The financial services sector covers a pretty broad church from interdealer brokers through buy-to-let finance to providers of non-standard loans. However, there is a common thread because as high street banks have been obliged to curtail their lending activities, the supply of credit has started moving elsewhere.
This has been welcome news for the likes of Provident Financial (PFG) and Close Brothers (CBG), both of which have experienced strong demand for finance, so strong in fact that they have been able to maintain strict lending criteria, which has helped to cap bad loans, and yet still increase the size of their loan books. And International Personal Finance (IPF) continues to perform well, with its Mexican operation now profitable. Meanwhile, buy-to-let specialist Paragon (PAG) doubled its warehouse loan facility during the year, as professional landlords continued to see increased demand for rented accommodation.
However, interdealer brokers ICAP (IAP) and Tullett Prebon (TLPR) have been caught up in a cocktail of events that has prompted many clients to sit on their hands. Uncertainty over the US budget, further turmoil within the eurozone, deleveraging by banks and economic uncertainty all played a part in cutting volumes. And, while the US budget and eurozone worries may fade as major concerns as the year progresses, IDBs are likely to remain under pressure because their major customers are banks, who are themselves under the cosh. And much the same malaise has affected client activity at online spread-betting specialist IG Group (IGG). But, while the depressed UK remains the biggest contributor to profits, IG is building its emerging markets operation and expanding its mobile phone applications, and crucially continues to increase its market share as smaller operators close.
| COMPANY NAME | LATEST PRICE (P) | MARKET VALUE (£M) | PE RATIO | DIVIDEND YIELD (%) | PERCENTAGE CHANGE IN 2012 | LAST IC VIEW |
| CLOSE BROTHERS | 878 | 1,295 | 13.0 | 4.7 | 39.3 | Buy, 832p, 25/09/12 |
| ICAP | 310 | 2,003 | 8.6 | 7.3 | -11.5 | Sell, 291p 14/11/12 |
| IG HOLDINGS | 460 | 1,675 | 12.1 | 4.9 | -5.6 | Buy, 440p 14/12/12 |
| INTERMEDIATE CAPITAL | 331 | 1,328 | 8.4 | 5.8 | 38.1 | Hold, 293p 21/11/12 |
| INTERNATIONAL PERSONAL FINANCE | 384 | 957 | 13.2 | 1.9 | 117.5 | Hold, 253p 24/07/12 |
| INVESTEC | 429 | 2,594 | 18.4 | 4.0 | 25.0 | Hold, 373p 15/11/12 |
| IP GROUP | 121 | 441 | 15.8 | 0.0 | 53.2 | Sell, 144p 3/05/12 |
| LONDON STOCK EXCHANGE | 1,113 | 3,017 | 10.6 | 2.6 | 36.9 | Hold, 925p 16/11/12 |
| PARAGON | 260 | 787 | 10.7 | 2.3 | 40.0 | Buy, 246p 20/11/12 |
| PROVIDENT FINANCIAL | 1,377 | 1,906 | 14.3 | 5.2 | 44.3 | Hold, 1,400p 24/10/12 |
| TULLETT PREBON | 256 | 557 | 5.7 | 6.6 | -6.7 | Hold, 231p, 27/07/12 |
