January 22, 2019 / 7:29 AM / 9 months ago

Close Brothers sees 'solid' half year on loan book growth

(Reuters) - Close Brothers Group (CBRO.L) expects a “solid outcome” for its fiscal half year ending in January, the British lender said, as loan growth at its banking division offset sharply lower volumes at its market maker unit.

The merchant banking group, which provides loans, wealth management and securities trading services, said loan book at its banking division rose to 7.5 billion pounds in the five months to Dec. 31, from 7.2 billion pounds at Aug. 1, partly driven by new business volumes across its commercial businesses.

The FTSE 250 company also said volumes and trading income at its market maker - Winterflood - have been significantly lower than last year reflecting difficult and volatile equity market conditions, particularly in December.

Greater market volatility tends to bolster profits at firms such as Winterflood as investors turn portfolios around more frequently. But volumes have not risen enough in the past few months as investors stayed on the sidelines amid the ongoing trade war between the United States and China.

The company said in November that it had made a solid start to its financial year and that its Winterflood business remained strong amid challenging market conditions.

The company, founded in 1878 to provide farm mortgages in Iowa, said net interest margins were broadly stable since the last financial year.

Total client assets at Close Brothers’ asset management arm fell to 11.7 billion pounds by December end, from 12.2 billion pounds at the end of July, with managed assets falling 3 percent in the five-month period.

Reporting by Samantha Machado in Bengaluru; Editing by Gopakumar Warrier and Saumyadeb Chakrabarty

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