Coronavirus selloff helps CMC Markets double revenue
Online trading firm CMC Markets said it nearly doubled its annual net trading revenue, bolstered by last month’s coronavirus-induced selloff.
In a pre-close trading update, the firm said it expects revenue from its contracts for difference business to be around £241m, up from £110.2m a year earlier.
CMC said it had had “strong underlying performance” in the business throughout the year which was enhanced by increased market activity in the final quarter.
CMC’s stockbroking business also had a strong year and net revenue is expected to increase from £15.5m to £32m. It helped offset a hit from regulatory restrictions on the sale of complex financial products to retail clients.
After a strong performance, CMC reaffirmed its dividend policy of paying a total annual dividend of 50 per cent of profit after tax.
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Shore Capital analysts Vivek Raja and Paul McGinnis said: “The relative certainty of dividends should therefore command a premium so we would not be surprised to see CMC trade above our fair value in these market conditions.”
The outlook for 2021 is confident despite the uncertain economic outlook and CMC said it would provide further detailed guidance at full-year results in June.
Chief executive Peter Cruddas said: We’re not reliant on a sustained period of high volatility in markets, but our well invested platform, technical expertise and diversified offering supports us delivering sustainable results not just now but also in years to come.”
CMC, whose online trading platforms allow individuals to make leveraged bets on financial markets, along with rivals IG and Plus500, has benefited from a surge in market volatility in recent weeks.
Last month Plus500 raised its outlook after a boom in trading activity during the market selloff. The spreadbetting firm said it had seen a significant increase in customer trading activity.
Shares in CMC are up 3.2 per cent.