Close Brothers Group PLC (LSE:CBG) has reported a 90% drop in adjusted operating profit to £12.6mln during the first six months ending January 2023, after setting aside more than £114.6mln for bad loans relating to Novitas, a legal finance specialist.
Subdued market conditions made life difficult for its Winterflood Securities business, which posted a 73% decline in profitability.
Excluding Novitas, where total provisions now stand at £182.3mln, Close Brothers said it saw “good demand and strong margins” in its banking division, as income grew by 5%, helping pre-provision adjusted operating profit to increase by 5% to £177.2mln.
The bank said that underlying credit remained resilient, though chief executive Adrian Sainsbury noted that "it has been a challenging six months”.
Underlining its confidence in the outlook, Close Brothers increased the half-term dividend marginally (by 0.5p a share) to 22.5p.
The shares opened 4.7% lower at 969.5p.