ICAP profits down but beats forecasts

City A.M. Reporter
ICAP – the world's biggest interdealer broker – said active and volatile markets enabled it to make a good start to its financial year after posting a five per cent drop in full-year pre-tax profit, beating expectations.

Concerns about Greece and a massive rescue package for the debt-laden country have led to wide swings in over-the-counter markets this month.

Market volatility boosts trading volumes and drives growth in interdealer broking.
Adjusted pretax profit fell to £333m for the year to the end of March on revenue that rose one per cent year-on-year to £1.6bn.

"We have made a good start to the new financial year, with volatile conditions creating more active markets," ICAP Chief Executive Michael Spencer said in a statement.

The broker, which aggressively added businesses in new markets, services and geographic areas, issued a shock profit warning in February due to losses at three of its new operations – equities, shipbroking and Brazil.

"We have learned some valuable lessons this past year," Spencer said. "We will concentrate this year on growing our business organically."

In March, ICAP said it would chop the equities business, axing up to 114 jobs and taking a hit of £51m

The firm said its Brazilian business continued to expand and had yielded good initial results in its first year.

Electronic broking contributed 48 per cent of operating profit. ICAP has said its electronic broking arms should benefit from regulatory demands for more transparency in over-the-counter mark