Protecting the margin has been paramount for Close Brothers (CBG), against a backdrop of rising competition in lending markets. Tightening underwriting standards in motor finance meant a marginal contraction in that business’s loan book to £1.7bn through FY2018, which offset growth elsewhere in the retail segment. The payoff of that approach was a broadly stable group net interest margin of 8 per cent, while impairments remained at 0.6 per cent of the average loan book.
The disposal of the retail point-of-sale business and increased operational investment meant adjusted operating profits for the retail banking business dipped 2 per cent to £81.1m. However, commercial banking continued to drive underlying loan and profit growth for the specialist lender, with the former metric up 7 per cent to £7.3bn at a group level.
The asset management business gained £1.1bn in net inflows, which together with market returns of £395m, pushed total managed assets up 17 per cent. Market maker Winterflood benefited from increased trading activity, with a 3 per cent rise in average bargains per day to 68,000.
Analysts at Numis expect adjusted net tangible assets of 766.2p a share at the July 2019 year-end.
| CLOSE BROTHERS (CBG) | ||||
| ORD PRICE: | 1,643p | MARKET VALUE: | £2.49bn | |
| TOUCH: | 1,642-1,644p | 12-MONTH HIGH: | 1,682p | LOW: 1,315p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 891p | LEVERAGE: | 8.8 | |
| Year to 31 Jul | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 628 | 189 | 98 | 49 |
| 2015 | 673 | 220 | 118 | 53.5 |
| 2016 | 687 | 229 | 126 | 57 |
| 2017 | 761 | 263 | 130 | 60 |
| 2018 | 806 | 271 | 136 | 63 |
| % change | +6 | +3 | +5 | +5 |
| Ex-div: | 11 Oct | |||
| Payment: | 20 Nov |
