IG Group has today published its interim results for the first half of its 2019 fiscal year ended November 30, 2018. As is the case with many brokers operating within the European Union (EU), IG Group felt the sting of the European Securities and Markets Authority (ESMA) regulation during the period.
During the first half of its 2019 fiscal year, IG Group reported a drop in net trading revenue of six percent year-on-year, falling from £268.4 million ($345.3 million) in the first half of 2018 down to £251.0 million.
Revenue is down, but it’s not all bad
As Finance Magnates previously reported, given that 2018 was a record year for IG Group, this loss actually isn’t as bad as it may seem. Considering the impact the new ESMA regulations have had on other brokers, IG Group actually did rather well.
Operating profit was also down, coming in at £112.5 million for the first half of the 2019 fiscal year. This is down by 18 percent when measured against H1 of 2018, which had an operating profit of £136.5 million.
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Commenting on the results, June Felix, the Chief Executive Officer (CEO) of IG Group said: “The actions that have been taken over the last two years have resulted in the Company successfully navigating the introduction of the ESMA measures.
“At the same time the business has developed innovative new products, continued to on-board new, valuable clients, and has continued to deliver a high quality service. Our ability to do so reflects the quality of our people, our technology, and our approach to innovation… I am confident that the Company will, as previously guided, return to growth after FY19.”
IG Group expects to recover after its 2019 fiscal year
As IG Group has previously noted, the firm expects that its revenue in the 2019 fiscal year will be lower than 2018. This is both due to the impact of the ESMA measures and the strong performance of the company during the second half of 2018, which was buoyed by an uptick in interest in cryptocurrencies.
In addition, the firm estimates that its total operating costs, which combines operating expenses plus variable remuneration, in the 2019 fiscal year, will be at a similar level to the total operating costs in the previous fiscal year (£290 million)
In the near future, IG Group is planning on launching new subsidiaries in the US and Europe. IG Europe (IGE), which is the Group’s client-facing subsidiary in Germany, is expected to launch at the end of this month. The Group’s US subsidiary (IG US), a retail foreign exchange (forex) dealer, is also planned to begin operations by the end of January.