Shares in CMC Markets Plc (LON:CMCX) were bid up after the spread betting outfit predicted full-year profit would be up year-on-year.
Net trading revenue in the six months to the end of September was strong, the group said.
The group’s stockbroking business’s half-year revenue is expected to increase to roughly £14mln when the numbers are totted up, compared to revenue of £5.5mln in the same period of 2018.
CMC said the uplift was mainly as a result of the revenue generated from various white label partnerships in Australia of which ANZ Bank is the largest.
The contracts for difference (CFD) business, however, saw client income dip a tad from a year earlier but the firm was quick to point out that the prior year’s six-month period included four months of operations under a more favourable regulatory requirement.
Chief executive officer Peter Cruddas said that clients are adapting to the regulatory changes.
Changes made to the internal business model have resulted in the retention of a greater proportion of client income, as a result of which management expects the CFD business’s net trading revenue to rise to around £85mln, compared to £63mln in the first half of last year.
The board is now confident that net operating income will exceed £170 million for the full year and profit before tax is expected to increase, benefiting from the operating leverage in the business.
#CMCX appears to be getting back on track - nice to see as suggests environment improving for #IGG as per their recent Update. I hold IGG and bought more recently.
— WheelieDealer (@wheeliedealer) October 3, 2019
“It is clear that we are becoming more than a CFD business with income also being derived from technology partnerships, such as the ANZ deal. This is an exciting area of the business which will continue to grow through further planned partnerships,” said Cruddas.
“On the regulatory front, we welcome the consultation by The Australian Securities and Investments Commission (ASIC),” the chief executive added.
“The group is supportive of regulatory change to ensure that all providers operate to the highest standards, ensuring fair client outcomes and we believe that a stronger and better industry will emerge from these changes. We anticipate the ASIC changes will come into effect in the second half of the financial year, although exact timing is still to be determined."
Shares in CMC were up 6.0% at 112.4p in mid-morning trading.