IG Group Q1 FY20 Trading Update Review

IG Share Price Versus two biggest publicly listed rivals CMC Markets and Plus 500
Chart: TradingView

IG Group the market leader in online CFD trading and spread betting updated the market on its recent performance yesterday, against a background of tightening regulation for the industry.

IG’s trading update covered the three months to the end of August 2019, which is the first quarter of its new financial year, that ends in May 2020.

The numbers made for pleasant reading after what has been a rather turbulent time for both IG Group and the margin trading industry as a whole. During the quarter IG saw a jump in both the number of new clients and the level of customer activity.

Revenues for the group during this period were £129.10 million up from £128.90 million in the same quarter in 2018 what’s more those revenues were some +11% higher than the average quarterly revenues for the group seen over the previous year.

Suggesting that both the company and its clients have come to terms with the product intervention measures introduced by the European super-regulator ESMA which greatly reduced the levels of leverage available to retail margin traders, within the European Union.

Paul Mainwaring, IG, Chief Financial Officer said: 

We’re particularly pleased that we have benefited from an increase in the number of active
clients, which as you’ll know is the medium-term driver of revenue, rather than the short-term
revenue per client which tends to fluctuate with market volatility. So we think this is a good
start to our financial year, a good start to our period post the announcement of the revised

You can view the full transcript and the analyst’s questions here.

Growth opportunities for IG

IG continues to target revenue growth in the range of three to five percent per annum despite the recent consultation paper from ASIC, the Australian securities regulatory, which is considering a product intervention of its own, IG has a significant presence in the Australian FOREX and CFD markets.

However, the IG believes that there are growth opportunities within margin trading, thanks to the size and quality of its client base and indeed the company pointed to a five per cent growth in client activity, in its core markets, during the quarter when compared to volumes seen during Q2 to Q4, in the prior financial year. Of course, professional clients, of which IG has a large number were unaffected by the ESMA intervention.

That professional client base could well be one of the reasons that IG was happy to reiterate a revenue of target of £160 million per quarter by the end of FY 2022.

One point of caution in the numbers, however, was a dip in average revenues per customer which was down by some -5 per cent at £1344.00, that dip was counterbalanced, however, by a five per cent growth in the number of active clients which stood at 92,300 at the quarter-end.

Analysts described the trading update as a positive surprise and traders seemed to agree, with the company’s shares closing higher on Thursday by some +42p at 638p, a gain of almost seven per cent on the day. At the time of writing IG Groups shares were down by -0.64 per cent at 637.36p

IG Group Share Price versus two biggest publicly listed rivals, CMC Markets and Plus 500

IG Share Price Versus CMC & Plus 500

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