May 22, 2019 / 7:21 AM / 4 months ago

UPDATE 1-IG Group shares jump as it sets out goals to return to growth

(Adds details from statement, CEO comment, background)

May 22 (Reuters) - IG Group Holdings Plc on Wednesday unveiled a plan to drive growth even as it forecast a sharp fall in full-year net trading revenue and operating profit, as it continued to suffer from low levels of financial market volatility.

IG shares advanced 7% in early deals, erasing some of the 17% slump so far this year.

IG also said it would ramp up investment to meet its medium-term goals and forecast a 30 million pounds ($38 million) rise in operating expenses for fiscal year 2020.

The company has identified Hong Kong as a potential opportunity in the leveraged securities market for retail clients and is developing partnerships to access Asian markets, it said.

Given the opportunities identified, the company will return to growth after fiscal 2019, June Felix, who was named IG’s first female CEO in October, said.

The company, which provides online stockbroking and trading services to retail investors, said it expected full-year net trading revenue to fall 17% to around 475 million pounds from 569 million a year earlier, while operating profit would sink to 190 million pounds from 281 million pounds.

FTSE 250-listed IG, along with rivals Plus500 Ltd and CMC Markets, has been battling an erosion of client base due to a clampdown in Britain and the European Union on financial betting.

The sector has also faced lower volatility this year as investors gauged the outcome of U.S.-China trade talks and Brexit.

However, IG said conditions were more favourable in the first three weeks of May, owing to which revenue in the fourth quarter was expected to be 115 million pounds, a 6.5% rise quarter-on-quarter.

IG, which started off as the world’s first spread-betting firm in 1974 with just three employees, said revenue was expected to jump 30% in fiscal 2022 from the current year as it targeted an expansion into newer products in EU that are not part of the regulatory curbs. ($1 = 0.7890 pounds) (Reporting by Muvija M in Bengaluru; editing by Patrick Graham)

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