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.
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.
It said profits fell to £88.3m in the year to end-July, compared with £118.4m in the previous year.
Chief executive Preben Prebensen described the performance as “solid” during the financial crisis.
“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,” he said.
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.
Close sold off its corporate finance arm to Daiwa SMBC Europe for £67m in July, sparking fears it was embarking on a full-blown sell-off to raise cash. But Prebensen dismissed the fears, saying: “What we wanted to do was bring more focus to the group by selling corporate finance… the smallest of the business areas.”
Shares in the group closed up one per cent at 793p last night.