Inter-dealer broker TP Icap has unveiled a 7% increase in revenue on a reported basis for H1 2020 at £990 million. Underlying profitability was 1% higher, however this was knocked lower by a £10 million charge due to untaken annual holiday leave by its staff – this will be reversed next year.
The increase was largely driven by the Rates business with FX, money markets and emerging markets all seeing a decline in activity – something that likely reflects the push towards bilateral online trading during March and April especially when market conditions were at their worst. Global Broking revenue rose 2% overall, helped by a 15% increase in energy and commodities, while Institutional Services revenue increased 50% on a reported basis as the division “benefited from increased client appetite, increased capacity to service new accounts, and strategic hires”.
Data and Analytics revenue increased 9% on a reported basis, against a strong prior year comparative period as the business continued, TP Icap states, to benefit from strategic initiatives to launch new, higher-value products and deeper client relationships. “The minor slowdown reflects some COVID-19-driven reduction in clients’ overall spend appetite,” it adds, however.
It was not all good news, however, for the firm warns that July trading is “materially lower” than July 2019 and as such its full year guidance remains unchanged.
Revenue for the EMEA region was £488m, a 7% year-on-year increase on a reported basis and reflected an increase in all divisions, while the Americas reported revenue of £376m, an increase of 11% year-on-year, with strong growth in Global Broking, Energy & Commodities and Institutional Services.
In Asia Pacific, revenue was £126m, an increase of 2% year-on-year, which reflected a very solid growth in Energy & Commodities offset by more challenging Global Broking figures, especially in Q2, as trading appetite was dampened due to the pandemic that placed practical constraints on market activity, the firm says.
In the interim report TP Icap says its launch of FXO, a hybrid FX options trading platform has had “an excellent response” and that “a good number” of top tier banks are streaming liquidity on it.
“Against the COVID-19 backdrop, our primary focus has been to protect the wellbeing of our staff and ensure continuity of service excellence for our clients,” says Nicolas Breteau, CEO of TP Icap. “We achieved this by deploying new technology and workflows that enabled the majority of our staff to work from home while maintaining seamless, global client coverage.
“Despite the challenges posed by the pandemic, we have grown revenues and underlying profitability whilst advancing our strategic priorities of aggregating liquidity across our brands, increasing electronification and diversifying our revenue streams,” he adds. “We paid our full year dividend and have declared an interim dividend. Our performance is a testament to our operational strength, scale and diversified business portfolio, as well as the hard work and dedication of our teams.”