Close Brothers profit swells as new business drives higher income

(Alliance News) - Close Brothers Group PLC on Tuesday reported a significant increase in its annual earnings as high new business volumes and lower impairment charges drove operating income higher.

In preliminary results for the year ended July 31, the merchant bank posted a pretax profit of GBP265.2 million, up 88% from GBP140.9 million the year prior.

Operating income rose to GBP952.6 million, up 10% from GBP866.1 million the year before. The increase was attributed to higher income across all divisions and significantly lower impairment charges in its Banking division.

Close Brothers declared a final dividend of 42.0 pence, resulting in a full year dividend per share of 60.0p compared to 40.0p in financial year 2020. The bank said the payout hike reflected the group's "strong performance in the year and continued confidence in the business model and financial position".

"We have delivered a strong financial performance in the year and made the most of the opportunities arising as the economy recovers from the effects of Covid-19. We are encouraged by the improvement in the economic outlook, although the trajectory remains uncertain," commented Chief Executive Adrian Sainsbury.

The company's Winterflood stockbroking division was singled out for delivering an "exceptionally strong trading performance", although activity had slowed over the last few months. Adjusted operating profit increased 27% year-on-year to GBP60.9 million, with only one loss day for the year.

Looking ahead, the bank was upbeat on its 2022 financial year, outlining its confidence in the long-term growth prospects for its Banking and Asset Management divisions. However, the group did caution that despite strong trading, Winterflood has seen a slowing in volumes over the last few months and remains sensitive to changes in the market environment.

Shares in Close Brothers were down 1.5% at 1,552.00 pence each in London on Tuesday morning.

By Will Paige; willpaige@alliancenews.com

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