Good parties quickly get crowded. Banking group Close Brothers (CBG) has seen a range of alternative lenders march onto its stomping ground of smaller business lending, hoping to profit from the upswing in the UK economy. This helps to explain why last year's 14 per cent growth rate in the loan book has slowed to 8.5 per cent.
Close's chief executive Preben Prebensen points to a 10-year average growth rate of 11.5 per cent, and expects investors to stick with the company's reliable dividend and tested underwriting processes over the newer players. "The new start-ups don't pay dividends," he says. "We are not a start-up, we are not a challenger, we have been doing this for 30 years." An increase in motor, property and asset finance drove up income, while impairments dropped, leaving adjusted profit in the banking division up 15 per cent at £209m.
The market-making securities division Winterfloods saw income dip as increased investment trust activity was outweighed by lower stock-trading activity. Market falls have continued to keep business "choppy" here since the year-end. Meanwhile, the investment management business increased its client assets from £9.7bn to £10.8bn, pushing fees and profits higher.
Numis expected to upgrade its forecasts following these results. It had projected adjusted EPS of 124p for the 2016 financial year, up from 121p in FY2015.
| CLOSE BROTHERS (CBG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,475p | MARKET VALUE: | £2.21bn | |
| TOUCH: | 1,475-1,477p | 12-MONTH HIGH: | 1,707p | LOW: 1,299p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 676p | LEVERAGE RATIO: | 9 | |
| Year to 31 Jul | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 549 | 79 | 30 | 40 |
| 2012 | 532 | 135 | 69 | 41.5 |
| 2013 | 583 | 164 | 82 | 44.5 |
| 2014 | 628 | 189 | 98 | 49 |
| 2015 | 690 | 220 | 118 | 54 |
| % change | +10 | +16 | +20 | +9 |
Ex-div: 15 Oct Payment: 24 Nov | ||||
