Terry Smith, the chief executive of Tullett Prebon, said that he was on the lookout for "top-line growth" as the world's second-largest interdealer broker pushed up annual operating profits by more than a quarter and delivered on a pledge to hand £300 million of capital back to shareholders.

The colourful City figure said that over the coming year he would take on fresh staff and move into new product areas and geographies.

He highlighted further expansion in credit derivatives, a move into freight and property derivatives and a likely foray into the insurance market as being of current special interest to the broker.

Moving into insurance, to offer hedging products for insurers and other heavy users of the bond markets, would follow a similar initiative by the arch rival Icap last month, which unveiled the bare bones of a joint venture with Jardine Lloyd Thompson, the insurance broker.

Mr Smith said that Tullett Prebon was also keen to grow in the emerging markets.

"If you drew a map of the world, then in some of the obvious emerging market geographies you could say we are a bit underrepresented," he said, naming Eastern Europe and Latin America as growth opportunities.

Nadir Latif, who joins Tullett Prebon next month as head of product development, will spearhead a more proactive approach by the broker into fresh product areas, he said.

This came as operating profits at Tullett Prebon, demerged from its former partner Collins Stewart in December, increased operating profits by 27 per cent to £114.8 million, with pre-tax profits up by 139 per cent to £125 million.

Mr Smith said that Tulletts, with profit margins of 17.6 per cent, was close to its stated target of 18 per cent.

The broker, which stands between institutional investors in a host of bond and derivatives trades, recovered in Asia Pacific and performed strongly in Europe, with respective revenues rising by 17 per cent and 9 per cent.

But new bond market reporting changes introduced by Nasdaq hit volumes in the North American fixed-income market, and saw revenues in that region fall by 3 per cent to £252.8 million last year.

Group revenues from fixed-income derivatives fell by 8 per cent to £181.8 million as higher interest rates made using the markets to refinance debt less attractive.

Mr Smith said that he expected the market to stabilise with the rates cycle appearing to have neared its peak.

He said that tighter disclosure requirements had driven dealers into the credit derivatives market, where disclosure is less onerous, and that this was benefiting Tulletts.

He also emphasised the recently completed acquisition of the US broker Chapdelaine for £48 million as bringing both diversity and punch to the American operations.

"It gets us higher revenues and it gets us to No 2 in North America," Mr Smith said.

Shares dropped 1p to 645p.

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