Capital Index (UK) Sees 36% 2020 Profit Jump despite Revenue Dip

Capital Index (UK) Limited, a London-based CFDs trading and spread betting broker, submitted its annual financials for 2020, ending December 31, reporting a healthy surge in its profits despite a dip in the overall revenue.

According to the latest Companies House filing, Capital Index generated total yearly revenue of £2.44 million, a 10.9 percent drop from the previous year’s £2.73 million. 

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However, with a much lower cost of sales and administrative expenses, the broker ended the year with an operating profit of £122,150, much higher than 2019’s £94,978. For a much clear comparison, that was a surge of 28.6 percent.

Benefited from 2020 Volatility

The numbers are only for the businesses generated by the broker’s UK subsidiary, which is a wholly-owned subsidiary of Capital Index (Cyprus) Limited. Its offerings include CFDs and spread bets for FX, indices, commodities, and bonds.

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The broker’s revenue was generated primarily from the transactional spreads generated from the clients’ trading. It acknowledged that most of the revenues were generated during the first and second quarters of the year due to the rise of volatility across the financial markets.

After interests and taxes, the broker generated a net profit of £87,108, which is 36.2 percent higher than the previous year. The trading profit margin also increased to 76 percent from the previous year’s 75 percent.

“The Directors are happy with the results of 2020 but see that more clients will be needed to continue to see growth in top line revenues,” the broker’s filing noted.

The broker is now planning to launch its proprietary trading platform in the third quarter of 2021, which will create a new revenue stream for its business.

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