UK online broker CMC Markets Plc (LON:CMCX) has earlier today provided a trading update for the six months to end-September 2020 (H1 2021), with the solid results leading to increased full year guidance.

The broker continued to build on the momentum gained in 2020, resulting in a strong trading performance across all areas of the business. This was supported by an ongoing focus on retaining and acquiring high value clients and diversification through its institutional B2B and stock broking business.

In addition to that, the period has been marked by elevated volatility resulting from the COVID-19 pandemic increasing client trading activity.

This led to CFD net trading revenue of approximately £200 million, sharply up from the level of £85 million registered in H1 2020. Client income retention remained strong and well in excess of guidance of ‘above 80%’ due to the market conditions prevailing for much of H1 2021 and continued improvements to the risk management strategy.

CMC expects its stockbroking net revenue to increase to approximately £26 million for H1 2021. This compares favorably with the result of £14 million registered in H1 2020. The rise reflects the continued growth across the business, especially the strengthening of the ANZ Bank white label partnership, as well as more volatile markets leading to increased client trading activity.

Operating costs for H1 2021, excluding variable remuneration, are forecast to be approximately £80 million (H1 2020: £65 million). This is primarily due to the Group’s continued investment in technology leading to higher personnel costs, as well as to an increase in marketing costs to attract high-value new clients and other variable costs which are linked to higher client trading activity.

In terms of outlook, CMC Markets’ Board says it is confident that net operating income will be towards the upper end of the current range of consensus, while operating costs (excluding variable remuneration) are anticipated to be moderately above consensus.

As at 7 October 2020, the Group’s compiled Full Year 2021 consensus is as follows:

• Net operating income of £329.9 million, ranging from £321.0 million to £348.7 million;
• Operating expenses (excluding variable remuneration) of £148.5 million, ranging from £145.4 million to £152.1 million; and
• Profit Before Tax of £159.6 million, ranging from £149.2 million to £175.3 million.

The results for the six months ending September 30, 2020 will be announced on November 19, 2020.