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UPDATE 1-UK's IG sees FY pretax profit "modestly" ahead of last year
May 31, 2017 / 7:08 AM / 7 months ago

UPDATE 1-UK's IG sees FY pretax profit "modestly" ahead of last year

(Adds details, analyst comments)

By Noor Zainab Hussain

May 31(Reuters) - IG Group Holdings Plc, a British online trading company, said it expected full-year pretax profit and earnings to be “modestly” ahead of last year, with full-year revenue seen rising about 7 percent.

The company, which provides online stockbroking and trading services to retail investors, said that despite a quiet fourth quarter in financial markets, IG’s revenue in the final quarter of the year ending May 31 was higher than in the same period a year ago.

In March the company had said its fourth quarter had seen a better start and client recruitment was strong.

Analysts at Barclays, who rate IG as “overweight”, said a 7 percent rise implies full-year revenue of 488.2 million pounds, about 7 million pounds below Barclays’ estimate, with pretax profit at 4 million pounds below Barclays’ estimate of 210.3 million pounds.

The analysts said, however, that implied fourth-quarter revenue was 125.9 million pounds, or a rise of 5.4 percent, making it the company’s second best quarter ever.

“We consider this a satisfactory performance given the absence of volatility. IG’s growing client base means that even in ‘quieter’ markets, the company’s revenue can be resilient,” Barclays analysts wrote in a note for clients.

An initial jump in market volatility after Donald Trump’s U.S. election victory last year had tailed off fairly quickly, with financial broker NEX Group giving a cautious assessment of its 2017 prospects.

Markets saw increased volatility last year after unexpected outcomes in global politics, such as Trump’s victory and Britain’s decision to leave the European Union.

Analysts at Liberum, however, called IG’s pretax profit projection “slightly disappointing”, given the proposed Europe-wide regulatory changes should not have had an impact in these results.

The UK’s Financial Conduct Authority (FCA) joined other European regulators in December to regulate the 3.5-billion-pound industry, where it said most retail investors lose money. IG said in March that regulatory uncertainty has had no impact on its business so far.

IG Group, which was founded in 1974 as the world’s first spread-betting firm and holds 40 percent of the UK financial spread betting market, also said operating expenses in the second half of the year are expected to be around the same level as in the first half.

Shares in IG were up 1.4 percent at 561 pence at 0703 GMT on Wednesday on the London Stock Exchange. ($1 = 0.7803 pounds) (Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair)

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