CMC Markets
raised its full-year revenue guidance by roughly 10% after the
London-listed brokerage (LSE: CMCX) recorded stronger-than-expected trading and
stockbroking activity in the six months through September.
CMC Markets Lifts Revenue
Outlook 10% After Record Australian Performance
The fintech
firm reported net operating income of £186.2 million for the first
half, up 5% from the prior-year period. Profit before tax held steady
at £49.3 million, though the margin narrowed slightly to 26.5% from 27.9%
a year earlier. The company attributed the compression to a £5.2
million remediation charge tied to an industry-wide margin netting issue
in Australia.
“Net operating
income to be approximately 10% ahead of current market
expectations for FY2026,” the company said, referring to
consensus estimates of £353.9 million compiled internally.
CMC’s Australian
stockbroking unit delivered a record half-year performance, with net
operating income climbing 34% to A$65.9 million.
Assets under administration in the region increased 14% to
approximately A$91 billion.
The company
now ranks as Australia’s second-largest stockbroker by revenue,
surpassing its contracts-for-difference operations in that market.
Half-Year Performance Metrics
Westpac Deal Expected
to Lift Trading Volumes 45%
The
results follow CMC’s late September announcement of an
extended partnership with Westpac Banking Corporation, Australia’s
second-largest bank. Under the arrangement, Westpac and
its St.George subsidiary will adopt CMC’s white-label trading
platforms after a 12-month integration period.
CMC
expects the agreement to expand its Australian customer base by
approximately 40% and increase domestic trading volumes by roughly 45%.
The partnership gives CMC access to Westpac’s retail base of some 13
million clients, though the company did not specify how many would
actively use the platforms.
“This
is a significant and exciting opportunity for CMC Markets and
continues our strong record in Australia in winning major technology
partnerships with major banks,” said Lord Peter Cruddas,
the company’s chief executive.
The Westpac
arrangement mirrors an earlier deal CMC struck with ANZ Bank. Both
partnerships position the firm to expand its
institutional footprint without the direct client acquisition
costs typically associated with retail brokerage.
Revenue Breakdown by Business Line
Blockchain Trial and
European API Push
Post-period,
CMC completed a live blockchain-based tokenized share trade through its
subsidiary StrikeX, using Arbitrum’s Layer 2 network.
The October trial involved transferring digital
tokens representing company shares between investors
using a custodial digital wallet, which the firm said complied
with UK regulations.
“With
StrikeX, we are embarking on a plan to tokenise securities and derivatives
markets, so that investors can trade 24/7,” said Laurence Booth,
CMC’s global head of capital markets.
The company
also announced an investment-grade rating of BBB- from Fitch
Ratings and established a commercial paper program with
capacity of up to €300 million. CMC said it does not anticipate
issuing the full amount initially and expects the overall
cost to be minimal given the improved credit terms.
Separately,
CMC’s API-based neobank partnership continued to grow, with the
firm now live in more than 30 European countries, many where
it has no physical presence. The API platform has opened
hundreds of thousands of retail trading accounts over the
past year, with roughly 70% coming from countries where CMC
lacks offices.
Costs Rise on
Remediation and Dual Operations
Operating
expenses increased 10% to £136.5 million, largely due to the
Australian remediation provision. Stripping out that charge,
costs remained in line with internal forecasts, the company
said.
CMC noted
it is incurring temporary dual-running costs as it
shifts operational functions to lower-cost jurisdictions
through a partnership with an outsourcing provider. The
firm expects those expenses to unwind over the next 12 to 18
months, leading to improved profit margins.
The board
declared an interim dividend of 5.5 pence per share, up 77%
from 3.1 pence a year earlier, in line with its policy of
distributing half of after-tax profits. Basic earnings per share
rose 4% to 13.3 pence.
CMC’s
trading revenue, which accounts for roughly 74% of total income, grew 5%
to £138.1 million, supported by volatility in commodities and equity
index products. The revised hedging strategy introduced in the
prior fiscal year contributed to improved efficiency, the company
said.
Interest income
declined 15% to £20 million, reflecting higher payments to
clients holding Cash ISA products. Assets in CMC’s Cash ISA
offering peaked above £300 million during the period.
CMC
Markets, founded in 1989 and headquartered in London, is listed on the
London Stock Exchange and is a constituent of the FTSE 250 Index. The
company provides online trading in contracts for
difference, spread betting, foreign exchange, and stockbroking
services across 12 countries.
This article was written by Damian Chmiel at www.financemagnates.com.
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