IG Group reports record profit but prepares for regulatory squeeze

IG Group reported record annual profit but the online trading platform said it would freeze its dividend to absorb the effect of regulatory changes.

Operating profit for the year to the end of May jumped 32% to £281.1m as net trading revenue rose 16% to £569m.

IG repeated its guidance that revenue would fall this year due to tougher regulations but that it would return to growth the year after. The company said it expected to hold its annual dividend at 43.2p a share until earnings growth strengthens.

Clients were active in trading cryptocurrencies during the year but that interest had faded, IG said.

Chief executive Peter Hetherington said: "The company delivered record revenue, operating profit and earnings in FY18, driven by strong growth across all regions and products, and has continued to make good strategic and operational progress. We will continue with the investments we are making to deliver future growth and to position the business to benefit from the strong demand for our products.”

IG’s business this year will be affected by a crackdown by the EU and UK on contracts for difference, IG’s main product, which allow traders to place big bets with small upfront stakes. Regulators are seeking to protect inexperienced traders from racking up big losses.

IG said it was working on new products for retail traders that would comply with the new rules. The rules could reduce revenue by about 10%, excluding “no benefit from further mitigating action taken by the company or its clients”.

Hetherington said: “The business is well positioned to mitigate the impact of regulatory change and to continue to deliver sustainable growth and attractive shareholder returns.”

IG shares fell 0.4% to 861.4p at 10:32 BST.