IG profits jump but betting firm seeks volatility

SPREAD betting firm IG Group yesterday announced a 14 per cent rise in year-end pre-tax profit but admitted that increased stability in the financial markets could dent growth this year.

“Most of what our clients are doing is trading on short term markets and it’s an increase in volatility that drives volume,” chief executive Tim Howkins told City A.M..

In the last six weeks revenues have been down because relative calm in the Eurozone means clients have seen fewer opportunities to make a trade.

This pushed the firm’s shares down 2.5 per cent yesterday to 450.7p.

But Howkins said the firm’s investment in technology helped retain its 60,000 to 70,000 monthly users, with one in ten customers never trading on a traditional desktop PC.

“Something like 43 per cent of our clients are using mobile devices for trading. About 6,000 only ever trade using mobile. The competition simply can’t afford to do native apps for iPhone, iPad, Android, Windows 7 and BlackBerry,” he added.

The FTSE 250 company said revenue for the year to May rose 17.3 per cent to £366.8m, producing adjusted profits of £185.7m.

It saw strong growth in all markets apart from Japan, with revenues from the European operation growing by 26 per cent to £72.2m amid the continent’s economic woes.

Analyst James Hamilton at Numis called IG’s offering “unmatched” and said the firm’s investment programme “is building sustainable barriers” to entry.

“With significant surplus capital and liquidity building over time IG will be able to return more to shareholders,” he added.