12th Mar 2019 09:13
LONDON (Alliance News) - Close Brothers Group PLC on Tuesday reported a decline in profit in the first half of its current financial year as it continues to invest heavily in the development of its divisions.
The merchant banking company said pretax profit for the six months to the end of January decreased by 3.3% to GBP135.6 million from GBP140.2 million reported a year prior, due to an increase in operating and administrative expenses.
Meanwhile, net interest income rose by 2.8% to GBP249.8 million from GBP243.0 million, with the the loan book increasing by 2.0% in the first half to GBP7.4 billion from GBP7.2 billion in August 2018.
Adjusted operating expenses increased 4.6% to GBP246.7 million, driven predominantly by continued growth and investment in the Banking division. Costs in the Asset Management unit also increased, as a result of investment in front office hires and research capability.
In turn, the Banking division delivered adjusted operating profit up 0.8% to GBP131.1 million. The Asset management unit delivered good net inflows, though adjusted operating profit shrank 5.3% to GBP10.8 million.
Winterflood - which provides execution services to asset managers, stockbrokers and investors - delivered solid profitability in a difficult market, Close Brothers said. Winterflood generated operating profit of GBP9.3 million, down 37% on the prior year, reflecting lower investor trading activity, particularly in December.
Close Brothers declared an interim dividend of 22.0 pence a share, up 5% from 21.0p paid the year before.
"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," said Preben Prebensen, chief executive of Close Brothers.
The stock was up 0.8% at 1,482.00 pence early Tuesday in London.
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