CMC Markets reports YTD net operating income in line with 2022 levels
CMC Markets Plc (LON:CMCX), a global provider of online trading and institutional platform technology, today issued a trading update for the period from April 1, 2022 to July 27, 2022.
CMC Markets says net operating income for the group year-to-date is in-line with levels seen in the same period in FY 2022. Active monthly trading client numbers and client assets under administration across both the leveraged and non-leveraged Australian stock broking businesses remain robust.
The Group continues to focus on delivering a strong business performance for its financial year ending 31 March 2023. Nevertheless, the cost environment remains challenging, and the Group now expects operating costs to be in the order of 5% above guidance provided at the time of the FY 2022 results. Higher operating costs are the result of a combination of higher personnel and non-personnel costs including higher professional fees and software costs associated with expansion projects, as well as the impact of the weaker GBP.
Progress towards new business growth across all platforms and geographies continues as planned and all expansion initiatives are on track, CMC Markets says.
Let’s recall that CMC Markets’ net operating income for FY22 amounted to £282 million – at the top end of the guidance released earlier this year.
Leveraged net trading revenue decreased by £119.6 million (34%) driven by decreases in both gross client income and client income retention. The reduction in gross client income was a result of the significant volatility in the market in 2021 resulting in exceptionally high client trading activity, with the majority of 2022 returning to more normalised levels.
Client income retention was lower during the period at 80% (2021: 104%) as a result of a change in the mix of asset classes traded by clients and lower natural hedging of flow within indices. This resulted in revenue per active client (“RPC”) decreasing by £985 (22%) to £3,575.
Leveraged active client numbers decreased by 16% in comparison to 2021; however, monthly active clients remain significantly above pre-COVID-19 levels, demonstrating the structural shift in the Group’s client base.
Non-leveraged net trading revenue was 12% lower at £48.0 million (2021: £54.8 million), with decreased client trading activity during the less volatile market environment offset by an active client base which was 6% larger than 2021 and 36% higher than 2020.
Profit before tax for the period was £92 million (2020: £224 million).