Peel Hunt slumped into the red as the broker blamed Liz Truss’s mini-budget and "market turmoil" for a slide in trading and corporate finance revenues.
Investment bank revenues dropped almost 60% to £23.4mln in the year to end March 2023 while the execution services arm was 27% down at £33.8mln.
Steven Fine, chief executive said: “The challenges faced by the financial services sector in the past 12 months have been well documented, with the impact on market activity and investor sentiment felt across the industry.
“The ongoing war on European soil combined with the fallout from the UK Government’s disastrous mini-budget have contributed to rapidly rising interest rates, which are now at their highest level for 14 years.
Conditions were especially tough in the AIM and small cap end of the markets, Fine added.
Peel Hunt said the number of transactions it worked on dropped to 27 from 46 in the previous year.
On a more positive note, Fine said it had seen a gradual improvement in its M&A pipeline since the start of this fiscal year and is seeing tentative signs of a pick-up in capital markets activity.
Peel Hunt added it has also launched its first graduate scheme with more than 1,000 applications for four places.
Losses for the year were £1.5mln (£33.1mln profit) on revenues of £82.3mln (£131mln).