Last checked at 14 Sep 2023 07:00
14 September 2023
LEI No: 2138003A5Q1M7ANOUD76
IG GROUP HOLDINGS PLC First Quarter Revenue Update
'Solid Group revenue performance set against much softer market conditions, driven by strong client retention rates and continued high levels of client money balances.'
IG Group Holdings plc, the home of active traders worldwide, today issues its scheduled revenue update for the three months to 31 August 2023 ("Q1 FY24"), representing the first quarter of the financial year ending 31 May 2024 ("FY24").
Business performance
Total revenue of £242.9 million reflected the benefit of business diversification over the past few years, as some moderation in OTC derivatives revenue in the quarter was offset by exchange traded derivatives and stock trading, both of which grew revenues significantly year over year.
Total revenue by product (£m) | Q1 FY24 | Q1 FY23 | % Change |
OTC derivatives | 182.7 | 199.0 | (8%) |
Exchange traded derivatives | 49.8 | 36.4 | 37% |
Stock trading and investments | 10.4 | 6.4 | 61% |
Total revenue | 242.9 | 241.8 | - |
Similar to trends seen in Q4 FY23, a decrease in net trading revenue reflected substantially lower volatility across a range of asset classes, which was more than offset by strong growth in interest income, which resulted from a combination of higher interest rates and stable client money balances from the year end.
Net interest income within total revenue was £34.4 million (Q1 FY23: £7.1 million). Of this, £11.8 million related to OTC derivatives (Q1 FY23: £1.2 million), £18.0 million was attributable to exchange traded derivatives (Q1 FY23: £5.6 million) and £4.6 million related to stock trading and investments (Q1 FY23: £0.3 million).
Total revenue by portfolio (£m) | Q1 FY24 | Q1 FY23 | % Change |
Core Markets+ | 188.7 | 200.3 | (6%) |
High Potential Markets | 54.2 | 41.5 | 30% |
Total revenue | 242.9 | 241.8 | - |
Total revenues within the Core Markets+ portfolio reduced by 6% to £188.7 million, reflecting softer market conditions through most of the quarter, although client money balances remained strong, indicating clients' interest in and propensity to trade when they see opportunities in the market.
Within the High Potential Markets portfolio, tastytrade achieved another record level of quarterly total revenue (USD), which increased by 48% to $60.0 million; on a reported GBP basis, total revenues increased 39% to £47.1 million (Q1 FY23: £33.9 million). Within total revenue, net trading revenue increased by 10% and 3% in USD and GBP terms, respectively, to $37.1 million (Q1 FY23: $33.8 million) and £29.1 million (Q1 FY23: £28.3 million). Total client equity on the platform reached record levels with average balances in the quarter up 9% on the prior quarter, as we continue to attract large balance accounts.
Total active clients across the Group in the quarter were 267,000 (Q1 FY23: 279,300), a resilient performance reflecting the quality of our clients and our ability to engage and retain client cohorts through superior technology, trade execution, and overall customer service.
Total client money balances of £4.1 billion remained stable on the year end balances as clients maintained their interest in trading financial markets around the world.
Capital update
In July, the Board announced a £250 million share buyback programme. The first tranche of £100 million commenced during the quarter. As at 12 September, approximately 5.9 million shares have been re-purchased, at a cost of £39.6 million. The first tranche is anticipated to be completed on or before 12 December 2023.
On 1 January 2022, the Group transitioned to the Investment Firm Prudential Regime ("IFPR"). Following our first Supervisory Review and Evaluation Process ("SREP") under the new regime, the Group's regulatory capital requirement reduced from £497 million at 31 May 2023 to £290 million as at 31 August 2023, evidencing the high quality and strength of our risk management frameworks and controls, following years of steady investment and development. The Group continues to be highly cash-generative, and this reduction in our regulatory capital requirement further strengthens our financial capacity for strategic growth initiatives and to deliver distributions to our shareholders. The Board will continue to allocate capital in a disciplined manner, in line with our Capital Allocation Framework adopted last year.
Outlook
The Group remains confident of achieving its medium-term targets. We are progressing with plans to drive even greater cost efficiency, leveraging the scale advantages that we have as a global Group.
As announced on 29 August 2023, the Board has commenced a comprehensive search process for a permanent CEO and expects to make an appointment in the coming months.
The Group's next scheduled market announcement will be the half year FY24 results in January 2024.
For further information, please contact:
IG Group Investor Relations | IG Group Press | FTI Consulting |
Martin Price / Simon Wright | Angela Warburton / Alayna Francis | Edward Berry / Katherine Bell |
020 7573 0020 / 0099 | 020 7633 5382 / 5395 | 07703 330 199 / 079 7687 0961 |
investors@ig.com | press@ig.com
| edward.berry@fticonsulting.com / katherine.bell@fticonsulting.com
|
Disclaimer - Forward-looking statements
This statement, prepared by IG Group Holdings plc (the "Company"), may contain forward-looking statements about the Company and its subsidiaries (the "Group"). Such forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "projects", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other various or comparable terminology.
Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors which are beyond the Company's control and are based on the Company's beliefs and expectations about future events as of the date the statements are made. If the assumptions on which the Group bases its forward-looking statements change, actual results may differ from those expressed in such statements. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including those set out under "Principal Risks" in the Company's annual report for the financial year ended 31 May 2023. The annual report can be found on the Company's website (www.iggroup.com).
Forward-looking statements speak only as of the date they are made. Except as required by applicable law and regulation, the Company undertakes no obligation to update these forward-looking statements. Nothing in this statement should be construed as a profit forecast.
About IG
IG Group (LSEG:IGG) is an innovative, global fintech company that delivers dynamic online trading platforms and a robust educational ecosystem to power the pursuit of financial freedom for the ambitious. For nearly 50 years, the Company has evolved its technology, risk management, financial products, and education and content to meet the needs of its retail and institutional clients. IG Group continues to innovate its offering for the new generation of tomorrow's investors through its IG, tastytrade, IG Prime, Spectrum, and DailyFX brands.
Established in 1974, IG Group is a London-headquartered FTSE 250 company offering its clients access to ~19,000 financial markets through its offices spread across Europe, North America, Africa, Asia-Pacific and the Middle East.