ICAP share price climbs six percent on half-year results

on Nov 13, 2013
Updated: Oct 21, 2019

iNVEZZ.com Wednesday, November 13: ICAP’s share price (LON:IAP) jumped by more than six percent today after the world’s largest interdealer broker said it expected full-year profit to rise on the back of job cuts and compensation reductions. At 14.02 UTC ICAP’s shares were trading 22.81p or 6.06 percent higher at 399.11p.

The British broker said today that half-year revenue declined one percent, slightly behind analysts’ expectations, as lower volumes in euro markets offset increased volatility in US interest rates. Revenue decreased to ₤736 million from ₤746 million a year earlier and below the ₤742.5 million consensus forecast from a Thomson Reuters survey of analysts. ICAP said pre-tax profits came in at ₤139 million, up one percent from the first half of 2012.

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“Notwithstanding the decline in revenue and the continued investment in the business, our operating margin has improved,” chief executive officer Michael Spencer said in a company statement. “We have made good progress despite the subdued market conditions over the summer and uncertainty created by the implementation of new financial markets regulations in the U.S.”

Capital expenditure rose from ₤18 million to ₤30 million in the six-month period as new regulations overhauling over-the-counter (OTC) derivatives markets began to be enforced in the US and Europe. Swaps trades, a major portion of ICAP’s business, must now be traded electronically while the new rules have strengthened digital audit trails through clearing and settlement.

ICAP also said today that it has no reason to believe any of its brokers are linked to the alleged manipulation of foreign exchange markets.
US and UK authorities are investigating whether employees at top banks attempted to rig currency rates. On a conference call with analysts, ICAP was asked whether they believed any of their staff could be connected to the alleged rate fixing. “We have no current reason to believe that,” said Duncan Wales, who oversees legal, risk and government affairs functions at the company.

ICAP also disclosed that it has been added as a named defendant to three civil litigations against various Libor and Tibor rate-setting banks in the US. “It is not practicable to predict the ultimate outcomes of these litigations or to provide an estimate of any potential financial impact on the group, but the company intends to defend the claims vigorously,” the London-based group said.
**Analysts on ICAP**
Espirito Santo Investment Bank reaffirmed its ‘neutral’ rating and 356.00p price target on ICAP’s shares in a research note sent to investors today.
Four equities analysts have rated ICAP’s stock as a ‘sell’, six have given it a ‘hold’ rating and three have assigned it a ‘buy’ rating. The shares have a consensus rating of ‘hold’ and an average price target of 362.92p.
**As of 14.29UTC buy ICAP shares at 395.80p.**
**As of 14.29 UTC sell ICAP shares at 395.40p.**
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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