Volatility, notably towards the end of 2018, made market conditions that much more difficult, with weaker trading volumes as investors stayed on the sidelines. So delivering a modest fall in profits was a creditable performance for Close Brothers (CBG) in the six months to December 2018.
Adjusted operating income from the banking division's retail loan book fell by 2 per cent to £113.2m, mainly because of increased lower-margin business in the motor finance division, where net interest margins fell from 8.7 per cent to 8.4 per cent. The retail loan book was broadly flat, although premium finance grew by 6.4 per cent to £1bn. Throughout the loan book, the group retained its strict lending criteria, with the bad debt ratio unchanged at just 0.6 per cent.
It was difficult to avoid the effects of the investment climate, though, and while a consistent generator of profits, securities trader Winterflood saw operating profits drop 37 per cent to £9.3m, despite only one lossmaking day of trading.
The asset management side also bore the scars from economic and political uncertainty, and its adjusted operating profits fell 5 per cent to £10.8m. This reflected negative market movements, although on a more encouraging note net inflows brought in £376m.
Analysts at Numis are forecasting adjusted pre-tax profits of £262m and EPS of 131p this year, compared with £278.6m and 139.3p in FY2018.
| CLOSE BROTHERS (CBG) | ||||
| ORD PRICE: | 1,495p | MARKET VALUE: | £2.26bn | |
| TOUCH: | 1,494-1,495p | 12-MONTH HIGH: | 1,682p | LOW: 1,387p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 886p | LEVERAGE: | 8.7 | |
| Half-year to 31 Jan | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 403 | 140 | 70.0 | 21 |
| 2018 | 407 | 136 | 68.1 | 22 |
| % change | +1 | -3 | -3 | +5 |
| Ex-div: | 21 Mar | |||
| Payment: | 24 Apr |
