ICAP Profit May Rise as Volatile Markets Boost Trading: Outlook

ICAP Plc, the world's largest broker of transactions between banks, may report an increase in first- half profit tomorrow after slumping credit markets drove record trading in currencies, stocks, bonds and their derivatives.

Net income probably rose by about 26 percent to 72.8 million pounds ($149 million) for the half-year to Sept. 30 from a year earlier, according to the average estimate of four analysts surveyed by Bloomberg. London-based ICAP, which acts as a go- between for trades in financial markets, is likely to have increased revenue 13 percent to 615 million pounds.

ICAP's computer-based foreign exchange and bond trading systems, its most profitable businesses, handled more than $1 trillion on six days in the first half. ICAP, which profits when prices fluctuate, may benefit as traders use the firm to bet on or hedge losses linked to record U.S. home foreclosures.

``This summer saw record flows, and given current market conditions and ICAP's positioning, there is some reason to believe that they will continue to perform well,'' said Roger Tejwani, an analyst at Numis Securities Ltd. in London who has a ``buy'' recommendation on the stock.

ICAP has risen 25 percent this year, reaching a record 640 pence on Nov 9. The shares were trading at 598.5 pence at 8:50 a.m. in London today, valuing the company at about 3.86 billion pounds.

The broker may have limited upside as banks and securities firms seek to reduce the fees they pay interdealer brokers because of losses stemming from subprime mortgages, Credit Suisse analyst Rupak Ghose wrote last week. He switched his rating to ``neutral'' from ``outperform.''
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