Today, one of the heavyweights of the online trading industry, IG Group Holdings plc, has issued an update in regards to trading within the final quarter of its financial year. The company’s fiscal year will end on the 31st of May, 2020.
High Volatilities Leading To Higher Revenue
The brokerage pointed out that volatility within the financial market has been sustaining an exceptionally high level of activity ever since the last week of February 2020. Alongside this, clients within the Group have taken to the opportunities that the current market conditions allow for.
As such, the current trading volumes from IG Group’s clients have been at an exceptional high. With all of these factors working in tandem, the Group managed to achieve extraordinary highs, as the revenue is tied to transaction fees from the clients. As one would imagine, there has been an incredibly high amount of transactions during this time period.
Crunching The Numbers
These exceptionally high levels of volatility have been going on through March and April and are showing no signs of stoppage. The Group is currently continuing to observe the high levels of client trading activity, as well as an overall increase in active clients. As such, revenue for the first 36 trading days within Q4FY20’s 61-day term has reached an estimate of about £173 million.
In contrast, Q3 FY20 only managed to gain a total revenue of £139,8. It should be noted, however, that the H1 FY20 revenue for the company was recorded at £249.9 million.
Overall Increase In Costs And Clients
Within these first 36 days of trading of Q4, IG Group has managed some impressive numbers. More than 22,500 new clients have traded through OTC leveraged trading with the Group itself. To put it perspective, this is almost two-thirds of the total new OTC leveraged clients that IG group has gained in the first three quarters of FY20, which totaled at 36,000.
IG had done revisions on its guidance regarding operating expenses, as well. While the company had initially anticipated operating expenses to increase, excluding variable remunerations, by around £30 million in FY20, this had changed.
Originally, the expected operating expenses for FY20 was £290 million in total. Today, the company adjusted its predicted increase in operating expenses. Now, it’s expected to have its operating expenses increase by an estimated £40 million in FY20, excluding variable remunerations once more.
This will make the operating expenses of FY20 to be £300 million. This increase in costs reflects the overall impact that such rampant growth inactive clients, as well as the high levels of client activity within Q4. Furthermore, there was an increase in the provision for doubtful or bad debts.