Banking the engine of growth at Close Brothers

15th Mar 2011 07:04

A strong showing by the banking division was not enough to offset weaker performance in other parts of the business at merchant bank Close Brothers.Operating profit before tax in the six months to 31 January 2011 dipped to £55.8m from £61.8m in the corresponding period the year before.Adjusted operating profit before tax, which excludes one off items, rose to £65.4m from £62.0m, however. The Banking division saw a 33% year on year increase in operating profit to £48.6m, helped by a reduction in impairment losses, while the Securities division saw operating profit dip 9% from a year earlier to £31.1m.The Asset Management division made a small loss but saw funds under management rise 20% to £8.3bn thanks in part to the Chartwell Group acquisition. However, the division continues to invest in implementing its new strategy and, as such, is expected to register a small loss in the second half of the financial year as well. The Banking division's loan book has seen organic growth of 9% since the end of July 2010 to £3,170m, and has seen an improvement in margins to 10.0% from 9.7%. "Given the Banking division's loan book growth in the first half, it expects a good performance in the second half of the year with a modest improvement in bad debts for the financial year as a whole," the company said. The interim dividend has been maintained at 13.5p.