19th Nov 2015 08:16
LONDON (Alliance News) - Close Brothers Group PLC on Thursday said it remains confident about its prospects for the full year despite the "slower start" seen in the first quarter.
In an update for the to October 31, the financial services group said its banking division achieved "solid growth at good returns" as it posted a 2.8% increase in the loan book to GBP5.9 billion from GBP5.7 billion at the end of July.
However, the banking arm's net interest margin - a driver of profitability - was down "modestly" on the prior year, largely due to competition in some markets. Close Brothers did not specify which markets hit margins, but noted that the effect was "broadly offset" by continued improvement in its bad debt ratio.
"Overall returns remain strong, but slightly lower than the prior year, as we focus on maintaining our prudent lending criteria and investing in our business," Close Brothers said of the banking arm.
Conditions facing the group's securities business, Winterflood, have been difficult since the start of the financial year, the companys aid.
"Although volumes were broadly unchanged, falling equity markets and volatile trading conditions, particularly in August and September, have resulted in lower profitability compared to the same period last year," Close Brothers said of Winterflood.
Meanwhile, the asset management arm had "solid net inflows" though overall client assets fell due to unwelcome movements in markets during the quarter. Client assets amounted to GBP10.6 billion on October 31 against GBP10.8 billion on July 31.
"The revenue margin has remained broadly stable on the prior financial year," Close Brothers said.
Close Brothers shares were down 0.5% at 1,513.00 pence on Thursday shortly after trading began.
By Samuel Agini; [email protected]; @samuelagini
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