Close Brothers' securities arm hit by volatile equity markets

FTSE 250 merchant bank Close Brothers said on Tuesday that its performance over the five months to 31 December 2018 was solid overall, but volumes and trading income at its securities arm, Winterflood, were hit by volatile equity markets.

Close Bros said the banking division continued to perform well and in line with expectations, with the loan book up 3.1% in the period to £7.5bn on the back of new business volumes across the commercial businesses and premium finance.

Impairment charges remained low, with strong credit performance across all businesses. Meanwhile the net interest margin remained broadly stable since the last financial year, reflecting the company's continued pricing discipline.

The Winterflood business continued to deliver solid profitability but volumes and trading income were "significantly lower" than the prior year due to "difficult and volatile" equity market conditions, particularly in December.

The asset management arm continued to achieve good net inflows, although these were more than offset by negative market movements, resulting in a 3% drop in managed assets to £10.0bn at 31 December 2018 and a decline in total client assets to £11.7bn from £12.2bn at 31 July 2018.

"Overall, we expect a solid outcome for the first half, and remain well positioned for the remainder of the financial year," it said.