Britain's biggest spread-betting firm IG Group met forecasts with a 40 per cent rise in full-year profit today as increased financial market volatility encouraged clients to place more bets.
IG said pretax profit for the year to May 31st was £96.99 million (€121.74 million), up from £68.89 million the previous year and compared with a consensus of £96.4 million from as average of nine forecasts collected by the company.
IG said higher business volumes after the credit crunch developed helped lift revenue for the year to £184 million, an increase of 51 per cent. Spread bets allow investors to profit from falling as well as rising prices.
IG Chief Executive Tim Howkins said there was so far no sign of customers betting less in response to a worsening economic outlook.
"We've had very strong trading since year-end. The sort of clients we attract are pretty resilient, and as of yet we've seen no sign of stress," he said in an interview.
However, Mr Howkins acknowledged that clients' bad debts rose "fractionally" to 2.2 per cent of revenues over the year as a whole from 1.5 per cent the previous year.
The increase in bad debts, coupled with the cost of opening new offices in Paris, Madrid and Chicago, cut IG's EBITDA margin - underlying earnings before tax expressed as a percentage of revenue, seen by analysts as a key measure of profitability - to 53.5 per cent from 57.7 per cent the previous year.
By 10.41am, IG shares were 0.3 per cent weaker 348 pence, while the FTSE 250 share index was 0.5 per cent higher.
"I don't think there were any real surprises here, it's strong across the board," said Investec Securities analyst Daniel Havercroft.
"The analyst presentation will probably go further to explain the drop in EBITDA margin, and that's something that is worthy of explanation."
IG's Howkins said the company remained on the lookout for opportunities to expand overseas, and was particularly keen to enter the Japanese market.
"The most attractive market which we're not in and which we could operate in is Japan, and that's certainly something we're giving consideration to," he said.
The improvement in IG's revenue and profit was driven entirely by its financial spread bets business, with revenues from the smaller sports operation falling 5.5 per cent to £11.5 million.