Among the three major London-listed retail brokers—Plus500, IG Group, and CMC Markets—profitability trends reveal unique strengths and challenges in their financial structures. While Plus500 demonstrates high efficiency in converting revenue to profit, IG Group claims the top spot in absolute profits, and CMC Markets struggles to maintain consistent performance.
IG Group: The Most Profitable CFDs Broker by Revenue
IG Group (LON: IGG), the largest of the three with a market capitalization of £3.2 billion, leads in pre-tax profits with strong three-digit gains. For the fiscal period from December 2023 to May 2024, IG generated a pre-tax profit of £224.4 million on a revenue of £514.7 million, resulting in a profit-to-revenue ratio of 43.6 percent.
This success echoes IG’s historical performance, particularly its best period in the first half of FY 2022, where it achieved a pre-tax profit of £245.2 million and a remarkable profit-to-revenue ratio of 51.6 percent. Although there was a slight drop to 37.3 percent in the previous fiscal period, IG has since recovered to post robust six-month gains.
Plus500: Profitability Efficiency Leader
In terms of profit efficiency, Plus500 (LON: PLUS) outshines its peers. In its record-setting first half of 2020, Plus500 achieved an impressive profit-to-revenue ratio of 64 percent, marking the highest profit conversion rate among the three brokers. However, recent figures show a decrease in efficiency, with the company’s profit-to-revenue ratio landing at 46.1 percent for the first half of the current year.
While Plus500 trails IG in total profits, generating $183.7 million (around £141 million) in the most recent fiscal six months, it has proven highly efficient. Plus500’s marketing expenditure also stands out as the highest among the three, indicating strategic spending to capture and expand its customer base.
CMC Markets: Challenges in Profit Consistency
CMC Markets (LON: CMCX) trails its competitors in profitability ratios. From October 2023 to March 2024, CMC posted a revenue-to-profit ratio of only 31 percent, well below IG and Plus500. Although CMC rebounded from a £2 million loss in the prior six-month period to £65.3 million in pre-tax profits, the broker’s profitability remains inconsistent.
The pandemic boom led to CMC’s peak performance between April and September 2020, with a profit-to-revenue ratio above 61 percent on £230.9 million revenue. Since then, CMC has faced difficulties maintaining that efficiency, reflected in its current underperformance.
Interest Income and Market Expansion
A significant factor contributing to IG’s dominance is its robust interest income, which reached £72.2 million in the latest fiscal period, compared to £22.3 million from Plus500 and only £18.9 million from CMC. Additionally, a Finance Magnates analysis reveals geographical variances in profitability: IG’s operations in Singapore, for example, proved highly lucrative, while CMC shifts focus from its UK base to target the Asia-Pacific region.