Some investors in Close Brothers (CBG) may have been spooked when it warned of increasing competition within the asset and motor finance markets, but its efforts to protect margins seem to be paying off. All three of its core businesses are trading ahead of expectations so far this year, leaving management confident of posting an increase in profits for the first half of the year.
Banking loans were up 7.3 per cent year on year to £7.1bn, driven by its property and premium finance businesses. The net interest margin was stable, bad debts remained low and underlying credit performance was consistent with the prior year, management said. But motor and asset finance were more subdued as the challenger bank tried to maintain underwriting discipline. The asset management business also benefited from bullish equity markets, helping push managed assets up 8.3 per cent to £9.6bn. Analysts at Shore Capital upgraded their forecast EPS for 2018, 2019 and 2020 by 4 per cent.
