Close Brothers benefits from renewed investor risk appetite and property loan demand

22nd May 2015 07:24

Merchant bank Close Brothers enjoyed a good third quarter's trading as investor risk appetite returned and its core banking division booked a solid performance.Demand for property, asset finance and a seasonal improvement in motor finance helped the core banking division retain a stable net interest margin remain and 2.7% growth of the loan book in the quarter, down from 3.2% in the first half, but leading to 6.1% growth in the year to date to £5.6bn.The bad debt ratio has increased marginally from the low level seen in the first half.After seeing operating profit slump 23% in a difficult first six months of the year, Winterfloods, the market making arm, enjoyed much better trading conditions since February, particularly on the London Stock Exchange's AIM junior market, and cited "increased investor risk appetite".As a result it has seen income per bargain and average bargains per day increase in the period, though no precise detail was given.The asset management arm made further "steady progress" and benefitted from the more positive market and "solid" net inflows to increase assets under management 9% in the year to date to £10.6bn, after 5% growth in the first half of the year.The division's revenue margin has remained broadly stable on the first half, when it was 86 basis points."Overall, the group remains well positioned for the remainder of the current financial year," the company said. "In Banking we expect to deliver continued loan book growth at good returns. Winterflood has benefited from the improved trading environment but remains sensitive to market conditions. We continue to see steady growth in Asset Management."