Close Brothers (CBG) delivered a 26 per cent hike in underlying operating profits at the half-way stage, buoyed by a bumper contribution from the banking division and a return to profitability on the asset management side, which more than offset weakness in the securities business.
Nearly all of the profit uplift came from the banking division, where adjusted operating profits rose from £61.8m to £77.7m, and while the loan book grew 6 per cent to £4.4bn in the six-month period, impairment losses fell from 1.7 per cent of average net loans to 1.2 per cent, thus reducing the expense income ratio from 48 per cent to 47 per cent.
On the asset management side, adjusted operating income rose 10 per cent to £37.2m, thanks to an increase in higher-margin private client assets, and with operating expenses reduced, this helped the prior half-year's loss of £2.6m turn into a profit of £1.1m. Securities trading remained profitable, although operating profits declined 12 per cent to £7.4m in the Winterflood market-making arm due to low trading volumes in higher-margin Aim and small-cap stocks. However, the big fall came from Mako, where profits fell from £5.7m to £0.9m hastened by a cut in Close Brothers' stake in the derivatives operation.
Numis was predicting full-year pre-tax profits of £153.6m and EPS of 77.8p prior to these results, but expects to upgrade these numbers shortly.
| CLOSE BROTHERS (CBG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,080p | MARKET VALUE: | £1.59bn | |
| TOUCH: | 1,080-1,082p | 12-MONTH HIGH: | 1,099p | LOW: 673p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 540p* | |||
| Half-year to 31 Jan | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2012 | 66.8 | 34.8 | 14.0 |
| 2013 | 77.3 | 40.4 | 15.0 |
| % change | +16 | +16 | +7 |
Ex-div: 20 Mar Payment: 24 Apr *Includes intangible assets of £139m, or 94p a share | |||
