Close Brothers operating profit up, but shares fall

Close Brothers posted its preliminary results for the year to 31 July on Tuesday, with adjusted operating profit up 4% to £233.6m, and adjusted basic earnings per share up 7% to 128.4p.

The FTSE 250 firm’s board proposed a dividend per share of 57p, a 7% increase on last year’s 53.5p.

Its return on opening equity was 18.9%, down from 19.5% in the 2015 financial year, with a loan book of £6.4bn at year-end, up 12% from £5.7bn a year prior.

Total client assets were down 8% however, to £9.9bn, with the company’s common equity tier 1 ratio at 13.5%, compared to 13.7%.

Close Brothers’ board said on a divisional basis, Winterflood's performance improved in the second half, resulting in a full-year operating profit of £19m.

Asset Management reportedly delivered £14m adjusted operating profit and positive net flows at 6% of opening managed assets.

“We are pleased to report a good performance for the 2016 financial year, with further growth in our earnings and dividend against a backdrop of more challenging market conditions,” said Close Brothers chief executive Preben Prebensen.

“We achieved good growth in all our lending businesses, while maintaining the strong returns and prudent underwriting criteria which underpin our long track record of profitability throughout the economic cycle.

“Although markets and the economy remain uncertain, our strong balance sheet and established business model give us confidence that we can continue to support our clients, invest in our business and generate returns for our shareholders,” Prebensen added.

At 0927 BST, shares in Close Brothers were down 0.99% at 1,397p.