IG Group betting on 25% rise in profits

Published on Wednesday 9 June 2010 20:25

SPREADBETTING group IG Group is benefiting from market volatility with full-year profits expected to come in ahead of expectations.

In a pre-close trading update issued yesterday, the firm said it was expecting a 25 per cent rise in full-year profits after recent stock-market turbulence boosted business.

It has also seen a surge in client activity and new account openings as investors sought to take advantage of heightened volatility in equity and currency markets caused by the eurozone debt crisis.

IG opened 21,500 accounts in the three months to 31 May, compared to the 18,750 seen a year earlier.

The group said revenues rose 24 per cent in its final quarter, which had put it on course for annual underlying pre-tax profits of about 157 million on sales 16 per cent higher at an estimated 298m.

Shares rose strongly on the update, closing up 36.4p, or 9.28 per cent, at 428.6p.

IG said: "It remains difficult to predict future trends in volatility or customer reaction to changing market and economic conditions.

"Strong account opening and the continued development of the group's offering leave the group well positioned for further growth."

IG said business was higher across all its operations.

The group's Australian office delivered "exceptionally strong growth", with revenue of 46m, compared to 27.9m in the same period last year.

The group's European offices also saw strong growth with revenue of 47m, up from 30.2m.

Growth was strongest in Germany, particularly in the final quarter of the year.

Analysts at Singer Capital Markets said that despite the lack of visibility over future trading conditions, IG Group's prospects for the year ahead were also looking positive, with the potential for earnings upgrades.

"IG has a strong market position, strong cash flow, strong earnings momentum and is, we believe, relatively defensive in relation to the wider market and economy," they added.