Close Brothers reports strong Q3 performance

Close Brothers reported a strong third quarter boosted by new banking business and busy trading at its Winterflood securities operation.

The banking loan book increased 3.2% in the three months to the end of April to £8.2bn and by 7.7% in 2021 to date. Lending benefited from strong demand for government-backed Covid-19 business interruption loans before the 31 March deadline.

The annualised net interest margin was broadly in line with the first half, the FTSE 250 merchant bank said in a scheduled trading update.

The bad debt ratio reduced slightly from the first half reflecting stable credit performance and modest releases in the retail and property businesses based on the improving economic outlook. Loans classified as forborne fell to £1bn from £1.1bn at the end of January as more customers resumed payments.

Close Brothers said it was confident in the quality of its lending but that impairment provisions still reflected the uncertain outlook and a potential further impact from Covid-19 when government support programmes end.

Net inflows at Close Brothers' asset management business increased 6% and managed assets rose by £1bn to £14.8bn from the end of January. Winterflood's trading was supported by active markets and its operating profit so far in 2021 is ahead of the figure for all of the previous year.

Adrian Sainsbury, Close Brothers' chief executive, said: "We continued to perform strongly in the third quarter, in line with the trends reported in the first half of the year. There are positive signs of economic recovery, but uncertainty remains."