Close Brothers' wealth arm back in profit

Close Brothers' wealth business has returned to profitability with assets under management within touching distance of £9 billion.

The firm’s asset management division saw profits hit £1.1 million in the six months to the end January versus a loss of £2.6 million in the corresponding period of the previous year. This was powered by the rise in the revenue margin from 73 to 84 basis points, with the sale of a residual investment in a private equity fund also contributing.

The group said during the period it had achieved good sales to new private clients both through its own advisers and fund managers and through third party IFAs. While inflows increased over the year, these were partially offset by redemptions from institutional clients and the maturity of a legacy structured fund.

Overall assets under management jumped 6% thanks to market movements to stand at £8.8 billion.

‘We remain focused on driving revenue margin expansion, partly by increasing the proportion of our assets which are both managed and advised by us. In the period, these increased to £2,052 million (31 July 2012: £1,651 million) as we progressed with sales of our integrated proposition to existing clients, including clients previously acquired,' the group told the stockmarket.  

‘Our business model provides high quality advice and investment management to private clients and remains well positioned in the current market and regulatory environment.'

The group also said it remained focused on its medium-term targets to achieve a revenue margin of around 100 basis points and an operating margin of at least 15% by the 2015 financial year.

Performance in the asset management business helped profit across the wider group rise 26% to £80 million. Within this profit at its banking division rose 26%, reflecting solid loan book growth of 6% and an improved bad debt ratio of 1.2%.

Meanwhile its securities division, Winterflood, contributed £7 million to profit.

The numbers prompted the firm to raise the dividend by 7% to 15p.

Close Brothers chief  executive Preben Prebensen said: ‘The group achieved a good result in the period as Banking delivered another strong performance, Securities held up well in the continued difficult market conditions and asset management made progress and delivered an improved result. We have made good progress on our strategic priorities and look forward with confidence.’