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Close Brothers reports solid performance as financial year draws to close

The FTSE 250 merchant bank said it had performed well across all divisions, with the banking division increasing its loan book 6.6% over the 11 months to £7.3bn
Piggy bank
The group’s asset management division saw managed assets rise by 14% to £10.2bn

Close Brothers Group PLC (LON:CBG) expects a good result for its current financial year following a strong performance over the last 11 months.

In a trading update, the FTSE 250 merchant bank said it had performed well across all of its divisions, with the banking division increasing its loan book 6.6% over the 11 months to £7.3bn.

READ: Berenberg blights Close Brothers, downgrading rating to ‘hold’ from ‘buy’ post-results

Within the division, commercial and property lending saw good growth, while retail business was broadly flat. Elsewhere, the group’s Winterflood Securities business delivered a good performance with high volumes.

The firm also said that its bad debt ratio had remained low across its businesses while its net interest margin had remained in line with the previous year at 8%.

Meanwhile, the group’s asset management division saw managed assets rise by 14% to £10.2bn over the year to date, while total client assets grew 8% to £12bn.

Looking ahead

Looking ahead, Close Brothers said it expected a good result for the full-year, in line with market expectations.

In a note to clients, City broker Numis upgraded the bank to ‘Add’ from ‘Hold’, saying that “economic profit is consistently and sustainably high” due to the group’s focus on new high risk-adjusted margin and specialist lending market segments.

Analysts at the broker also highlighted that Close Brothers had seen a 31-year earnings per share (EPS) compound annual growth rate (CAGR) of 11%, while never cutting its dividend or engaging in a rescue rights issue.

In late-morning trading Wednesday, Close Brothers shares were up 0.9% at 1,537p.

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