IG’s Q1 OTC Revenue Drops 8% despite Strong Interest Income

<p dir="ltr">IG Group (LON: IGG) closed the first quarter of its financial year 2024 with a total revenue of £242.9 million that remained flat year-over-year. Although revenue from over-the-counter products, including CFDs and spreading, declined 8 percent to £182.7 million, other areas of the business dragged the number higher.</p><p dir="ltr">IG’s Revenue Streams</p><p dir="ltr">According to the official numbers, between June and August, the <a href="https://www.financemagnates.com/tag/ig-group/">London-headquartered broker</a> generated £49.8 million in revenue from exchange-traded derivatives products, which is a yearly jump of 37 percent. Revenue from stock trading and investment products further jumped 61 percent to £10.4 million.</p><p dir="ltr">“[The total revenue] reflected the benefit of business diversification over the past few years, as some moderation in OTC derivatives revenue in the quarter was offset by exchange-traded derivatives and stock trading, both of which grew revenues significantly year over year,” IG stated.</p><p dir="ltr">Strong Interest Income</p><p dir="ltr">In the three months, IG generated £34.4 million, compared to the previous year’s £7.1 million, from net interest income. Out of this, £11.8 million, which is up from £1.2 million in the first quarter of FY23, was related to OTC derivatives.</p><p dir="ltr">“Similar to trends seen in Q4 FY23, a decrease in <a href="https://www.financemagnates.com/forex/brokers/ig-group-ends-fy23-with-lower-trading-revenue-expands-share-buyback/">net trading revenue</a> reflected substantially lower <a href="https://www.financemagnates.com/terms/v/volatility/">volatility</a> across a range of asset classes, which was more than offset by strong growth in interest income, which resulted from a combination of higher interest rates and stable <a href="https://www.financemagnates.com/terms/c/client-money/">client money</a> balances from the year-end,” the broker added.</p><p dir="ltr">IG further broke down its revenue streams into two portfolios: Core Markets+ and High Potential Markets. The revenue from Core Markets+ declined 6 percent to £188.7 million, reflecting softer market conditions through most of the quarter, while the other one shot up 30 percent to £54.2 million. Its US-based subsidiary tastytrade brought in $60 million in revenue, which is an increase of 48 percent.</p><p dir="ltr">Clients and Outlook</p><p dir="ltr">The broker reported a yearly decline in the number of active clients to 267,000 from 279,300. However, the total client balances remained stable at £4.1 billion.</p><p dir="ltr">As for the outlook, “the Group remains confident of achieving its medium-term targets. We are progressing with plans to drive even greater cost efficiency, leveraging the scale advantages that we have as a global Group.”</p><p dir="ltr">Meanwhile, IG is in search of a new Chief Executive after the <a href="https://www.financemagnates.com/executives/ceo-of-ig-group-june-felix-steps-down-due-to-ill-health/">departure of June Felix</a> last month due to ill health. Charlie Rozes, the Chief Financial Officer (CFO) at IG, has temporarily taken over the apex role.</p>

This article was written by Arnab Shome at www.financemagnates.com.