Profits slump at Close Bros on bad debts

MERCHANT bank Close Brothers has reported a 25 per cent drop in its pre-tax annual operating profits, although the fall was less severe than expected.<br /><br />The firm said a strong performance from its Winterflood brokerage helped ease its losses, which were largely caused by bad debts in the financial crisis.<br /><br />It said profits fell to &pound;88.3m in the year to end-July, compared with &pound;118.4m in the previous year.<br /><br />Chief executive Preben Prebensen described the performance as &ldquo;solid&rdquo; during the financial crisis.<br /><br />&ldquo;All three divisions have remained profitable. We are soundly funded and well capitalised, and our businesses are well positioned to take advantage of future growth opportunities,&rdquo; he said.<br /><br />He said Winterflood had seen a strong start to the new financial year and is happy with its current structure and ready to seize on opportunities thrown up by a recession that has driven many rivals out of business or into effective hibernation.<br /><br />Close sold off its corporate finance arm to Daiwa SMBC Europe for &pound;67m in July, sparking fears it was embarking on a full-blown sell-off to raise cash. But Prebensen dismissed the fears, saying: &ldquo;What we wanted to do was bring more focus to the group by selling corporate finance... the smallest of the business areas.&rdquo;<br /><br />Shares in the group closed up one per cent at 793p last night.