19th May 2015 06:48
LONDON (Alliance News) - ICAP PLC Tuesday reported lower profit for its last financial year, as the interdealer broker continues with a shift to electronic markets and post trade risk and information divisions from voice broking.
ICAP, which matches buyers and sellers in the wholesale markets for interest rates, credit, commodities, foreign exchange, emerging markets and equity derivatives, said it made a GBP95 million pretax profit in the year ended March 31, compared with GBP121 million in the prior year.
The group's earnings have been hurt by the need for its key banking clients to deleverage in order to meet tougher regulations, although the impact on trading was partly offset by the European Central Bank's quantitative easing programme in the second half of the year, as well as higher volatility due to concerns about the timing of when the US Federal Reserve will increase interest rates.
The closely watched trading profit before tax, which strips out costs deemed exceptional or related to acquisitions and disposals, fell to GBP229 million from GBP271 million, just ahead of the GBP228 million analyst consensus forecasts provided by the company.
Revenue was down to GBP1.28 billion from GBP1.38 billion, as higher revenue in its post trade risk and information division was more than offset by slower revenue in electronic markets and a 13% drop in global broking, its voice broking division.
Chief Executive Michael Spencer said the year had been one of both challenges and opportunities.
"Our bank customers have re-prioritised their sales and trading franchises and continued to reduce balance sheet risk. Our regulators continued their important work for market efficiency, embracing greater transparency and tighter, more risk averse financial systems," Spencer said in a statement.
The CEO said that ICAP's move towards electronic markets and post trade risk and information means the two divisions now contribute three quarters of its profitability.
"We have materially re-engineered ICAP, with a significant reshaping of our Global Broking division and the merging of EBS and BrokerTec. We have had some excellent successes with EBS Direct, the new emerging currencies on EBS, and in our Post Trade Risk and Information division with risk reduction services from TriOptima. These factors, combined with our ongoing investment in technology-based innovative solutions, have set us on the path to growth," Spencer said.
ICAP maintained its dividend for the year at 22.0 pence per share.
By Samuel Agini; [email protected]; @samuelagini
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