Spread-better IG Group Holdings PLC (LON:IGG) has cashed in from what it says were “favourable market conditions” in August as client numbers and trading activity increased.
In a trading update for the three months to 31 August, the FTSE 250 firm reported revenues of £129.1mln, which while mostly flat compared to a year ago was 11% higher than the average amount of £116mln reported across the final three quarters of the prior year.
The number of active clients, meanwhile, rose 5% year-on-year to 92,300, although average revenues per customer fell 5% to £1,344.
IG also reiterated its expectation that it would return to revenue growth in the current year, as well as income growth of 3-5% over the medium term.
This was despite concerns over the last year that leverage limits on the firm’s retail clients, who are generally more prone to suffering large losses, would impact revenues going forward.
When leverage limits were brought in across the UK and EU last year, IG’s profits plunged by a third, however investors may have been relieved that the update showed revenues for the region covered by the regulations, which accounts for around 52% of IG’s revenue, were 6% higher than the second to fourth quarter average last year.
READ: IG Group warns Australia will be the next to introduce leverage limits
Similar regulations are also currently being considered in Australia, a region which accounts for 15% of the company’s income, although IG stressed that new regulations in the region would not affect its growth forecasts.
In a note, analysts at Peel Hunt said the results were a “positive surprise” and gave them confidence that IG’s revenue model was “sustainable” and would continue to grow.
They added that the first quarter numbers meant the company was well placed to “meet or exceed” their estimates for the full year, which are currently estimating revenues of £505.2mln and an adjusted pre-tax profit of £189.7mln.
Peel Hunt has IG rated at a 'buy' rating with a target price of 685p.
Chairman exits
In a separate announcement, IG confirmed that its chairman, Andy Green, would step down from the board at the end of its AGM on Thursday after having flagged his impending departure in April
The company said a replacement candidate had been identified and was currently awaiting regulatory approval while Jonathan Moulds, a non-executive director, would take over as interim chairman following Green’s exit.
In mid-morning trading on Thursday, IG shares were 8.1% higher at 625.6p.