IG Group share price jumps as it reports revenues are expected to increase

Caitlin Morrison
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IG Group shares were up this morning

Online trading firm IG Group said it expects full year revenue to rise by seven per cent this year.

According to analysts, this would imply full year revenue of around £488m.

The FTSE 250 company delivered a trading update to the market this morning, and said revenue for the three months to 31 May was higher than this time last year, "despite a quiet fourth quarter in financial markets".

Shares in IG were up 5.3 per cent in early trading.

IG said total operating expenses in the second half of the financial year ending 31 May were expected to come in around the same level as the first half, including a rebate from the Financial Services Compensation Scheme relating to prior years.

Meanwhile, full year profit before tax and earnings are forecast to be "modestly ahead" of the year before.

"Given the lack of market volatility in Q4, a key driver of client activity, we regard this as a relatively resilient outcome," said Shore Capital's Paul McGinnis.

IG was rocked when the Financial Conduct Authority proposed changes to rules around spreadbetting products late last year. The company's stock plunged by almost 40 per cent.

McGinnis noted: "We think IG is a well-run company and don’t believe its business model and higher average client value were the prime target of the FCA (and other European regulators) seeking to crackdown on operators targeting a relatively inexperienced retail client base which may not have fully understood the risks of leverage trading.

"However, with approximately 50 per cent of net trading revenue from the UK, the implementation of leverage limits capped at 50x (for experienced clients) will impact the on revenue and profits if introduced as proposed in the consultation published by the FCA in December."

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