Despite challenging conditions, ICAP plc, one of the world’s major interdealer brokers, reported revenues for the first time exceeded 1.5 billion British Pounds during the year ending March 31,2009.
ICAP’s current forecast for pre-tax profits for the year to March 2009 is between 336 million and 356 million pounds, which is in range with forecasts by 13 equity analysts The source of these estimates was Bloomberg, Reuters and the analysts.
Commenting on the financial market outlook and the capital rebuilding by the banks, Michael Spencer, Group Chief Executive of ICAP said, “We expect to take full advantage of the restructuring of the financial markets and remain very positive about the medium term outlook for the business.” There are “significant opportunities to build ICAP’s business by attracting high quality people and acquiring some assets at attractive prices," said Spencer in the release.
ICAP invested an additional 40 million British Pounds into new initiatives this year, in addition to its acquisitions, to support the long-term growth of the business.
Maintaining its focus on costs, ICAP has taken advantage of opportunities in both voice and electronic broking to reduce costs by 38 million Pounds; this reduced costs this year by 15 million pounds. In 2009/2010, it will reduce costs by a further 23 million pounds. These savings partially offset the investment in new areas, many of which are still under development.
Owing to the diversity of its business, ICAP says it has increased market share in both voice and electronic broking. Volumes in electronic broker began to slow in November of 2007, but overall have steadied in the last three months. Average daily volume in March until last Friday, was $147 billion in spot FX and $420 billion in the fixed income markets.
ICAP says its market position in both foreign exchange and fixed income remains very strong and there is potential for volumes to grow with increased government bond issuance and buy-backs. “We continue to invest in the expansion and development of the Group’s electronic systems,” said Spencer in the release.
Demands for improvements in the efficiency of post-trade processing and for reductions in the capital allocated to existing positions are benefiting ICAP’s range of post trade processing, portfolio compression and reconciliation and risk management services — Traiana, TriOptima and Reset. The release noted that ICAP is a member of a consortium of financial institutions that are collectively bidding for LCH.CLearnet Group Limited.
ICAP will announce its preliminary results for the year ending March, 31, 2009, on May 19, 2009.
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