IG Group Holdings plc has disclosed its financial results for the six months ending November 30, 2023, marking H1 of the FY24.

The company reported a total revenue of £472.6 million for H1 FY24, experiencing a 9% decline compared to the same period in the previous fiscal year (H1 FY23). Notably, OTC derivatives total revenue was £352.6 million, down 17%, influenced by subdued market conditions and reduced client activity during the period.

In contrast, exchange-traded derivatives total revenue showed resilience, reaching £99.7 million, a notable increase of 19% from the prior period. The inclusion of Tastytrade total revenue, amounting to £94.3 million and witnessing a surge of 21%, was because of heightened interest rates and increased cash balances, though slightly offset by a 5% dip in net trading revenues.

Stock trading and investments demonstrated robust growth, with total revenue reaching £20.3 million, representing a significant 63% increase over H1 FY23. The positive momentum in this segment was because of increased interest rates, while net trading revenue remained steady.

IG Group Holdings plc Reports H1 FY24 Results Amid Market Challenges.

A noteworthy shift in the revenue composition was with non-OTC revenue accounting for 25% of the total revenue in H1 FY24, compared to 19% in H1 FY23, showcasing IG Group’s successful focus on revenue diversification.

Net trading revenue witnessed a 19% decline, settling at £402.4 million, primarily due to lower client activity amid challenging market conditions. However, net interest income experienced a substantial increase, reaching £70.2 million, compared to £24.2 million in H1 FY23, driven by higher interest rates across all markets.

Despite challenges, IG Group maintained a significant client base, with 296,300 active clients compared to 312,000 a year earlier. The acquisition of new clients stood at 33,800, a slight decrease from the 37,500 recorded in H1 FY23.

Adjustments to total operating costs amounted to £281.1 million, reflecting a 9% increase over H1 FY23 but a 1% reduction against H2 FY23. Statutory total operating costs reached £310.4 million, up 11% from H1 FY23.

Adjusted profit before tax was £205.7 million, down 21% from H1 FY23, with a corresponding adjusted profit before tax margin of 43.5%, compared to 50.2% in the previous fiscal year. Statutory profit before tax was £176.4 million.

Adjusted basic earnings per share (EPS) for H1 FY24 were 38.9p, down from 49.7 pence in H1 FY23. Statutory basic EPS stood at 33.4 pence, a decline from 45.8 pence in the prior year.

In Response to the Market Challenges!

In response to market challenges, IG Group announced plans to reduce its headcount by approximately 300, representing around 10% of the total workforce at the end of FY23. The company aims to achieve full run-rate cost savings of £50 million per year through various efficiency measures and the expansion of global centers of excellence, facilitating operating margin expansion over the medium term.

IG Group is on track to realize structural savings of £10 million in FY24, £40 million in FY25, and £50 million in FY26. The company anticipates non-recurring costs associated with these savings to be approximately £18 million, with the majority incurred in FY24 and the remainder in FY25. Execution costs of £10 million were incurred in H1 FY24.

In addition to the structural savings, variable costs in FY24 will be reduced by an additional £10 million, reflecting the impact of softer market conditions in the first half of the year.

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