Tullett First-Half Profit Declines on Weaker Trading RevenueLiam Vaughan
Tullett Prebon Plc, a London-based inter-dealer broker, said first-half profit fell 5.4 percent after a drop in revenue from trading in foreign exchange and bonds.
Underlying pretax profit in the six months to June 30 slipped to 62.8 million pounds ($96 million) from 66.4 million pounds a year earlier, the company said in a statement today. Revenue fell to 439.8 million pounds from 455.1 million pounds. It will pay an interim dividend of 5.6 pence a share.
“Conditions have improved in the last few weeks as volatility returned,” Chief Executive Officer Terry Smith said in a telephone interview today. “It’s difficult to know whether that will continue but there are plenty of fundamental factors which should lead to further volatility.”
Inter-dealer brokers such as Tullett and ICAP Plc act as a go-between for banks that trade bonds, stocks, currencies, energy and derivatives. Profits have been squeezed as regulators push more trading onto exchanges and financial markets in Europe struggle to shake off the sovereign debt crisis.
Revenue from treasury products, which includes currency and money markets, fell to 115.4 million pounds from 121.4 million pounds a year ago, reflecting a drop in trading FX forwards such as in Asia, the company said. Fixed income revenues also fell as banks reduced activity in corporate bonds.
Inter-dealer broking will “undergo some change in the second half of this year as a result of the implementation of the final rules for swap execution facilities in the U.S.,” Smith said in the statement. “It is currently not possible to accurately predict the impact this will have.”