10th Mar 2020 09:31
(Alliance News) - Close Brothers Group PLC on Tuesday reported a reduced interim profit after booking higher expenses and an increased impairment loss of financial assets.
The FTSE 250-listed merchant bank posted a GBP124.1 million pretax operating profit for the six months ended January 31, down 8.5% from GBP135.6 million the year before. This was despite an improved operating profit from its Winterflood unit of GBP10.6 million, up 14% from GBP9.3 million.
Close Brothers reported a 3.1% rise in operating income to GBP420.0 million from GBP407.4 million - with interest income up 2.9% at GBP323.5 million from GBP314.5 million and 5.3% rise in non-interest income to GBP165.9 million from GBP157.6 million.
However, administrative expenses climbed 4.4% to GBP257.6 million from GBP246.7 million and the company incurred a GBP36.7 million loss on impairment of financial assets, up 68% from GBP21.9 million. These factors combined to push the bank's operating profit lower year-on-year.
Net interest margin in the first half fell to 7.8% from 8.1% the prior year.
The company increased its dividend per share for the period by 3.2% to 22.7 pence from 22.0p.
As at January 31, Close Brothers' loan book was flat at GBP7.6 billion compared to July 31. Total client assets at January 31 stood at GBP14.0 billion, a 5.3% increase from July 31's figure of GBP13.3 billion. Its CET1 capital ratio rose to 13.4% at the end of January from 13.0% at the end of July.
Chief Executive Preben Prebensen said: "The performance of the group continued to demonstrate the consistent application of our business model in a period of lower activity in the UK economy. We delivered a strong return on opening equity of 13.6% and declared an interim dividend 3% higher than the prior year. We are confident that our resilient business model and the deep experience of our people leave us well placed to navigate the current uncertainty, and to continue serving our customers and clients in a range of market conditions."
Shares in Close Brothers were up 1.6% at 1,156.00p in London on Tuesday morning.
By Anna Farley; [email protected]
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