Market crash a boon for IG Group profits

EXTREME market volatility over the past two months pushed revenues up almost a fifth higher than last year at spread-better and derivatives trader IG Group, it said yesterday.

IG said its customers had spent the summer months trading rather than holidaying as normal, which had pushed its client activity to “record levels” since the start of June and led to a 19 per cent jump in its revenues.

The turmoil in financial markets, sparked by fears over Eurozone sovereign debt levels and the Standard & Poor’s downgrade of the US credit rating, is likely to raise its quarterly revenues to at least £94m, it said in an unscheduled trading update.

That would be more than £14.9m over the £79.1m revenues it made in the quarter to the end of August last year.

“IG Group Holdings has benefited from record levels of client activity in the recent market volatility, despite it being holiday season in the majority of the countries in which the group operates,” it said in a statement.

Costs have remained as expected while credit management was “robust”, which would keep its bad debt charges to less than one per cent of its revenues, the group said.

Analysts welcomed the news, with Evolution Securities analyst James Hollins calling it “stellar trading”.

“This is a strong performance, especially given that it is a low-season period,” he said.

Investec analyst Paul Leyland said IG had room to outperform further.

“We believe more fundamental-led upgrades should be achievable during the balance of the year, especially driven by international growth,” he said.