Sovereign crisis boosts IG Group profits
Volatile markets have helped IG Group's profits rise by 25% but the Group expects revenues in Japan to drop following new leverage rules...
However, the company said new limits on trading with borrowed money in Japan could wipe out 20 percent of its revenues there. The group re-positioned FXOnline in Japan following its acquisition of the business in September 2008, but the division’s success is expected to be cut short by new regulatory restrictions on leverage which will be implemented on 1 August.
IG Group chief executive Tim Howkins said during its preliminary results statement this morning: “There remains much to be done in Japan, where we face a challenging competitive and regulatory environment. The first of a number of leverage restrictions comes into force at the beginning of August and it is inevitable that this will have an immediate adverse impact on our revenues. We are doing what we can to mitigate this impact.”
The Group announced that profit before taxation was up 25% to £157.6m (2009: £125.9m). Trading revenue was up 16% in the year ending 31 May 2010, increasing from £257.1m in 2009 to £298.6m. Revenues in Australia rose by more than 63% from £27.9m to £45.7m year-on-year.
IG Group’s focus is on expanding the business into new markets, having opened offices in China, Portugal and Sweden in the last year. Howkins said this morning that the Group was looking into opening an office in the Netherlands or Canada in the next 12 months.