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Close profits rocket 50pc

Steve Dinneen
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British merchant bank Close Brothers saw first-half profits rocket 50 per cent, smashing analyst expectations.

However, it sounded a note of caution saying the buoyant conditions had sagged recently.

Chief executive Preben Prebensen said uncertainty surrounding the upcoming election has spooked markets and hit its profits.

Its operating profit before tax reached £62.3m for the year, up from £41.5m a year earlier. Adjusted operating profit dipped four per cent year-on-year after the sale of its corporate finance unit to Japan’s Daiwa Securities. Analysts said profits were 11 per cent ahead of expectations, lifted by higher than expected revenue and lower impairments.

Close said its banking arm, which accounts for half its profits, saw operating profit rise 14 per cent thanks to demand for secured specialist lending services, particularly retail demand for its premium and motor finance operations. Bad debts rose to 2.5 per cent from 2.1 per cent a year ago.

Close Brothers’ asset management arm saw profits fall 60 per cent to £2.7m. However, Close put this down to an increased head-count and an investment drive aimed at changing the fortunes of the division.

Funds under management rose seven per cent to £7.3bn at the end of the first half, though the average funds under management dipped, hit by the sale of its private equity unit in August.