ICAP updates the market

ICAP is due to issue a trading statement on Tuesday 30 September, which will be guidance for the first-half figures due out 19 November. 

ICAP CEO Michael Spencer
Source: Bloomberg

ICAP is trading at £3.96 with the stock marginally higher since reporting full-year figures in May. Pre-tax profits declined by 4% to £272 million – better than expected – while revenue declined by 5% to £1.39 billion versus £1.42 billion expected.

The interdealer broker has suffered from tighter regulation while investment banks are less willing to take on risk. In the face of tougher rules, governing financial markets, a decline in volatility and the eurozone debt crisis, ICAP has been cutting costs by closing down its credit default swap (CDS) desks in Australia and Hong Kong.

In July the firm released a statement in which revenues declined by 14% between 1 April and 15 July. Cost-cutting to the tune of £28 million has taken place since May, which is partially down to a reduction in headcount.

Traders will be looking for an increase in broking revenues and for the cost-cutting scheme to continue. If the full-year outlook is positive and on track, the stock could be put on a path to £4.40. If not, it could drop back to £3.65.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts