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UPDATE - IG Group to learn lessons from Swiss franc episode

IG Group says it will review its risk management practices in the wake of last week’s events in Switzerland, which saw the spread betting firm take a £30mln loss.
UPDATE - IG Group to learn lessons from Swiss franc episode

--adds broker comment, updates share price--

IG Group (LON:IG.) says it will review its risk management practices in the wake of last week’s events in Switzerland, which saw the spread betting firm facing up to a £30mln loss.

The Swiss National Bank stunned markets on Thursday by scrapping its pledge to cap the value of the franc at 1.20 per euro sending markets into a tailspin.

IG, which offers forex trading services, put its loss at up to £30mln through a combination of market (£12mln) and client credit (£18mln) exposure.

Reporting IG’s six month results to 30 November, chief executive Tim Howkins said profit and earnings will be negatively affected by client debts associated with the Swiss franc movement.

“We will seek to learn lessons from this incident which we can incorporate into our risk management approach going forward,” Howkins said.

Revenue in the six months to 30 November was £197.4mln, 8% ahead of the same period in the prior year. Profit before tax went up by 2.8% to £101.4mln.

The firm, which also provides trading in shares, indices, forex, commodities and binaries, said client numbers rose by 2.7%, while revenue per client was 5.2% higher.

Analysts at Canaccord Genuity said the £30mln loss event leaves IG's investment case far from risk free in an environment with increased volatility and the possibility of further central bank intervention.

The broker maintained its hold rating and share price target of 650p. 

Shares were trading at 727p, up 10p in early deals.

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IG Group Timeline

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January 15 2015
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September 17 2013
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September 11 2012

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