IG nearly doubled client-interest pass-through as customer cash rose 20%

IG Group’s gross interest income on client funds was almost unchanged in the first half of 2026, but the amount recorded as interest expense on those funds nearly doubled. Gross income was £65.3 million, down only £0.4 million from a year earlier. Client-fund interest expense rose from £5.9 million to £11.3 million. The result was a 9.7% fall in net interest on client funds to £54.0 million even as total customer cash at the period end increased 20% to £4.8 billion.[1]

The two-line reconstruction shows that lower benchmark rates were only part of the change. IG expressly attributes the decline in net interest to lower rates and greater pass-through to customers. The implied pass-through ratio—interest expense divided by gross interest income—rose from 9.0% to 17.3%. That does not mean every customer received 17.3% of the yield earned on their money. It is a group-level accounting ratio across different jurisdictions, products, currencies and client terms.[1]

The pass-through line, not gross income, drove the reported decline

Gross interest income fell by £0.4 million, while the expense paid or credited in relation to client funds increased by £5.4 million. The £5.8 million reduction in net interest is therefore almost entirely explained by the larger expense line, with the small difference reflecting rounding. A reader looking only at the £54.0 million net number could miss that gross income was resilient despite lower rates and that the distribution of that income between IG and customers changed materially.[1]

This does not establish that IG changed every client rate at once. Some balances may receive no interest, some may qualify only above thresholds, and rates can vary by currency, product, legal entity and customer segment. Client balances also move during the half. The accounts disclose income earned over six months and cash held at the ending date; they do not provide the average daily balance required to calculate a comparable portfolio yield.[1]

Using £4.8 billion as the denominator for £65.3 million would therefore produce a misleading annualised rate. The period-end balance includes cash held on 30 June, not the average amount invested throughout January to June. It also combines money placed with banks, money-market funds and clearing brokers, which may earn different rates or generate different economics. A defensible yield calculation requires average balances by currency and location.[1]

The £4.8 billion is largely not IG’s corporate cash

IG’s notes identify £3.0156 billion of segregated client funds and qualifying money-market-fund balances held off the group’s balance sheet. A further £1.7429 billion was held by clearing brokers. Together they equal £4.7585 billion, which rounds to the £4.8 billion total customer cash cited by the chief financial officer. The company says the segregated and money-market-fund balances remain under client control.[1]

This classification is critical. The customer-cash total is not a freely deployable corporate cash reserve and should not be added to IG’s own cash when assessing liquidity. Client money is subject to safeguarding, segregation, clearing and return obligations. IG can earn interest from arrangements involving those balances and can pass part of it to customers, but that revenue stream does not convert ownership of the underlying principal.[1]

The clearing-broker balance is also operationally distinct from segregated bank or money-market-fund cash. It supports client positions and clearing obligations. The public report does not state how much of the £65.3 million gross interest came from each location, nor whether the pass-through ratio differs between balances at banks, funds and clearing brokers.[1]

The annual comparison and the half-year balance comparison are different

The two disclosed June 2026 balance components total 5.0% more than December 2025, while IG says customer cash was 20% higher than June 2025. Those statements are not inconsistent; they use different starting dates. Combining the 20% year-on-year growth rate with December balances would create a false bridge. This is another denominator issue: balance growth must be matched to the same period as the income comparison.[1]

The 2025 ending balance components can be reconstructed from the note as £2.8429 billion of segregated or qualifying money-market-fund cash at 30 June 2025 plus the then-applicable clearing-broker balance if disclosed elsewhere in the report. The headline £4.8 billion and 20% growth are sufficient for the company’s narrative, but a full yield bridge would need average balances for both halves, not just three point-in-time snapshots.[1]

Acquisitions and product growth may also affect comparability. IG consolidated Freetrade for the whole latest period and Independent Reserve for five months. Customer cash within stock-trading, investment and digital-asset propositions may have different interest arrangements from leveraged-trading margin. The report does not publish a like-for-like client-interest bridge excluding those changes.[1]

Net interest became a smaller part of group revenue

Net interest on client funds represented about 8.4% of IG’s £642.8 million total revenue in H1 2026, down from about 11.0% of £545.2 million a year earlier. The reduction in share occurred because net trading revenue grew 21% while net client interest declined. That mix shift reduces the group’s relative dependence on the interest stream for the period, although £54.0 million remains material.[1]

The regional table shows the decline was broad rather than confined to one segment. Net interest on client funds in the United States fell from £30.7 million to £28.3 million, and the combined other regions fell from £29.1 million to £25.7 million. The report does not publish gross interest and customer pass-through separately by region, so it is impossible to tell whether the U.S. and non-U.S. reductions were driven by the same mix of benchmark rates and customer credits.[1]

Cash-flow figures also differ slightly from income-statement recognition. IG reports £66.1 million of client-fund interest received and £11.0 million paid in cash, compared with £65.3 million of income and £11.3 million of expense recognised. The differences are timing and accrual effects. Mixing cash receipts with accounting expense, or vice versa, would create another artificial spread.[1]

What the change means for customers

At group level, customers received a larger share of the gross interest income associated with their funds than in the prior half-year comparison. The expense nearly doubled and the aggregate pass-through ratio rose by about eight percentage points. The accounts do not show how that benefit was distributed. It may have been concentrated among customers with larger balances, qualifying products, particular currencies or jurisdictions.[1]

The disclosure also does not establish whether IG’s customer rates were competitive with deposit accounts, money-market funds or rival brokers. Such a comparison would require the actual rate schedules, thresholds, currency conventions and product restrictions in force during each month. The accounting ratio is useful for showing the direction of the revenue sharing, not for ranking customer outcomes.[1]

Greater pass-through can be commercially rational even when it reduces near-term net interest. Brokers may use interest on cash to attract transfers, retain higher-value customers or support investment products. IG’s report highlights rapid growth in assets under administration and UK direct-to-consumer inflows. It does not quantify how much of that growth resulted from cash remuneration rather than product expansion, marketing or acquisitions.[1]

What remains to be disclosed

A transparent client-interest bridge would provide average customer cash, average gross yield, average customer crediting rate and net spread, split at least between the United States and other regions. It would also reconcile organic and acquired balances and distinguish segregated accounts, qualifying money-market funds and clearing-broker balances. Those data could be aggregated without exposing individual customers.[1]

The public evidence supports a precise conclusion. IG did not experience a large fall in gross client-fund interest income in H1 2026; it experienced a much larger increase in the expense associated with passing interest to customers. That shift, combined with lower rates, reduced net client interest despite higher customer cash. It also left the underlying £4.8 billion principally outside the corporate balance sheet and under customer or clearing arrangements.[1]

The result is economically different from a simple ‘lower rates cut interest revenue’ headline. Gross income was almost flat, pass-through nearly doubled, and net interest fell. Until average balances and regional rates are disclosed, no reliable portfolio yield can be calculated. The strongest finding is the redistribution visible in the two income-statement lines, not an inferred return on the period-end cash total.[1]

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