Friday 22 May 2020 8:09 am

Close Brothers' securities division helps to offset coronavirus impact

A strong performance in Close Brothers Group’s securities division partially offset the impact of the coronavirus on the banking group in the third quarter.

Winterflood Securities experienced a substantial increase in trading volumes since the coronavirus outbreak.

Read more: Close Brothers shares fall on subdued trading update

The figures

In Close Brothers’ banking division, the loan book reduced slightly in the third quarter. It decreased 1.2 per cnet to £7.53bn reflecting the impact of Covid-19 on new business levels.

The commercial loan book experienced a slight fall overall, reflecting modest new business levels in asset finance and lower utilisation levels in invoice finance.

In Close Brothers’ retail division, the lockdown in the UK resulted in the closure of motor dealerships which meant a reduction in new business for motor finance.

The asset management division achieved annualised net inflow rate of 10 per cent year-to-date. Managed assets were hit by market volatility reducing to £11.8bn. Total client assets decreased £1bn to £13bn.

Securities division Winterflood recorded third-quarter daily average volumes almost double those in the first half.

The merchant banking group had previously announced that it had cancelled the payment of the 2020 interim dividend. Today the group said it will consider the payment of a full year dividend in September.

Why it’s interesting

The group said its financial performance in the third quarter reflects the “impact of the forward-looking recognition of impairment charges under IFRS 9”.

Close Brothers is now carefully reviewing the “timing and prioritisation of investment spend and continue to focus on cost discipline.”

Although the impact of coronavirus on the economy remains uncertain, Close Brothers remains confident that its “prudent and disciplined business model” will serve it well.

Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.

What Close Brothers said

Chief executive Preben Prebensen said:

Our prudent and resilient business model has served us well in challenging times over many years, and we have successfully adapted to the unique circumstances we face in this environment and have continued operating effectively.

Our loan book is predominantly secured and conservatively underwritten, with a deep expertise and relationship driven approach present throughout our lending, trading and investment management businesses. We have a strong capital, funding and liquidity position and are well placed, both operationally and financially, to navigate this rapidly evolving environment.

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