Icap profit view sapped by low trading volume

Michael Bow
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ICAP, the world’s largest inter dealer broker, lowered its forecast for annual profit yesterday as it revealed revenues for the first half of the year are expected to plunge 14 per cent.

Lacklustre trading over the summer, with volumes in capital markets seeing double-digit drops, forced the firm to cut its pre-tax profit forecast from a range of £335m and £365m to between £307m and £346m for the year to 31 March 2013.

Analysts now expect profits to fall around the £340m mark.

Icap had already said that it expected its revenue to fall nine per cent in the first half, but yesterday revised this to a 14 per cent drop for the six months to 30 September.

Icap, which has a market cap of £2.2bn, was relegated from the FTSE 100 to the FTSE 250 a fortnight ago after falling to the bottom of the blue chip index.

Markets sent the company’s shares down four per cent yesterday on the back of the negative trading update.

Chief executive Michael Spencer said: “The macroeconomic environment remains difficult and it’s too early to judge if recent actions by the Federal Reserve and the European Central Bank will result in a sustained improvement in market confidence.

“In any event, we will continue to take the necessary action to constrain our cost base as well as position Icap optimally for upcoming financial regulatory reform.”

Trading volumes have had a torrid time over the summer, with European trading in July and August down a third on last year, to its lowest level since mid-2009.