IG Group benefits from August’s market turmoil

The spread-betting specialist IG Group reported a 15 per cent increase in revenue in its first quarter, driven by heightened trading activity as customers sought to take advantage of market turmoil in August.
The FTSE 250 company posted revenues of £278.9 million in the three months to August 31, up from £242.9 million in the same period last year. The London-listed business said the increase in revenue per client was “supported by elevated volatility across a range of asset classes in early August”.
• State of economy divides America
This pushed its net interest income up to £36.8 million in the three months to the end of August, an increase from £34.4 million a year earlier, it said in a trading update on Thursday.
It marks a turnaround for IG Group which announced in November last year that it would lay off 10 per cent of its workforce in a cost-cutting drive aimed at saving £50 million a year.
Fears over the strength of the American economy jolted financial markets across the globe last month with broad-based sell-offs in Asia, the United States and Europe. In London, the FTSE 100 lost 4.36 per cent in three days.
Uncertainty in financial markets is often a beneficial environment for spread-bet sellers because punters are more likely to trade when conditions are volatile, and big swings in asset prices raise the prospect of netting quick profits for successful bets.
Within the group’s net interest income, £13.7 million was related to its over-the-counter derivatives division, an increase from £11.8 million during the same period last year. Net interest income from exchange-trading derivatives rose to £18.4 million, while its stocks and trading arm generated £4.7 million.
Meanwhile, the group’s options trading arm Tastytrade, acquired in January 2021, reported a 17 per cent rise in total revenues to £55 million. Yet, the group reported a 1 per cent decline in total active clients during the period to 263,200.
The FTSE 250 company is a provider of spread bets and contracts for difference, which are derivatives that enable amateur and professional punters to place high-risk, leveraged wagers on the direction of asset prices. It was a pioneer of spread betting when it was founded in 1974 by Stuart Wheeler, a lawyer, banker and gambler who died in 2020. IG Group now has a market value of about £3.47 billion.
The spread-betting specialist said it expects its performance in the 2025 financial year to be in line with market expectations.
Stuart Duncan, an analyst at Peel Hunt, said that the company had reported a positive start to the financial year with “resilient customer metrics”.
IG Group has benefited from rising rates over the last year because it only pays interest to a small number of institutional clients, allowing it to reap the rewards of the higher rates being earned by the majority of its customers’ cash.
Shares in the group have climbed over 25 per cent since the beginning of the year, and rose 3½p, or 0.4 per cent, to 963½p.