16th Jul 2014 07:09
LONDON (Alliance News) - ICAP PLC Wednesday said first-quarter revenue fell by 19%, hit by currency movements and tough trading conditions.
The interdealer broker - which matches buyers and sellers in the wholesale markets in interest rates, credit, commodities, foreign exchange, emerging markets and equity derivatives - has been struggling due to a range of challenges, such as banks' efforts to deleverage, regulatory changes, and low volatility.
In a statement, ICAP said that its performance between April 1 and July 15 was hurt by a 10% fall, to USD707.0 billion, in average daily electronic volumes for its BrokerTec and EBS platforms.
In addition, ICAP's global broking division, which now contributes less than 30% of group profits as the interdealer broker intensifies its focus on its post trade businesses, saw a 25% fall in its reported revenues. These weaknesses were partly offset by double-digit revenue growth in ICAP's post trade risk and information division, and growth in EBS Direct volumes, which averaged USD11.0 billion a day in June.
ICAP said that it is on track to save at least GBP60.0 million in the current year. ICAP said it has identified GBP28.0 million of cost savings since reporting full-year results in mid-May, aided by reducing broker headcount. ICAP has made GBP125.0 million in savings in the past three years.
"Our post trade businesses are growing strongly, supported by accelerating demand for risk reduction services. During the quarter we have made further progress with our growth initiatives. Volumes on EBS Direct and on i-Swap in US dollar reached new highs, in addition to a record number of compressions within triReduce and further expansion of triResolve's customer base," Chief Executive Michael Spencer said in a statement.
"In global broking, conditions are still very difficult, and we continue to mitigate these challenges by increasing the flexibility of our operating model, focusing on priorities and delivering cost efficiencies," Spencer said.
"The group is in the process of progressing a number of multi-year structural projects to enhance the efficiency and cost effectiveness of the organisation which will result in a more efficient corporate structure and more variability in its cost base. These will enable ICAP to continue to invest in products and services to drive future growth across the group," Spencer added.
ICAP shares were Wednesday quoted at 357.00 pence, up 0.3%, shortly after the open, after having started lower.
By Samuel Agini; [email protected]; @samuelagini
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