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Icap Boosts Profits in Turbulent Markets

Icap said profits in the half-year to 30 September rose to a record as price swings boosted commissions on trading currencies and securities.

The interdealer broker, the world’s largest, benefited from high levels of volatility during turbulent times in the financial markets when risky assets were liquidated and there was a dramatic migration to safe-haven assets such as foreign exchange.

Icap’s pre-tax profit before amortisation and impairment of intangibles increased by 8% in the six-month period to 174 million and group revenue for the six months was 764 million, a rise of 22% from 626 million in the same period in 2007.

Of that total, electronic revenue accounted for 156 million, an increase of 24% over the same period in 2007. Electronic broking now represents 34% of group operating profit, up from 32% in the previous financial year.

Overall for the six-month period, average daily volumes in spot foreign exchange were 22% higher than the previous year.

Non-deliverable forward foreign exchange (NDF) trading was introduced on the EBS platform in February 2008. There are now more than 100 NDF counterparties live on the platform and more than 140 prospective customers in the pipeline.

In fixed income, US treasuries and euro repo volumes were marginally down on the previous year and US dollar repo volume was down by 11%.

All of Icap’s post trade businesses, Reset, Traiana, and TriOptima, performed strongly, the interdealer broker says. Icap’s post-trade revenue and profit are reported as part of electronic broking. Traiana’s message service, Harmony, processed an average of 160,000 FX trades per day in September, an increase of almost 300% over the same month in 2007.

Michael Spencer, group chief executive officer, says, “Icap has continued to benefit from the generally high levels of volatility in the wholesale financial markets.

“Our business structure and diversity are a major source of strength; and we continue to believe that the changing environment makes this the right time to invest in the future growth of the business. There are significant opportunities to build our business by attracting high quality people and acquiring assets at attractive prices.”

He says revenue in October remained strong and, although cautious, the company remains “confident” about the outlook.

Profit & Loss

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