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Close Brothers finds it 'difficult' in first half

By Iain Gilbert

Date: Tuesday 12 Mar 2019

Close Brothers finds it 'difficult' in first half

(Sharecast News) - Merchant banking outfit Close Brothers saw profits slide in the first half of its trading year, partly due to market conditions it called "difficult" for its asset management and brokerage unit.
Close Brothers revealed a 4% year-on-year drop in operating profits to £138.8m, driven by a 37% fall in profits to £9.3m over at Winterflood, the group's market-making business, as lower trading volumes hit the firm's balance sheet. Earnings per share dipped 3% to 69.80p.

The FTSE 250 group grew its loan book 2%, to £7.4bn, as the 140-year-old bank increased business in its commercial and premium finance divisions. The motor finance and property loan books narrowed 1.7% and 1.2% respectively.

Close Brothers also revealed it had been somewhat successful at protecting its margins in the six months ended 31 January, as it remained focused on growing its premium finance operations amid heavy competition from other lenders.

Chief executive Preben Prebensen said: "We delivered another solid performance in the first half, continuing to achieve strong returns while staying true to our service-led business model, disciplined approach, and commitment to investing through the cycle.

"Longer term, we are confident that the disciplined application of our business model will continue to allow us to support our clients and customers and invest in our business, while maintaining strong returns and profitability in a wide range of market conditions."

Further on the outlook, he said the banking division "remains well positioned, benefiting from the diversity of its business portfolio and strong customer focus" and would "remain committed to protecting margins, maintaining our prudent underwriting and continuing to invest in our businesses for the long-term".

Asset Management division was also focused on the long-term strength of our client proposition and on growing the asset base through ongoing investment and maintaining good net inflows, while Winterflood "remains sensitive to external market conditions".

As of 0850 GMT, Close Brothers shares had inched up 0.41% to 1,476p.

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