REG - IG Group Hldgs plc - First Quarter Revenue Update

IG groupAnnouncement

14/09/2023 07:00

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RNS Number : 3713M  IG Group Holdings plc  14 September 2023

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)
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.iggroup.com%2F&data=05%7C01%7CSimon.Wright%40ig.com%7Cfa58780cb4c445598c5a08da3f12df38%7C4b4cca9cedaf42f38e219070c5d9d76b%7C0%7C0%7C637891647530086156%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=ZopP0pt%2Bpil6u7sT7JRD8OjvetOm4sSxJJ%2FDPRvXU2A%3D&reserved=0)
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.

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