Icap shares dive as it warns on profits

 
Michael Bow
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INTERDEALER broker Icap plunged during trading yesterday after warning that its annual profits are set to be nearly a fifth lower than last year.

The outfit, set up as Intercapital by current chief executive Michael Spencer in 1986, was the biggest faller on the mid-cap markets yesterday after plunging over six per cent, wiping out more than £129m in value.

The group said despite a 17 per cent rise in volumes in January, driven by Japanese monetary policy changes, March had been slower, curtailing revenue and pre-tax profit estimates.

Increased uncertainty over incoming regulation of swap execution facilities under the Dodds-Frank act – which have been delayed for months and would affect Icap’s interest rate swap broking business – was also causing problems, it said.

“While we had a better start to the fourth quarter, we are not yet seeing a sustained upturn with market activity remaining fragile and unpredictable,” Spencer said.

The company said in February pre-tax profits would fall between £280m and £305m. Yesterday it said they would come in at the lower end of the range for the year ending March 31. Profits were 20.9 per cent higher last year at £354m. Group revenue is also expected to be down 13 per cent, as flagged in February. Spencer previously said the trading environment is the hardest he has ever encountered.

Icap also said its cost cutting plan was on track and it would have saved £60m by the year end.