Last checked at 
(Alliance News) - Close Brothers Group PLC on Tuesday said increased impairment charges along with lower activity levels and forbearance measures resulted in a 47% year-on-year drop in profit for financial 2020.
The London-based merchant banking group termed the annual performance a "resilient" one in the face of the virus outbreak.
For the year ended July 31, Close Brothers recorded pretax profit of GBP140.9 million, down 47% from GBP264.7 million a year ago. Net interest income reduced to GBP494.0 million from GBP505.7 million.
The financial firm recognised a GBP183.7 million impairment charge versus GBP48.5 million a year ago, primarily reflecting the impact of Covid-19 on the forward-looking recognition of impairment charges under IFRS 9.
Annual net interest margin fell to 7.5% from 7.9% due to lower activity levels and forbearance measures.
The company's loan book remained broadly stable at GBO7.62 billion due to an increase in activity since the easing of lockdown restrictions in June and July.
Common equity tier 1 capital ratio at the end of financial 2020 stood at 14.1% versus 13.0%.
Close Brothers cut its annual dividend payment to 40 pence per share from 66p paid a year ago.
Chief Executive Adrian Sainsbury said: "The impact of Covid-19 has been felt across our businesses and the outlook is still uncertain, but the fundamental strengths of Close Brothers remain unchanged. Our resilient model and the experience and expertise of our people leave us well positioned to respond to opportunities and to continue to support our customers and clients into the future.''
Separately, Close Brothers said that senior independent Non-Executive Director Geoffrey Howe has decided not to seek re-election at the annual general meeting in November.
Close Brothers has commenced a search process to appoint a replacement to Howe.
Shares were up 2.6% at 987.00 pence each in London.
By Tapan Panchal; tapanpanchal@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
