IG Group expands its spread bets
Following last year’s subdued first half coupled with by more volatile market conditions, spread betting firms such as IG Group (IGG) was able to deliver an adequate and robust half-year earnings growth. After the record profitability in the second half of last year, the comparatives are being set to be more competitive and tough.

However, investors can still expect to see some slow progress. To begin with, the chief executive of IGG anticipates several “patches of volatility”, such as in the U.S. to help in bolstering trading activity and drive demand. Moreover, he also pointed out that customers and clients alike are becoming more and more confident as the global economy slowly emerges from the recession.

The group is likewise making good progress with more effort in focusing on more profitable and active customers with an 18 % increase in the average profit per U.K. based client. This concentration is expected to improve the company’s ability to maintain and retain this higher-value based customer.

Whilst IG currently generates roughly half of its revenues in the U.K., the overseas operations are significantly expanding. The European business, for example saw revenue rise 25 % and management is now contemplating its plans to open a new office in Switzerland. While the company’s U.S. exchange operation which offers the only legal way for U.S. residents to trade binary bets still is the relatively small albeit the 85 % growth during last year. In addition, revenue from Australian operation did decline 4 % which is indicative of a small drop in the number of active customers along with the weakness of the Australian dollar.

The company is looking to expand its product offer in the long run in order to launch a U.K. cash equity service during the second semester. Management reckons this will indeed be a much superior offering by the existing U.K. online execution-only stockbrokers, since IG’s existing platform leaves it better placed to entice active traders. However this, as well as with the current developments as the opening of the Swiss office are expected to increase second-half costs up to as much as £7 million.

Last Updated: January 20th, 2021