November 16, 2017 / 7:45 AM / a year ago

British lender Close Brothers' first-quarter boosted by banking unit, market maker

(Reuters) - British lender Close Brothers Group (CBRO.L) said it had made a good start to its financial year, driven by strength in its banking division and higher trading activity at its market maker Winterflood.

The merchant banking group said the loan book at its banking division rose 1.4 percent from end-July to 7 billion pounds in the first quarter ended Oct. 31, driven by growth in property and premium finance.

Close Brothers said its asset and motor finance loan books remained broadly flat and analysts have pointed to particularly intense competition within these markets possibly curbing net loan book growth.

In August, Close Brothers said its banking business would face challenges due to a “highly competitive” environment, prompting analysts to warn that loan growth would be limited and net interest margin could be pressured.

The company, which provides loans, wealth management and securities trading services, said its net interest margin and bad debt ratio were in line with the last financial year.

Close Brothers, founded in 1878 as a merchant bank to provide farm mortgages in Iowa, said market maker Winterflood benefited from continued retail investor trading activity.

Greater market volatility tends to bolster profits at firms such as Winterflood as investors turn portfolios around more frequently.

Total client assets at Close Brothers’ asset management arm rose to 11.7 billion pounds in the quarter from 11.2 billion pounds at the end of July, helped by positive market movements.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair

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