Icap shares hit a three-year low despite rise in revenues

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In a trading statement ahead of the end of its half year tomorrow, Icap said revenues in the six months had soared 20% on the back of the volatility from the recent months of financial turmoil.

It said it remains bullish about matching or even bettering last year's profits of £330 million in the financial year to next March.

The market, however, in the midst of another major sell-off of financial stocks, took another view.

The shares, which had already nearly halved over the past nine months, crashed a further 70½p to trade at a three-year low of 308¼p.

Broker Numis Securities, a supporter of the stock, admitted: "The financial world is changing with the number of counterparties diminishing and those that remain are deleveraging.

"Inevitably the current period of market volatility will come to an end. We see a period of subdued trading where fear rules greed and revenues for Icap are impacted."

Broker Daniel Stewart & Co said: "Market conditions are likely to get tougher for Icap as bank consolidation and deleveraging is likely to lower volumes over time.

"We expected the possibility of a reduction in volumes may lead the market to reduce [Icap profit] estimates for 2010 and beyond."

Figures from Icap revealed that the day of the collapse of Lehman Brothers and the biggest crash in shares on Wall Street since 1929 saw its trading volumes go off the scale.

While credit markets have for the most part remained untraded, Icap said it has seen "significant activity in the OTC markets" — so-called over-the-counter trading between dealers who use their own networks rather than a formal exchange.

The mayhem after the collapse of Lehman saw Icap voice-brokered interest-rate swaps and options soar by 35% on Monday 15 September, while activity was up by 95% on the Tuesday.