Close Brothers' Profit Rises Sharply, AuM Gains

Tom Burroughes, Group Editor, London, 14 March 2017


The UK-listed banking and asset management group reported stronger results for its six-month period to end-January this year.

London-listed Close Brothers today reported a 21 per cent rise in adjusted operating profit for the six months to 31 January this year, at £134.2 million ($162.8 million), from the same period a year ago.

Banking adjusted operating profit rose by 13 per cent year-on-year to £122.7 million, driven by lending income, with a broadly stable margin, Close Brothers said in a statement.

The group's Winterflood trading and securities business reported operating profit of £14.4 million, "significantly higher than the prior year period, reflecting strong retail investor risk appetite," Close Brothers said.

Close Brothers had a common equity tier one ratio - a common measure of a lender's financial strength - of 12.6 per cent, down from 13.8 per cent a year earlier.

Asset management
On the asset management side of the business, Close Brothers said managed assets were driven up by favourable market movements and positive net inflows. Over the reporting period the firm achieved net inflows of £125 million, an annualised 3 per cent of opening managed assets, and also gained from £207 million of positive market movements. However, managed assets were broadly stable at £7.9 billion due to the sale of OLIM with around £500 million in assets, it said.

Total client assets closed 3 per cent higher at £10.2 billion (31 July 2016: £9.9 billion) reflecting an increase in advised only assets to £2.3 billion (31 July 2016: £1.9 billion). The growth largely related to the acquisition of two independent financial advisory businesses during the period.  

Asked by this news service about inflows into the asset management business,  Martin Andrew, chief executive for Close Brothers Asset Management, said there had been a slowing of inflows immediately before and after last June’s EU referendum vote, but inflows have since speeded up.

“We continue to grow organically in terms of new clients and inflows,” he said. “We’re also looking to supplement that with acquisitions if they are suitable in scale and by type,” he said. “We do look for add-on acquisitions,” he said.

"All parts of our business performed well in the period. Our three banking segments, retail finance, commercial finance and property finance, all reported profit growth and strong returns, while both Winterflood and Asset Management benefited from favourable markets," said Preben Prebensen, chief executive.

"Trading conditions have clearly been favourable in the first half, but as always our priority remains to protect, sustain and invest in our business for the long term," he added.

Boardroom change
Mike Biggs has been appointed an independent non-executive director and chairman designate of the group, slated to take over from Strone Macpherson, who has confirmed his decision to step down on 30 April. Macpherson has been a non-executive director of the group since 2003 and chairman since 2008, a period that saw him lead the group during the worst financial crisis since the 1930s.

Biggs joins the board today, and takes up the chairmanship on 1 May.



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