ICAP profits sink but shares surge
SHARES in broker ICAP jumped 7.9 per cent to 362p yesterday – despite the firm announcing job losses and reduced annual profit expectations.
The unusual situation occurred after the world’s largest interdealer agent beat gloomy analyst predictions that the situation would be even worse.
Yesterday ICAP announced that profit for the year ending in March should be toward the upper end of the £336m-358m range. The figures are still substantially down on November 2011 predictions of £358m-390m profit.
Reduced trading volumes due to the Eurozone crisis and a reduction in market liquidity have hit the firm, resulting in a seven per cent drop in trading volume during the final three months of 2011 to $740bn (£466bn).
Meanwhile electronic trading volumes during January 2012 dropped 19 per cent on the same month last year.
Michael Spencer, group chief executive of ICAP, said: “Like everyone else we saw a significant reduction in risk appetite in November and December. In January we saw encouraging signs of activity starting to return, albeit cautiously in some markets.”
The firm used the interim management statement to announce that it had reduced expenditure by £20m during the current financial year, mainly by cutting jobs in areas where profits are falling but that it would continue to invest in areas such as financial futures and commodities.