Investment bank Peel Hunt said it was seeing “encouraging signs” of recovery today after a sharp drop off in deals and listings over the past year.
In a trading update this morning, the mid-market specialist said said it has seen a “prolonged period of adverse market conditions” since the end of 2021 but revenues had ticked up “in line with guidance” over the first six months of the year.
Group revenues increased by around 3.2 per cent to approximately £42.4m for the six months to September 30, bosses said. Costs for the firm were also in line with expectations but have seen continued inflationary pressure.
“Whilst there has been a focus on costs during the period, this has been against headwinds of inflationary cost increases, particularly in service provider and technology costs, with interest rate rises impacting our debt facilities,” the firm said.
“As a result, costs have increased broadly in line with inflation over the period.”
It added that its long-term debt now stands at £15m, having come down from around £30m in September last year.
The firm has been among scores of mid-market banks to be hit by a downturn in dealmaking this year. In July, Peel Hunt said it had swung to a loss of £1.5m last year from a £41.3m profit the year prior.
The downturn has triggered a period of consolidation, with London-listed rivals Numis and FinnCap both striking deals for scale.
Peel Hunt pointed to the strength of its balance sheet as a buffer to “weather” the continued weak spell facing the financial markets, and suggested a recent slow down in inflation could bring reason for optimism.
“Whilst exact timing of recovery cannot be predicted, there are encouraging signs that interest rate rises are bringing inflation under control, and we may be nearing the end of the current tightening cycle,” the company added.
“We have the balance sheet strength and regulatory capital to weather the remainder of this cyclical downturn and are well positioned to benefit from the strength of our platform and considerable operational gearing as market conditions normalise.”
Shares in the company were dipped 1.8 per cent lower in early trading but recovered to trade flat by around 2pm.
Additional reporting by Press Association – Henry Saker-Clark