IG Group saw a 3% drop in revenue year-over-year during its third quarter. However, the financial trading business was able report growth due to its operations in high-potential markets.
IG Group updated its three-month period ending February 28, 2023. It stated that while it saw a decline in revenue in its core markets, it experienced growth on other markets with high potential such as the US and Europe with exchange traded derivatives (ETD) businesses.
The quarter’s total revenue fell by 7% to PS239.3m ($EUR271.6m/$290.1m) compared to PS257.0m for its 2022 financial year.
Over-the-counter derivatives remained IG Group’s main source of revenue. However, this decreased by 18% to PS179.4m in the quarter. Lower market volatility led to a lower revenue per customer and active clients fell 8%.
Revenue in the ETD segment grew 65% to PS52.0m. This was helped by a PS44.9m contribution of tastytrade, a brokerage and investor education platform that was acquired in June 2021.
Interest income drove a 19% increase in stock trading and investments revenue to PS7.9m. IG Group observed that although client trading activity has decreased, returning to prepandemic levels but the number of clients has remained steady and significantly higher than prepandemic.
Core market revenue was 18% lower at PS182.6m. IG Group stated that this was due to lower OTC derivatives revenues in the period, compared with a difficult comparative period. High potential market revenue rose 60% to PS56.7m due to strong growth in the US ETD segment.
Year to date
Group revenue for the nine months ended February 28th was 5% more than the PS722.7m reported in the same period last year.
OTC derivatives revenue fell 1% to PS602.3m, while stock trading and investments revenue dropped 10% to PS20.3m. However, ETD revenue came in at 52% more than PS135.8m which led to higher overall revenues.
Core market revenue was 2% lower at PS606.9m due to OTC clients being less active and revenue per client being marginally lower than the previous period in its 2022 fiscal year.
High potential market revenue increased 50% year-on-year, to PS151.5m. IG Group noted that revenue per client rose “significantly” across all portfolio businesses, but was partially offset by a decrease in active clients.
IG Group stated that revenue and profit before taxes will be in line to current market expectations. Its medium-term revenue guidance and profit margin guidance remain unchanged.