ICAP sees profit rising in volatile markets

LONDON: ICAP, the world's No 1 interdealer broker, said it expected annual profits to rise after a 20 per cent increase in first-half revenues, with market volatility offsetting adverse effects of the credit crunch. "Current conditions make forecasting market activity during the balance of the year much more difficult than usual,"the British firm, which offers voice and electronic broking to a range of financial and commodities markets, said in a trading update on Monday ahead of first-half results on Nov 18.

"However, after investing significantly in the future growth of the business, profit before tax, amortisation and impairment of intangibles arising on consolidation and exceptional items for the financial year ending 31 March 2009 is anticipated to be ahead of the year to March 2008."

"If market developments and exchange rates are favourable, then the increase in profit could be well ahead of this figure." ICAP, which is 21-percent-owned by Chief Executive Michael Spencer, made an underlying profit of 330 million pounds ($606.6 million) in the year ended March 2008.

Analysts currently expect ICAP to make an underlying profit of 369.5 million pounds in the year ending March 2009, according to the average of seven forecasts from Reuters Estimates. ICAP said electronic broking revenues were particularly strong in the first half of its financial year, especially in foreign exchange. However, credit markets and mortgage-backed securities markets have been subdued in the credit crunch.

ICAP shares have beaten the UK general finance index by 6 per cent over the past year. They closed at 378.5 pence on Friday, valuing the firm at 2.5 billion pounds.