Close Brothers says trading 'mixed', loan book rises 5.1%

Merchant bank Close Brothers said on Friday that it has continued to deliver a "solid" performance amid "mixed" trading conditions, with loan book growth in its banking division but lower trading volumes in its securities arm.

In a trading update ahead of its 2019 financial year end, the company said the banking division remains focused on maintaining pricing and underwriting discipline, and continued investment in its businesses for the long term. The loan book grew 5.1% year to date to £7.6bn as at 30 June 2019.

The commercial segment delivered "good" growth across the portfolio, while "solid" growth in retail was driven mainly by premium finance, with a modest increase in motor. Close Bros said the property loan book remained broadly flat.

The bad debt ratio remained low, with continued strong credit performance across the business and the company said a combination of lower fee income and ongoing higher cost of funds resulted in a slight reduction in net interest margin to 7.8% year to date from 8% in 2018.

In the asset management division, net inflows were "good" amid subdued client activity, but Close Bros said profitability continues to reflect lower market levels for most of the year and ongoing investment spend to support its long-term growth potential. Managed assets rose 9% to £11.3bn at 30 June and total client assets pushed up 6% to £12.9bn.

The company’s securities arm, Winterflood, delivered "solid" profitability throughout the period but trading volumes remained low. Close Brothers said the business remains focused on maximising its trading opportunities in all market conditions and performed broadly in line with the first half overall.

"While current trading conditions are mixed, we remain well positioned for the long term," it said.