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Broker TP ICAP warns on first-qtr revenue as virus-led market volatility eases

Mar 9, 2021

(Reuters) – Broker TP ICAP posted lower annual adjusted earnings on Tuesday, as a flurry of coronavirus-led market activity eased towards the end of the year, and warned that current quarter revenue might be weaker compared to last year.

The world’s largest inter-dealer broker also halved its dividend to 6 pence a share due to a one-off reduction and posted a 3% fall in adjusted pre-tax profit to 223 million pounds ($308.48 million) for the 12 months ended Dec. 31.

TP ICAP, which had to temporarily halt services to some of its European Union clients in January, said it was moving brokers to its Paris hub and continuing to cover its EU clients effectively following Brexit.

“Trading in the final months of the year improved slightly to more normalised patterns, albeit not with the levels of activity usually associated with a U.S. Presidential election,” the company said.

Born out of the merger of brokers Tullett Prebon and ICAP, the company acts as a broker between institutional customers for commodities, shares, currencies, interest rate swaps and bonds, and tends to thrive on market volatility.

The year 2020 took an index which gauges market volatility to levels not seen since the global financial crisis, as panicked investors dumped stocks.

But markets have calmed down since, supported by massive government stimulus measures to reboot pandemic-hit economies and positive news on vaccines, causing TP ICAP to sound a warning in August that trading volumes were easing from levels seen earlier.

TP ICAP said revenue per trading day in the first two months of 2021 was marginally higher than the prior year.

But the company said its first-quarter revenue might be lower as March 2020 was a record month. It expects low-single digit revenue growth for the full year.

($1 = 0.7229 pounds)

(Reporting by Muvija M in Bengaluru; Editing by Rashmi Aich)