MERCHANT bank Close Brothers posted a seven per cent rise in underlying profits yesterday on the back of a 23 per cent rise in its loan book and said it expects further growth in lending this year.
The group said its underlying operating profit rose by £7.6m to £121.3m in the year to 31 July, before impairments totalling £21.5m related to a revaluation of two investment assets and a writedown on its asset management business, which is being restructured.
But the banking division business contributed an adjusted operating profit of £79.5m, up 47 per cent as it expanded its reach in retail and commercial lending.
“Although all lending has been down, there have been opportunities for specialist lenders like ourselves to step up,” chief executive Preben Prebensen said, adding he expected growth in the loan book to continue.
The group’s core tier one capital adequacy ratio dipped 0.9 percentage points from a year ago to 13.9 per cent but it said a modest improvement in economic conditions saw a reduction in loan impairment losses as a percentage of the average loan book to 2.4 per cent from 2.6 per cent at the end of July 2009.
The securities division saw a nine per cent drop in its operating profit to £59.3m, with the reduction attributed to a sharp fall in profits at derivatives trader Mako. The final dividend was maintained at 25.5p a share.
City A.M. Reporter