City stockbroker Numis Corporation PLC (AIM:NUM) reported a 72% plunge in profits as deal revenues fell in the past year, with the capital markets outlook remaining “challenging”.
While it is adviser to around a fifth of FTSE 350-listed companies, the market for initial public offers (IPOs) in London was pretty much closed this year, and so the firm said it benefits from its efforts to diversify into M&A advisory and private markets in recent years.
Revenue of £144.2mln for the year ended 30 September 2022 were down 33% compared to a record performance the year before.
Capital markets revenues fell 62% as UK equity capital markets volumes dropped to a 10-year low, while investment banking revenues declined 39%, bolstered by record advisory revenues, particularly from acting in M&A defence on 12 bid situations for corporate broking clients.
Profit before tax tumbled to £20.9mln from £74.2mln, with a final dividend of 7.5p per share giving a full-year payout of 13.5p in line with a year ago.
On the outlook, the capital markets outlook “remains challenging with deal volumes remaining subdued and unfavourable conditions persisting as the market digests the impact of sustained inflation and higher interest rates”, the company said.
On the upside, momentum in M&A was said to have been maintained into the new year, with a “strong” near-term pipeline of transactions due to complete in the first half.
The equities business enjoyed strong trading gains.
“Our experience suggests that market uncertainty and macro-economic conditions are likely to affect the investment banking industry for some time. Similarly, when markets stabilise, our commitment to building a more diversified investment banking platform leaves us well placed to benefit from any future recovery in activity levels,” the firm added.