UPDATE: Close Brothers Eyes Solid FY10 As Bad Debt Improves

23rd Jul 2010 10:20

(Adds analyst comments and share price.) By Rachael Gormley Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Financial services company Close Brothers Group PLC (CBG.LN) Friday said it was confident of solid performance for fiscal 2010, reflecting better-than-expected loan growth and an improvement in its bad debt ratio. The firm warned bad debts are still sensitive to the economic environment adding that its loan book totaled GBP2.9 billion at June 30, up from GBP2.6 billion at the end of January, with good organic growth from its asset finance unit as well as its motor and premium finance divisions. In an update on trading for the year to July 31, Close Brothers said funds under management were unchanged at GBP7.3 billion as at June 30--the same as at Jan. 31--with the revenue margin consistent with the first half. The asset management division's underlying results in the five months to June 30 were subdued relative to the first half, the company said, despite investment gains in the third and fourth quarters. Its securities division meanwhile performed well but Close Brothers said trading was more difficult later in the second half. Collins Stewart kept its "buy" rating and 800 pence target price following the update adding that over the past year Close has traded in the range of 797 pence to 666 pence while providing trading updates that show higher than expected loan growth. "In our opinion Close Brothers' Banking division and its Securities division together are worth more than 800 pence a share," analyst Robin Savage said. Oriel Securities, which has an "add" rating and a 1,000 pence price target, said loan growth was better than they expected at GBP2.9 billion as Close Brothers exploits the pull back in lending by the big banks. At 0857 GMT, shares were down 25 pence, or 3.5%, at 685.5 pence, while the wider FTSE 350 index was up 0.1%. Close Brothers will release its preliminary results Sept. 28. -By Rachael Gormley, Dow Jones Newswires; 44-20-7842-9308; [email protected] (END) Dow Jones Newswires July 23, 2010 05:20 ET (09:20 GMT)