CMC Markets PLC (LON:CMCX) almost doubled sales in the year to the end of March as it benefitted from high financial market volatility in reaction to the coronavirus pandemic and hived off of a large proportion of its clients’ spread-betting income.
The group’s contracts for difference (CFD) business generated net trading revenue of roughly £214mln for the year, up 94% on the previous year.
This improvement was thanks to CMC’s CFD customers generating £241mln of gross income during the year, up 12% and CMC retaining a “considerably stronger” proportion of this client income than the 75-80% range than it guided at its half year results.
Buoyed by how much of its client’s money it is able to hive off, CMC said it was “encouraged by the continued trading of its loyal client base”.
Stockbroking was also stronger, with net revenue expected to more than double to roughly £32ln, mainly driven by the first full year of a partnership with ANZ Bank.
Since coronavirus starting causing higher volatility in global markets, client trading activity has been more double that seen in more normal market conditions, the spread-betting group said last month, while the pandemic had led to “99%” of its London office working from home or from a disaster recovery site in Hertfordshire.
With operating costs of £136mln compared to £120mln the year before, pre-tax profit is estimated to be in the region of £100mln compared to a consensus forecast of around £85mln, analysts at Shore Capital said.
CMC shares were up 8% to 209p on Friday morning, up more than 40% since the start of 2020, recovering to where they were in late 2016.