Electronic trading major IG Group Holdings plc (LON:IGG) has today announced its results for the six months ended 30 November 2023 (“H1 2024”).
Total revenue was £472.6m in 1H24, down 9% on 1H23. Total OTC derivatives revenue was £352.6m, down 17% reflecting softer market conditions over the period and lower levels of client activity.
Total trading derivatives revenue was £99.7m, up 19% on the previous period. This includes tastytrade total revenue of £94.3m, up 21%, benefiting from both higher interest rates and higher cash, offset by a 5% decline in net trading income.
Total trading and investment income was £20.3m, up 63% on 1H23, benefiting from higher interest rates, while net trading income was flat.
Non-OTC revenue made up 25% of total revenue in 1H24, up from 19% in 1H23, reflecting continued focus and successful delivery of revenue diversification.
Net trading income was £402.4m, down 19% on 1H23, mainly due to lower levels of client activity as clients found fewer opportunities to trade in subdued market conditions.
Net interest income of £70.2m (H123: £24.2m) increased significantly, driven by higher interest rates across all markets.
The number of active customers was 296,300, compared to 312,000 a year earlier, while new customers acquired were 33,800 (H1 23: 37,500).
Adjusted total operating costs of £281.1m (1H23: £256.8m), up 9% on 1H23 but down 1% on 2H23. Statutory total operating costs of £310.4m (H123: £279.9m) increased by 11%.
Adjusted pre-tax profit of £205.7m (H123: £260.7m) was down 21%. Statutory profit before tax £176.4m (H1 23: £240.5m). Adjusted pre-tax profit margin remains attractive at 43.5% (H1 23: 50.2%).
Adjusted core EPS was 38.9p (1H FY23: 49.7p). Statutory core EPS was 33.4 pence (H1 23: 45.8 pence).
IG expects to reduce the number of employees by about 300 people, representing about 10% of the total workforce at the end of the 23rd year. Along with other efficiency measures, including expanding the use of IG’s global centers of excellence, the broker expects to deliver full execution cost savings of £50m per annum. These initiatives are expected to lead to an expansion of the operating margin in the medium term.
IG says it is on track to achieve structural savings of £10m in FY24, £40m in FY25 and £50m in FY26. The company expects non-recurring costs to achieve these savings of around £18m with the majority occurring in FY24 and the remainder in FY25. Execution costs of £10m were incurred in 1H24.
In addition to structural savings, especially in year 24, variable costs will be reduced by a further £10m, reflecting softer market conditions in the first half of the year.