IG Group Reports Strong 32% Jump in Net Profits in FY-2018, Lowers FY-19 Target on Regulatory Challenges

Peter Hetherington, IG Group Chief Executive
Peter Hetherington, IG Group Chief Executive

UK’s leading forex brokerage group, IG Group Holdings Plc (LON: IGG) has reported earnings report for the fiscal ending 2018 ( IG has May 31st fiscal year end). The group has recorded more than 30 per cent jump in profits for the full year and has announced a higher dividend. The group also cautioned investors that the earnings growth in the FY19 may weaken down on the account of CFD leverage caps being instituted by ESMA, which is scheduled for next month implementation.

The net trading revenue for the FY 18, came in at £569.0 million, an increase of 16 per cent from £491.1 million in FY 17. The operating profit during the year has increased by 32 per cent to £281.1 million, an increase from £213.4 million in FY 17. The earnings reports surpassed expectations of many analysts who have predicted a rise of $273.9 million in operating profits.

According to the company, the strong results are due to the increased excitement around cryptocurrencies and heightened market volatility in the financial market in the first quarter of this year. Operating profits margin came in at 49.4 per cent against 43.5 per cent in FY 17. The group has announced a final dividend of 43.2 pence per share, an increase of 34.2 per cent compared to previous year.

The IG’s operation is still heavily dependent on UK operations, with a revenue share of close to 45 per cent, next is EMEA which contributes close to 29 per cent in revenue and APAC region contributed 25 per cent of the total revenue. Also, the APAC region was IG’s fastest-growing region in 2018 with 20 per cent growth.

IG which led a fierce lobbying campaign against the curbs feels that the initial effect on revenue on account of ESMA regulations will be 10 per cent.

Peter Hetherington, Chief Executive, commented:

“The Company delivered record revenue, operating profit and earnings in FY18, driven by strong growth across all regions and products, and has continued to make good strategic and operational progress.  We will continue with the investments we are making to deliver future growth and to position the business to benefit from the strong demand for our products.”

“We are pleased that there is now greater clarity around the nature and extent of regulatory change in the UK and EU affecting the CFD industry.  As ESMA’s product intervention measures are focused on the CFD industry, they risk creating an unlevel playing field by giving an advantage to other forms of leveraged trading products which are offered to retail clients. IG has a long history of successful innovation, and is committed to offering the widest possible range of trading opportunities to appropriate clients that are fully compliant with regulations.”

“IG has delivered a sustainable business for more than 40 years by placing good client outcomes at the heart of everything it does.  IG’s business model ensures that its interests as a business are aligned with the interests of its clients, which sets it apart from most companies in the industry.   IG will continue to lead the way in the industry, and the business is well positioned to mitigate the impact of regulatory change and to continue to deliver sustainable growth and attractive shareholder returns.”