TP Icap Posts Lower Revenues, Profits, in 2021

Unsurprisingly perhaps, given how the 2020 numbers were boosted by the volatility at the start of the pandemic, TP Icap has recorded a drop in revenues in its 2021 full year across most business lines, the bottom line recording an increase thanks to the inclusion for the first time of revenues Liquidnet, which the firm bought for $700 million in a deal that concluded in march 2021.

The latter generated £159 million in 2021 as the overall firm produced revenue of £1.865 billion, up from £1.794 billion in 2020. In actual profit terms, TP Icap reports profit for the year of £8 million – down from £97 million in 2020.

Global broking revenues dropped by 5% (2% in constant currency terms) to £1.105 billion from £1.168 billion in 2020. Within that, the drop was most pronounced in Rates, which generated revenues of £429 million, compared to £488 million in 2020 – this in spite of an uptick in activity towards the end of the year when monetary policy changes very much came up on the market’s radar.

The firm’s emerging markets broking business generated £179 million in revenues, and while this is a drop from £183 million the year before, it does mean EM becomes the second most profitable Global Broking business line in revenue terms after Rates and equities. The latter actually saw an increase in revenue to £226 million from £201 million in 2020.

FX and money markets broking revenues dropped to £170 million from £186 million, and credit desks generated £82 million, down from £90 million the year before. Energy and commodities revenues were £367 million, down from £388 million.

TP Icap’s data and analytics business, Parameta Solutions, remains in good shape, the unit generating £166 million in 2021, just £1 million below 2020, with data and analytics earning £149 million (£145 million) and post-trade solutions £17 million (£22 million).

The firm’s Fusion electronic platform continues to be rolled out across TP Icap’s FX and Rates desks and is responsible for 20% of in-scope Global Broking revenue in 2021, comprising of 15% of Rates revenue and 35% of FX. Although the firm does not reveal volumes on the platforms, it says G10 forwards matching was rolled out on client desks during the year in EMEA and the US – the platform’s one-month Asian NDF offering was also completed. TP Icap says its nascent FX options matching platform is producing “attractive early trade flows”.

“Our performance naturally reflects the unusually quiet secondary markets that we experienced in 2021, particularly in the first half of the year,” says Nicolas Breteau, CEO of TP Icap Group. “However, as market conditions started to improve in the second half, TP Icap recovered most of the ground and grew overall market share. We continued to deliver double-digit revenue growth in Data & Analytics.

“We took pre-emptive action to mitigate margin pressure, including greater operational efficiency, and delivered significant overall cost savings of £31 million,” he continues. “These measures helped to partly offset the impact of market conditions which shifted activity to lower margin asset classes within Global Broking. We are targeting a further £38m of incremental savings from 2022 to 2024.”

The firm has flagged higher revenues in the first quarter of 2022, although it says Russian clients were responsible for around 0.5% of 2021 revenues and  it will have realised losses of failed settlements of £4 million and potential unrealised losses of £9 million. In spite of this, Breteau says the sustained market volatility and monetary policy uncertainty are driving higher revenues across the board. “Our revenue in the year to date until 11 March 2022 was approximately 16% higher than the corresponding period in 2021, in constant currency, or 4% higher excluding Liquidnet,” he says. “While it is too early to judge whether this activity will be sustained, we believe the results of our many actions will show through in improved performance across the group in 2022 and beyond.”

Breteau also expressed the firm’s shock and sadness over the events in Ukraine and says it will donate to the relief fund that provides humanitarian assistance to Ukrainian refugees.