential election, which is testament to the team's planning and delivery of risk mitigating actions".

What CMC Markets said

"Our first half net operating income reduced due to lower client trading activity, as experienced by the wider market and highlighted at our AGM trading update on 7 September 2016," said chief executive Peter Cruddas.

"However, we continue to make significant strategic progress, delivering against our five pillars of growth. We are growing our active client base through retail and institutional channels, rolling out new products and platform enhancements and looking at opportunities to develop our international footprint."

In short

Quieter trading in the first half has hit CMC Markets hard.

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