IG Group Expects Revenues Contraction in Fiscal 2019

Regulatory changes are set to hamper growth for a year before returning to normal.

IG Group, a retail brokerage powerhouse, published its Annual Report for the year ending May 31, 2018, on Monday. The firm, which has experienced a challenging past 18 months, has stated that this will continue into the 2019 fiscal year.

The annual report follows the announcement of its financial results for the last fiscal year. In July, when the results were published, we took an in-depth look at the report and highlighted some of the key points of the results for your convenience.

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In the report, however, the key point is clear – in the 2019 fiscal year the company is expecting to see a drop in earnings. This is due to the implementation of the measures announced by the European Securities and Markets Authority (ESMA) in regards to contract-for-differences (CFDs) earlier this month.

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The outlook for the 2019 fiscal year – decline in revenues, increase in costs

While the company stated that it is pleased that the nature and extent of the ESMA regulations in the UK and European Union (EU) are more clear, the broker yet again warned that it expects to lose approximately 10% of its revenue in the quarter following the implementation of the regulation. Furthermore, the firm added that it expects its operating expenses, excluding variable remuneration to increased in the 2019 fiscal year.

According to the statement, the total operating costs in 2019 are expected to be similar to the 2018 total operating costs at £290.1 million ($370.5 million). Despite the firm being prepared to go through a lean 2019 fiscal year, it expects to maintain the 43.2 pence per share annual dividend.  

Andy Green, Chairman of IG Group
Andy Green
Source: IG Group

Commenting on the annual report, Chairman of IG Group, Andy Green said: “The last 18 months have been a challenging period in our Company, but our operating and financial performance has been strong… the Company expects that its revenue in the 2019 financial year will be lower than in 2018, reflecting the impact of the regulatory changes in the UK and EU, and the Company expects to return to growth after the 2019 financial year…”

“In the medium term, I believe that the initiatives we are putting in place now, coupled with our people’s commitment to innovation and championing the client, will see IG extend its industry-leading position and become even stronger.”

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