Merchant bankers Close Brothers posted a 13% rise in full-year pre-tax profits today that the group credited to underwriting discipline combined with investment into new products and markets.
Adjusted operating profit was £264.8m up from £233.6m last year with a return on opening equity of 17.9%.
Despite the rise, shares in the company fell by almost 9% in morning trading as the company announced that the competitive environment in banking remains challenging for some of its businesses.
It added: “We continue to monitor market conditions carefully for any change in demand or credit performance. The UK motor finance market remains highly competitive and we continue to prioritise margin and credit quality.”
Profit growth across the board
All three of Close Brothers’ divisions saw profit growth. This was due to favourable financial market conditions that benefited both Winterflood and Asset Management.
Winterflood, the group’s securities arm, delivered a profit leap of almost 50% to £28.1m from £19.0m last year. The boost came from high levels of retail trading activity with the company reporting only one loss day this year.
Asset Management had an adjusted operating profit of £17.4m that was up 21% on the prior year. This was attributed to good net inflows, reflecting continued demand for its integrated advice and investment management services.
An operating profit increase of 24% in property finance saw the banking division report a 9% rise with an adjusted operating profit of £243.5m.
The company said: “Property Finance had a particularly successful year, achieving strong growth in both operating profit and the loan book. The business benefited from continued demand for residential property finance, particularly new build family homes. It remains well positioned competitively, reflecting the specialised nature of our lending and our many years of experience in this market."