Close Brothers' (CBG) securities business suffered due to the poor performance of Aim in the second half of last year, but was more than bailed out by a growing loan book in its banking arm. Overall, the group saw a 16 per cent increase in its first-half operating profits to £109m, with a return on equity of 19 per cent (from 17 per cent in 2013).
Banking delivered the lion's share of this profit at 87 per cent, up from 84 per cent in the six months to the end of January 2014. Borrowing appetite among small businesses is a major factor. "There are more signs of an underlying increase in the demand for credit," said chief executive Preben Prebensen. The division also benefited from growth in its property loan book - where the company lends to professional developers for residential projects - as well as in motor finance.
Lower trading volumes on Aim dented profits in Close's securities business, which is dominated by market maker Winterflood. Here, first-half profit fell 23 per cent year on year to £10.3m, as political uncertainty around first the Scottish referendum and then the upcoming UK general election made private investors hesitant about trading smaller stocks - on which Winterflood makes its widest margins. This is a cyclical business, though, and Mr Prebensen reported a better market environment in February.
Broker JPMorgan Cazenove expects full-year adjusted pre-tax profits of £216m, giving EPS of 114p (from 104p in 2014).
| CLOSE BROTHERS (CBG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,649p | MARKET VALUE: | £2.5bn | |
| TOUCH: | 1,648-1,651p | 12-MONTH HIGH: | 1,707p | LOW: 1,217p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 629p | |||
| Half-year to Jan 31 | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2014 | 92 | 47.7 | 16.5 |
| 2015 | 106 | 56.9 | 18.0 |
| % change | +16 | +19 | +9 |
Ex-div: 19 Mar Payment: 26 Apr | |||
