London-based inter-dealer broker Icap announced strong growth in revenues and profits yesterday, and predicted that future growth would be fastest in credit and energy derivatives.
Icap reported a revenue of £443.9 million for the six months to September 2005, up 12% compared with the similar period last year. Profits were up 18% to £98.2 million.
Chief executive Michael Spencer said the electronic broking business had grown more rapidly, up 24% to £49.3 million, than voice broking, which was still responsible for most of the revenues, rising 11% to £381.8 million.
Interest rate markets remained active, especially medium and longer-term dollar interest rate swaps and interest rate options. Energy products revenue rose to £34.3 million from £23.7 million.
In the future, Icap expects the market to continue to grow at between 3% and 5% annually, but Spencer added that credit derivatives would grow at "more like 20-25%, driven by the increasing hedging needs of banks, the rapid pace of product development by the leading players, new players attracted by a commoditised, liquid product (iTraxx indexes) and the likely emergence of futures contracts early in 2006".
Political tensions would make energy products popular as well, with growth of 19-22% expected, and the hedge fund boom would drive up volumes in OTC equity derivatives 19-22%, said Icap.
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