Online trading group IG Group Holdings (IGG) released a positive trading update driven by increased trading activity as high market volatility persisted into April. The shares nudged 0.1% higher to 736p.
RECORD REVENUES BUT HIGHER COSTS
Revenues in the first 36 trading days of the final quarter to 31 May 2020 are estimated to be around £173m, a record quarter. The business saw a record number of new client applications and on-boarded over 22,500 customers compared with 36,000 in the first nine months of the year.
Higher revenues will lead to an increase in variable employee bonus payments and result in a charge of around £42m compared with £25m in 2019.
The company had previously guided for operating expenses excluding variable pay to increase by £30 to £290m, due to a step-up in brand promotion and establishing new businesses in the US and Europe.
Today, the company said it expects operating expenses to increase to around £300m, reflecting growth in the client base and an increase in provisions for bad debts.
Management struck a cautious tone for the rest of the financial year, saying the ‘recent sustained level of market volatility and revenue is unprecedented’ making it difficult to predict the eventual outcome.
However, the board confirmed it would maintain the annual 43.2 pence per share dividend payment until earnings allowed the resumption of progressive dividends as previously guided. The payout represents a yield of 5.8% at the current share price.
Broker Numis raised its fourth-quarter revenue forecast by 34.5% to £239.8m and its full-year earnings per share (EPS) forecast by 20.7% to 61.1p.
CHARITABLE CAUSES
The company has committed to donating £5m from its pre-tax profit to the IG Brighter Future Fund, to improve educational opportunities for underprivileged young people across the world, many whom have been disproportionately impacted by the coronavirus epidemic.
