Low market volatility hurts IG

Current trading has certainly been subdued, however. Even though the FTSE 100 index rose 10 per cent in the six months to the end of November, this was against a backdrop of the longest sustained period of low volatility for over five years. What's more, trading was also depressed by continued global economic uncertainty and fragile consumer sentiment. Activity has been especially hit by ongoing central bank interventions - central bankers have helped iron out volatile market responses with quick policy action. But chief executive Tim Howkins stressed that there's nothing to suggest any significant degree of structural weakness in the business. Indeed, client activity responded well to larger market movements in the first few days of the new year.

However, client activity across all the group's operations was lower in the first half, with active client numbers down 14 per cent in the UK, although revenue per client fell by a modest 1 per cent. Overall client activity and revenue per client dropped 7 per cent, but this didn't include Japan, where a regulatory reduction in leverage limits reduced active client numbers by 29 per cent and revenue per client by 28 per cent. Moreover, and while IG continues to gain market share in established markets, thanks to the challenges being faced by many of its competitors, its newer markets are expected to provide the best growth engine until volatility in more mature markets picks up again. Indeed, Singapore delivered a 6 per cent rise in active clients and, while still relatively small, IG has opened a representative office in Dublin and expects to start up in Norway during the second half.

However, if volatility levels don't return in the second half, IG believes that profits will be much the same as during the first half, and Numis expects full-year pre-tax profit of £172.8m, giving EPS of 34.8p (from £185.7m and 37.5p in 2012).