IG profits jump 52% on shutdown trading surge

(Reuters) - Online trading firm IG Group IGG.L reported a 52% rise in annual profit on Thursday, helped by increased client activity during the COVID-19 pandemic, while saying it expected a return to more normalised levels of market volatility in fiscal 2021.

The company, which allows individuals and other non-institutional retail investors to bet on stock, currency and oil market moves, posted a pretax profit of 295.9 million pounds ($377.15 million) for the 12 months ended May 31, up from 194 million pounds last year.

It said that average daily trade volume tripled to more than 1 million trades at the peak of the COVID-19 sell off in March, against 336,000 in 2019.

Retail brokers and trading platforms have seen a surge in their number of active clients during the coronavirus crisis while also benefiting from huge swings in stock, currency and commodity markets, which have increased the volume of trade.

The resulting surge in profits has eased pressure on IG, and rivals including Plus500 Ltd PLUSP.L and CMC Markets CMCX.L, who struggled last year in the face of a regulatory crackdown on the scale of risk-taking on their easy-access platforms.

IG, which hedges all client risk into the market and makes money primarily just from transaction fees, said it saw revenue growth in its core markets portfolio of 3%-5% over the medium term, and an incremental 100 million pounds of revenue by 2022 end relating to ‘significant opportunities’ portfolio.

It recommended a final dividend of 30.24 pence per share, taking the full-year dividend to 43.2 pence per share, unchanged from the payout the year earlier.

Annual net trading revenue rose 36% to 649.2 million pounds, with 96,900 new clients onboarding in the fiscal year.

Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich and Shounak Dasgupta