CMC Markets profits rise as it focuses on ‘big fish’ clients
Spreadbetting firm CMC Markets today surging profits as a focus on big fish clients paid off.
Profit before tax jumped by 26 per cent in the year ending in March to reach £60.1m, the firm said.
CMC has targeted higher-value clients as it tries to set itself apart from a throng of spreadbetters, with 80 per cent of revenues gained from a fifth of the client base.
Peter Cruddas, CMC founder and chief executive, said the firm has been pushing hard on improving its platform in recent years, with over $100m invested in its platform in order to offer clients professional-standard tools such as charting abilities and newswire access.
Read more: Spreadbetting firm launches pro platform to circumvent Brussels clampdown
The investment programme is dubbed “Project Tuna”, because it is the tastiest, most expensive fish in the sea, Cruddas said.
Revenues per client rose by 18 per cent year-on-year over the 12 months, helping to grow net operating income by 16 per cent in spite of a two per cent fall in active client numbers.
CMC has also pushed strongly on institutional deals, with Cruddas hailing a white-label tie-up with Antipodean bank ANZ as the firms “Ocado moment”, referring to a game-changing deal announced last month by the online grocery firm. CMC declined to give details of the share of revenue it will gain from ANZ customers.
The firm proposed a final ordinary dividend of 5.95p per share, down from the previous years 8.93p. Chief operating and financial officer Grant Foley said it was a “really strong performance” on the financial side.
Read more: Small spreadbetters "will suffer" from regulation says CMC Markets boss
CMC has also launched cryptocurrency products, but says it will not rely on the products for future growth.
“We think its too volatile a product,” said Cruddas. “We dont think it fits with our client base too much.”
“I think they should be called kleptos,” he added, referring to kleptomania, an irresistible urge to steal.
Meanwhile, the firm is mostly unconcerned about a crackdown on the use of high leverage in the spreadbetting and contracts for difference industry by European regulators, saying its focus on higher-value, less speculative clients will help.
“We think its the beginning of the end of the churn and burn business,” Cruddas said.
Read more: Regulatory overhang takes gloss off CMC's record quarter
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