Close Brothers profit hit by exceptional costs

27th Sep 2011 07:17

Close Brothers, the FTSE 250 banking, securities and asset management firm, saw its adjusted operating profit grow 13% for the year to the end of July, but pre-tax profit dropped 22% after higher admin costs and exceptional items. Adjusted operating profit rose from £116.5m to £131.2m, offset by a 12% increase in operating expenses to £352.1m, which led to pre-tax profits of £78.5m, down from £101m in 2010. Revenue for the year rose 11% from $495.3m to £548.5m. Chief executive Preben Prebensen said: "Close Brothers has made good strategic and operational progress during the year. We achieved a good overall result driven by the banking division, whilst securities achieved a solid performance in variable market conditions, and asset management has made significant progress on its strategic transformation. "Economic and market conditions are uncertain, but we have a strong financial position, continue to see good prospects for our businesses and are well placed to continue delivering solid results." The firm increased the total dividend for the year from 39p to 40p. Exceptional items for the year included a £36m impairment to the value of the group's investment in Mako, and a charge of £15.4m related to the restructuring and repositioning of the asset management division.The group's banking division achieved organic loan book growth of 18%, from £2.9bn to £3.4bn driven by good levels of new business and high levels of repeat business. Market activity in the securities division slowed in the fourth quarter but the business was still able to generate consistent profitability and recorded only one loss day for the year. The asset management division underwent a significant transformation, disposing of a number of non-core businesses which realised around £45m of proceeds to be reinvested in the division. The group added: "The bad debt ratio reduced to 2.1% (2010: 2.4%), driven by commercial as it benefited from an improvement in the credit quality of its lending overall. As a result, impairment losses on loans and advances were only slightly higher at £65.2m (2010: £63.4m) despite very strong growth in the loan book."The share price fell 0.37% to 670p in early morning trading. NR