Close Brothers profit up 13% but warns over Brexit impact

FTSE 250 merchant bank Close Brothers said on Tuesday that profit for the year rose 13% as profits rose across all three of its divisions, although it warned over the impact of the longer-term economic outlook and Brexit on its customers.

In the year to the end of July, operating profit before tax increased to £258.6m from £228.5m, while adjusted operating profit was up 13% to £264.8m.

In the securities arm, Winterflood, operating profit was up nearly 50% to £28.1m, underpinned by high levels of retail trading activity throughout the year. Meanwhile, the asset management business saw operating profit rise 21% on the previous year to £17.4m, with good net inflows reflecting continued demand for the group's integrated advice and investment management services.

Chief executive Preben Prebensen said: "In an evolving market environment, we remain committed to our established business model, which relies on the expertise of our people to deliver consistently high levels of service, building deep and sustainable relationships with clients and intermediaries.

"As a business, we remain well positioned longer-term, focusing on protecting our margins and underwriting discipline, improving our model through continued investment and extending into new products and markets.

"All of this ensures we can continue to support our clients and drive long-term value for our shareholders through all stages of the financial cycle."

The company said that although current market conditions are stable overall, the longer-term economic outlook and impact of Brexit on its customers and wider markets remain uncertain. In the banking division, meanwhile, the competitive environment "remains challenging" for some of Close Brothers' businesses and it continues to monitor market conditions carefully for any change in demand or credit performance.

At 0850 BST, the shares were down 4% to 1,457p.