IG Group set to exceed city expectations amidst market volatility

IG Group, Britain’s longstanding spread-betting firm, has announced that it expects to meet or slightly exceed the higher end of financial forecasts for its annual revenues and profits. This comes amid the sharp market volatility following Donald Trump’s re-election and subsequent economic policies.

The company revealed that elevated turbulence across various asset classes during the three months to the end of May, particularly in April, has driven a significant increase in client activity. As a pioneer in leveraged trading since its establishment in 1974 by Stuart Wheeler, IG specialises in financial instruments like spread-bets and contracts for difference, which allow traders to profit from rapid market movements. Historically, IG Group has benefitted during periods of heightened market unpredictability, as investors seek quick gains from substantial price swings.

The standout development came on April 2, when President Trump unveiled his reciprocal tariff plan, sparking extreme fluctuations across financial markets. This volatility proved advantageous for IG, which now projects its annual revenues to approach £1.05 billion and profits to reach £516.3 million, both at the upper range of analysts’ forecasts. Ben Bathurst, an RBC analyst, commented that this performance is unsurprising given the recent chaos, while acknowledging potential upside risks as the company’s financial year approaches its conclusion.

The recently acquired investment platform Freetrade, purchased in a £160 million deal earlier this year, has reportedly performed in line with expectations during the fourth quarter. This acquisition marks IG’s strategic pivot towards expanding its non-leveraged share trading business, under the leadership of CEO Breon Corcoran. Corcoran, formerly with Paddy Power, stepped into his position at IG during a challenging time after the company announced a 10 per cent workforce reduction in 2023 to streamline costs following a post-Covid trading lull.

To bolster its operations, IG is planning to issue a new senior unsecured bond, pending relevant approvals and market conditions. While questions have been raised regarding the precise use of this long-term funding, analysts emphasise the company’s steady cash generation.

Over the past year, IG Group’s shares have risen over 33 per cent, reflecting investor confidence. However, following the trading update, shares dropped slightly by 1.4 per cent to £10.74, as markets processed the broader implications of its strategies and forecasted performance.

The group remains poised for continued success as market conditions evolve, solidifying its position as a leading player within the financial trading sector.