UPDATE 2-Spread-better IG Group year profit jumps 40 pct
(Adds CEO comment, analyst reaction)
LONDON, July 21 (Reuters) - Britain's biggest spread-betting firm IG Group (IGG.L) met forecasts with a 40 percent rise in full-year profit on Monday as increased financial market volatility encouraged clients to place more bets.
IG said pretax profit for the year to May 31 was 96.99 million pounds ($193.2 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 pounds, an increase of 51 percent. 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 told Reuters in an interview.
However, Howkins acknowledged that clients' bad debts rose "fractionally" to 2.2 percent of revenues over the year as a whole from 1.5 percent 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 percent from 57.7 percent the previous year.
By 0941 GMT, IG shares were 0.3 percent weaker 348 pence, while the FTSE 250 share index .FTMC was 0.5 percent 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 percent to 11.5 million pounds.
Howkins said the unflattering year-on-year comparison reflected a one-off surge in revenues during the 2006 football World Cup, adding that the group held out little hope of a comparable boost from this year's Olympic Games.
"The Olympics is always a bit of a damp squib as far as spread-betting is concerned. It's very fragmented across very many sports, and not that many people really have a view on that many of those sports," he said.
IG is paying a final dividend of 9 pence per share, taking the total payout for the year to 12 pence, an increase of 41 percent. (Editing by Louise Ireland)
