ES in inter-dealer broking group Icap suffered yesterday as it said it saw a slowdown in volumes of trades placed by telephone as banks cut their risk appetite towards the end of the year.
In a cautious trading update, Icap, owned by former Conservative party treasurer Michael Spencer, said its voice broking volumes had been “disappointing” in October and November, and warned that it was “not immune from changes in financial market activity”.
Investors took the news poorly and its shares closed down 4.7 per cent.
Icap said its revenues were flat in the six months to September compared with a year ago, at £867m, while its operating profit fell two per cent to £193m. Revenues from electronic trading were five per cent higher, at £160m, but its earnings per share fell six per cent to 19.6p.
Spencer said the group was “living through extraordinary times in financial markets” but said Icap expected “to see a return to normalised activity at the start of the next calendar year.”
Numis analyst James Hamilton said the fall in bank activity was likely to continue.
“We expect banks’ risk appetite to remain weak into 2012 and expect to leave our £341.4m forecast for the full year unchanged – expect market downgrades,” he said.