Business

Wednesday 23 August 2017

Shares in Dublin and London based IFG Group slump as investors react to annual pre-tax profits

Stock photo: Depositphotos
Stock photo: Depositphotos

Gretchen Friemann

Shares in the London and Dublin-listed financial services company, IFG Group, slumped this morning as investors reacted to a 26pc decline in annual pre-tax profits.

Lower interest rates were blamed for the deterioration over the past financial year, which marked a sharp reversal from the previous year when IFG, the parent of James Hay and Saunderson House, posted an 86 per cent increase to £8.6m. That compares to £6.4m in 2016.

However in a note to clients released earlier today Goodbody stockbrokers re-iterated its buy recommendation on the stock, pointing out the growth prospects in Saunderson House,a financial advisory firm, remain robust.

While annual revenue at IFG rose by 10 per cent to £78.5 million, margin pressure, triggered by the Bank of England's August interest rate cut, drove down net profits at James Hay.

Goodbody argued this margin compression was likely to continue in 2017, and trimmed its earnings per share forecast by 2pc to 9pc.

Despite the share price slump, IFG's chief executive, James Cotter, struck an upbeat note, insisting the group enters 2017 "with both businesses in stronger positions than last year."

He claimed both its key subsidiaries are "benefiting from the accelerated investment in people and technology".

He also stressed IFG's growth in assets under administration, which leapt by 14 per cent to £26.7 billion, along with the revenue gains helped to position the group for "sustainable growth".

IFG, which is headquartered in Dublin but focused on the UK, sold its Irish pension and advisory business in 2015 and recorded a near £2m "exceptional cost" due to the closure of offices in Ireland.

The group's share was trading at €1.54, down almost 10 per cent at the time of writing.

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