By Patrick Graham and Alistair Smout
LONDON (Reuters) - Peter Cruddas, one of the City of London's most prominent supporters of a British exit from the European Union, is confident that Brexit will be good for business at his retail brokerage CMC Markets, despite an immediate hit.
CMC Markets, which floated on the London Stock Exchange earlier this year, reported a downturn in revenues on Wednesday, knocking another 4 percent off its share price, which has fallen by a third since early September.
Chief Executive Cruddas said the revenue fall was due to a slump in client trading, driven by retail investors scared that volatility around the shock vote in June's referendum would spark chaos similar to that around the Swiss franc last year.
"No one is more depressed about that than me," Cruddas told Reuters of the share price fall.
Cruddas and his wife have a 62.5 percent stake in the firm, and have lost about 145 million pounds on paper as a result of the share price fall, according to Reuters calculations, although they would have received around 9.6 million pounds in dividends.
"After the result...clients sat on the sidelines, we kept our margins high. We pretty much lost a month to it. Brexit hasn't caused the downturn in our business. It was the run-up to the referendum. It is industry-wide."
Cruddas told Reuters ahead of the vote that he expected the opposite, with any volatility in the pound likely to spur retail investors in currencies to take more not less risk.
BREXIT BACKERS
Only three founders of FTSE 350 companies publicly backed Brexit, albeit in a personal capacity, and the impact on their share price performance, as well as that of CMC peer IG Group, has been mixed. http://reut.rs/2g2BP18
While Peter Hargreaves has lost around 400 million pounds on the value of his 32 percent stake in financial services firm Hargreaves Lansdown (LON:HRGV), according to Reuters calculations, shares in pub chain JD Wetherspoon have risen.
Wednesday's results showed CMC's net operating income down 4 percent to 75.5 million pounds while revenue per active client sank 13 percent to 1,488 pounds.
But Cruddas and CMC's chief financial officer, Grant Foley, remain bullish, pointing to another shareholder dividend as evidence they are confident of hitting their revenue target of 220 million pounds by 2020.
"We are not that focused on the share price," Cruddas said. "Whilst it is painful to see the share price not perform and the company not hit numbers...we will stick to our strategy."
"Medium and long-term we think the referendum is going to generate good business for us. Client money is up, new accounts are up. The stuff we're doing is working."