Close Brothers steps into the void to boost loan book value

 
Michael Bow
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CLOSE Brothers, the FTSE listed financial services firm, yesterday reported a bumper year for its banking division as it capitalised on tightening credit conditions from traditional lenders to grow its loan book value by 20 per cent.

The 134-year old firm saw operating profits in its banking division soar 27 per cent to £135m on the back of increased loans to credit starved small businesses and individuals, who have seen credit from bigger banks dry up.

“It’s a function of us increasing our market share in our specialist lending niches as there has been less credit available from traditional firms,” chief executive Preben Prebensen said yesterday.

The increase in book value, up to £4.1bn from £3.4bn in July 2011, is the third year of growth for the firm and has been matched by a fall in the book’s bad debt ratio, which improved to 1.5 per cent.

Overall, adjusted operating profits for the firm increased two per cent to £134.2m dragged down by losses in its securities and asset management divisions.

Winterflood Securities, its market making business, hit a ten-year profit low to £16m – down from £43.2m last year – as a result of low retail investor risk appetite and reduced trading activity in the small cap space. Its asset management managed to stem losses to £4.2m from £8.6m last year following a restructure of the division.

“All the heavy lifting in the asset management division is behind us and we’ll move into profitability during the course of 2013,” Prebensen said.