Some 19% of IG Group’s total revenue came from non-over-the-counter (OTC) leveraged derivative trading in the six months to 30 November 2022, compared to just 3% as recently as 2019 when its diversified business growth strategy was launched. The figure was also up three percentage points on the corresponding period in FY22.
Total revenue during H1 FY23 increased 10% to £519.1m, with the adjusted figure – excluding £5.8m foreign exchange hedging gain associated with the financing of its Tastytrade acquisition – up 11%.
IG Group purchased US-based brokerage and investor education platform Tastytrade in June 2021, with this acquisition leading to a rise in revenue from high-potential markets around the world. IG Group said all its regional offices and high-potential markets grew from Q1 to Q2, and it is now fifth by market share in Japan. Its US businesses posted a record second quarter for total revenue, as interest income becomes a larger contributor to the group overall.
Active clients remained in line with H1 FY22, with 159,100 clients trading in the period, while average revenue per client increased by 6% to £2,618.
Net trading revenue from OTC derivatives in the six-month period was £416.5m and increased by 6% year-on-year. UK and EU OTC derivatives revenue was flat at £209.3m, while Japan revenue increased by 25% to £55.8m.
Net trading revenue from exchange traded derivatives was £67.1m and increased 16% on H1 FY22, and was 1% higher on a pro forma basis, which includes a full six months of Tastytrade revenue in the comparative period.
Total adjusted operating costs for the six-month period were £256.8m, which was 25% higher than the same period last year. IG Group said the year-on-year increase reflects an additional month of Tastytrade costs, an estimated £10m of translational FX headwinds across the cost base and increases in technology related costs. Advertising and marketing spend increased by 15% to £43.7m, reflecting increased marketing spend in the US, UK and Europe.
Profit before tax decreased slightly by 2% to £240.5m, while adjusted profit before tax increased 1% to £260.7m.
IG Group also said it is now executing the Capital Allocation Framework that it announced last summer. In the period it progressed with its current £150m share buyback and has now extended that to a total of £200.
“I’m extremely proud of our achievements in the period, having delivered on two critical elements of our strategy: diversified business growth and the return of excess capital to shareholders,” said June Felix, IG Group’s chief executive. “Non-OTC products now make a meaningful contribution of nearly 20% to our total revenue, and by the end of the half we had returned nearly £250m to shareholders. We have also announced an extension to our share buyback today.
“Despite a softening in trading demand due to the global economic environment, our high-quality clients have continued to find opportunities to trade, demonstrating the resilience of the business model. This is the result of our unwavering focus on investing in and prioritising the delivery of best-in-class technology and platforms, innovation, client service and marketing. All achieved while delivering significant profit margins and consistently generating healthy levels of cash and capital.”