Close Bros does well but weak securities drag

Marion Dakers
FINANCIAL services group Close Brothers said yesterday it has made a solid start to its new financial year, though its Winterflood Securities arm continues to suffer from low trading volumes.

The FTSE 250-listed firm’s loan book has grown four per cent to £4.3bn, Close said in a trading update for the quarter to the end of October. Motor finance, asset finance and property brought in the bulk of the gains at its banking arm.

The firm’s bad debt ratio has also improved during the period, though changes in the product mix means the net interest margin is lower than a year ago.

At market-maker specialist Winterflood, average bargains per day have fallen on last year, a victim of subdued securities trading. The firm said it “remains well placed for when market conditions improve”.

Its asset management arm is moving towards profitability, it said, with assets under management rising two per cent to £8.5bn in the period. The division has been helped by positive market movements and a rise in higher margin private client assets.

Gary Greenwood at Shore Capital, which has a “buy” rating on the firm, said weakness at Winterflood could prompt a three per cent downgrade to its annual profit forecast to £157m, if it continues to trade flat on last year.