CMC Markets, a London-headquartered brokerage group, has estimated that its net operating income (NOI) for the first-half (H1) of its fiscal year 2023 (FY 2023), which ended in September 2022, will bring in approximately £153 million, which is 21% year-on-year (YoY) growth.
The online trading service provider, which serves retail and institutional clients across 12 countries, including in the UK, Australia, Germany and Singapore, stated these in its H1 2023 pre-close trading update published on Thursday.
“Underlying market activity improvement through August and September underpinned an improvement in net operating income for the Group in the period,” CMC Markets said.
The broker noted that the business expansion plan to grow its net operating income by 30% over the next three years “through the addition of additional products, and geographical expansion based on the 2022 result and underlying conditions remain on track.”
While CMC Markets expects that its leveraged net trading revenue for the period to jump 27% YoY to approximately £128 million, the Group believes its non-leveraged net trading revenue will drop -14% YoY to approximately £21 million.
During the first six months of its fiscal year 2022, the leveraged and non-leveraged net trading revenues came in at £101 million and £24 million, respectively.
Furthermore, CMC Markets expects its leveraged gross client income to improve 22% YoY to £155 million. During H1 2022, this income touched £127 million.
Additionally, the London Stock Exchange-listed company disclosed that its client leveraged assets under management came in at approximately £530 million which is "slightly below the historical period-end record of £560 million but remaining at elevated levels.”
“H1 2023 active leveraged clients are moderately lower compared to H1 2022, offset by an overall increase in activity,” the company said.
In terms of operating cost, CMC Markets expects a 30% increase from H1 2020s £84 million in costs. The broker estimates that the cost will hit approximately £109 million, minus variable remuneration.
In July, Finance Magnates reported that the broker projected that its operating cost would jump 5% from its annual guidance, pushed up by higher personnel and non-personnel costs.
Diversification Moves
On Friday, CMC Markets launched CMC Invest, its UK investment platform that provides customers with investment opportunities in over 1,100 US and UK shares and over 135 exchange-traded funds and investment trusts.
The Group noted that this UK non-leveraged business forms part of its “steady diversification strategy.”
In September 2021, the brokerage group acquired more than half a million share investing accounts of Australia and New Zealand Banking Group, Australia’s fourth-largest bank by market capitalization, for AUD $25 million.
The migration of these clients is still on track and should be wrapped up during the second half of the current fiscal year, CMC Markets said.
“This move into self-directed investing marks a significant milestone for us, representing a major opportunity for growth and diversification into the non-leveraged market,” Lord Cruddas, the CEO of CMC Markets, noted.
Cruddas added: “While it is still in its initial stages of development, as we plan to add further functionality over the coming months, our goal is to provide unrivaled market access to investors through the best technology and lower transaction costs and fees.”
Furthermore, CMC Markets stated that this Australia-based stockbroking business finished H1 with “a modest reduction” in assets under administration, falling “from historical record levels" but is in line with Australian market performance. It added that activity in the business “remains elevated” when compared to pre-pandemic levels.
The results of CMC Markets' half-year fiscal year 2023 performance will be announced on November 16, 2022.
