Close Brothers ' (CBG) securities business went through the ringer during the first half, as market volatility continued to spook retail investors. However, 4 per cent growth in the loan book of the group's banking arm helped to offset markets division Winterflood's dampened performance. Overall, the group generated 2 per cent growth in adjusted operating profit to £111m.
The banking division's operating income increased by 5 per cent to £258m, led by retail lending, although pricing pressure on commercial lending knocked 30 basis points off the net interest margin, at 8.5 per cent. Management has continued to invest in new sources of lending, including expansion into Ireland and financing technology for small- and medium-sized businesses.
At Winterflood, flagging retail sentiment towards the market resulted in 13 trading loss days, compared with 10 at the same time the previous year. As a result of declining volumes, operating income for this segment was down 16 per cent. However, chief executive Preben Prebensen says trading picked up from the second half of February, while the group's asset management arm enjoyed net inflows of £310m, compared with £195m in 2015.
Analysts at Numis Securities expect adjusted pre-tax profit of £225.4m for the year to July 2016, giving adjusted EPS of 118, compared with £231.5m and 115p in FY2015.
CLOSE BROTHERS (CBG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,292p | MARKET VALUE: | £1.94bn | |
| TOUCH: | 1,290-1,292p | 12-MONTH HIGH: | 1,707p | LOW: 1,159p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 685p | LEVERAGE: | 8.9 | |
| Half-year to 31 Jan | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 330 | 106 | 56.9 | 18 |
| 2016 | 341 | 109 | 59.7 | 19 |
| % change | +3 | +2 | +5 | +6 |
Ex-div: 17 Mar Payment: 20 Apr | ||||
