IG Group Reports a Decline in Revenues Amid Declining Customer Value

Revenues per client for IG Group declined materially year-on-year.

UK spread betting, FX and CFDs brokerage IG Group (LON:IGG) is reporting that the company’s revenues in the third quarter of fiscal 2017 declined somewhat. For the quarter that ended on February 28th, the metric decreased by 3.8 percent year-on-year to £117.4 million ($146.4 million).

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The drop was led by declining revenues per client, which was down 15 percent when compared to the same quarter of last year. The negative impact was cushioned somewhat by a 13% rise in the number of active clients.

The business of IG Group is also seeing a geographical shift. A material decline in the UK and Ireland was offset by an increase in Europe and the ‘Rest of the World’ regions.

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Geographical revenues from the UK and Ireland declined 15 percent to £53.5 million ($66.9 million), while European figures rose 3.3 percent to £26.6 million ($33.3 million). IG Group’s Australian business remained flat at £17.3 million ($21.6 million) and the company’s big performer, the ‘Rest of the World’ segment, contributed with £20 million ($25 million) which is a rise of 23 percent.

IG Facing More Competition in the UK

The UK market has been one of the most competitive markets for a while and IG Group has been the leader for many years. As we approach the finishing line of the consultation period that the FCA provided to brokers and clients to comment on its proposed changes, the dominance of the firm in the UK market is not as strong as it used to be.

Changes in revenues per client in the UK amounted to a decline of 23 percent, a figure which was only partially offset by an 11 percent increase in active traders. According to the data published by IG, higher value clients are shifting their business elsewhere.

Just before the FCA finalizes its new regulations on retail trading, the market appears to be reshaping with IG’s leadership role for retail traders being challenged somewhat. Looking at quarterly reports released by some UK-centered firms, smaller companies appear to be acquiring an increasing number of higher value clients.

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