Numis upgrades Close Brothers Group despite market concerns

25th Aug 2015 13:52

(ShareCast News) - Analysts at Numis upgraded merchant bank Close Brothers Group to 'add' from 'hold' and said the bank was largely unaffected by market concerns such as rising US rates and weakness in China.Numis dropped its price target for the bank to 1540p from 1545p but said it upped its recommendation due to its recent share price weakness."The group has a very long track record of playing the cycle well in the core banking division and we have already factored in higher UK interest rates into our forecasts," analyst James Hamilton said.Hamilton said the track record of the bank meant it was worthy of a premium valuation, and Close was well positioned in the attractive specialist market segments of UK banking.Numis noted while Close would see lower growth, and shed market share, it would protect its margin and the quality of its loan book as far as possible."Current banking returns are unsustainable and we forecast increasing impairment and falling margins through our forecast period despite our belief that Close will do better than most," Hamilton said.Shares in Close were down by 6.35% to 1473p at 1409 BST.