IG Group's Earnings Take a Hit in Tough Market, Falling 32% in HY FY24

by Damian Chmiel
  • The company's numbers dropped amid a softer volatility, with a decline of 9% in total revenue.
  • However, the number of active and new customers shrank slightly, remaining near 2023's levels.
IG-chart-down

Softer market conditions and lower volatility across asset classes translated into lower revenue and profits for IG Group Holdings plc (IG) in the first six months of the fiscal year 2024 (FY24).

Total revenue declined 9% to £472.6 million from £519.1 million a year before. Net trading revenue fell 19% to £402.4 million from £494.9 million reported in the same period in 2023.

IG Group Reports Decline in Six-Month Financial Results amidst Market Volatility

IG Group's adjusted profit before tax declined 21% to £205.7 million from £260.7 million last year. The after-tax profit shrank even more, by 32%, to £154.8 million. Along with this, the earnings per share indicator also fell, shrinking from 49.7 pence to 38.9 pence.

The base of active clients slightly decreased, dropping from 312,000 to 296,300. The number of newly acquired clients decreased from 37,500 to 33,800.

H1 FY24

H1 FY24 adjusted

H1 FY23

H1 FY23 adjusted

Change

%

Adjusted change %

Total revenue(£m)

472.6

472.6

519.1

519.1

(9%)

(9%)

Net trading revenue (£m)

402.4

402.4

494.9

494.9

(19%)

(19%)

Total operating costs2 (£m)

310.4

281.1

279.9

256.8

11%

9%

Profit before tax3 (£m)

176.4

205.7

240.5

260.7

(27%)

(21%)

Profit after tax (£m)

132.7

154.8

194.9

211.3

(32%)

(27%)

Basic earnings per share (p)

33.4

38.9

45.8

49.7

(27%)

(22%)

Interim dividend per share (p)

13.56

-

13.26

-

2%

-

Are there any positives? The adjusted profit margin remained strong at 43.5%. Net interest income rose significantly to £70.2 million from £24.2 million, driven by higher interest rates.

Moreover, the Acting CEO, Charlie Rozes, said that IG Group's exposure to diverse revenue streams will drive further growth as it executes its strategy. With the end of this month, the acting CEO will be replaced with a newly appointed permanent CEO, Breon Corcoran.

“It’s encouraging to see the benefits of our diversification strategy paying off, despite a mixed trading backdrop for our clients, driven by persistently low levels of market volatility in Q1 and Q2,” Rozes added.

IG Launches Cost Savings Program

At a time when both pre-tax and after-tax profits were visibly shrinking, total operating costs were on the rise. In the reported period, these costs amounted to £310.4 million, reflecting an increase of 11% compared to H1 2023.

The company launched a cost savings program targeting £50 million in annual savings by 2026 to combat this increase. IG Group also reduced its regulatory capital requirement 40% and returned capital to shareholders, repurchasing £149.2 million of shares.

“We’ve taken action to control growth in the cost base, significantly reducing the rate of cost growth from FY23, yet still making selective investments in the business,” the CEO of IG Group explained.

Series of Changes in IG Group's Leadership

In addition to appointing a new permanent CEO, IG has made several other executive moves recently.

In mid-January, Matthew Davidson was appointed as the new Chief Executive Officer of IG's Australia and New Zealand unit. Based in Melbourne, he has already taken over the new role, which came as an internal promotion after working at IG Group for 19 years.

Earlier this year, Eren Eraslan announced his appointment as the Head of Northern Europe at IG Europe GmbH, marking a career move reflecting his extensive experience and leadership in the financial industry. Eraslan brings a wealth of experience to his new position, with a remarkable track record in various roles.

Additionally, IG Prime, the institutional arm of IG Group, strengthened its team with the appointment of Andrew Wood as the Institutional Sales Manager based out of IG Prime’s Sydney office. Like most other major brokerage brands, IG offers institutional services under the IG Prime brand, including technology, platforms, products, and exchanges across nineteen countries on five continents.

Softer market conditions and lower volatility across asset classes translated into lower revenue and profits for IG Group Holdings plc (IG) in the first six months of the fiscal year 2024 (FY24).

Total revenue declined 9% to £472.6 million from £519.1 million a year before. Net trading revenue fell 19% to £402.4 million from £494.9 million reported in the same period in 2023.

IG Group Reports Decline in Six-Month Financial Results amidst Market Volatility

IG Group's adjusted profit before tax declined 21% to £205.7 million from £260.7 million last year. The after-tax profit shrank even more, by 32%, to £154.8 million. Along with this, the earnings per share indicator also fell, shrinking from 49.7 pence to 38.9 pence.

The base of active clients slightly decreased, dropping from 312,000 to 296,300. The number of newly acquired clients decreased from 37,500 to 33,800.

H1 FY24

H1 FY24 adjusted

H1 FY23

H1 FY23 adjusted

Change

%

Adjusted change %

Total revenue(£m)

472.6

472.6

519.1

519.1

(9%)

(9%)

Net trading revenue (£m)

402.4

402.4

494.9

494.9

(19%)

(19%)

Total operating costs2 (£m)

310.4

281.1

279.9

256.8

11%

9%

Profit before tax3 (£m)

176.4

205.7

240.5

260.7

(27%)

(21%)

Profit after tax (£m)

132.7

154.8

194.9

211.3

(32%)

(27%)

Basic earnings per share (p)

33.4

38.9

45.8

49.7

(27%)

(22%)

Interim dividend per share (p)

13.56

-

13.26

-

2%

-

Are there any positives? The adjusted profit margin remained strong at 43.5%. Net interest income rose significantly to £70.2 million from £24.2 million, driven by higher interest rates.

Moreover, the Acting CEO, Charlie Rozes, said that IG Group's exposure to diverse revenue streams will drive further growth as it executes its strategy. With the end of this month, the acting CEO will be replaced with a newly appointed permanent CEO, Breon Corcoran.

“It’s encouraging to see the benefits of our diversification strategy paying off, despite a mixed trading backdrop for our clients, driven by persistently low levels of market volatility in Q1 and Q2,” Rozes added.

IG Launches Cost Savings Program

At a time when both pre-tax and after-tax profits were visibly shrinking, total operating costs were on the rise. In the reported period, these costs amounted to £310.4 million, reflecting an increase of 11% compared to H1 2023.

The company launched a cost savings program targeting £50 million in annual savings by 2026 to combat this increase. IG Group also reduced its regulatory capital requirement 40% and returned capital to shareholders, repurchasing £149.2 million of shares.

“We’ve taken action to control growth in the cost base, significantly reducing the rate of cost growth from FY23, yet still making selective investments in the business,” the CEO of IG Group explained.

Series of Changes in IG Group's Leadership

In addition to appointing a new permanent CEO, IG has made several other executive moves recently.

In mid-January, Matthew Davidson was appointed as the new Chief Executive Officer of IG's Australia and New Zealand unit. Based in Melbourne, he has already taken over the new role, which came as an internal promotion after working at IG Group for 19 years.

Earlier this year, Eren Eraslan announced his appointment as the Head of Northern Europe at IG Europe GmbH, marking a career move reflecting his extensive experience and leadership in the financial industry. Eraslan brings a wealth of experience to his new position, with a remarkable track record in various roles.

Additionally, IG Prime, the institutional arm of IG Group, strengthened its team with the appointment of Andrew Wood as the Institutional Sales Manager based out of IG Prime’s Sydney office. Like most other major brokerage brands, IG offers institutional services under the IG Prime brand, including technology, platforms, products, and exchanges across nineteen countries on five continents.

About the Author: Damian Chmiel
Damian Chmiel
  • 1369 Articles
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1369 Articles
  • 28 Followers

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