January 25, 2018 / 8:00 AM / 9 months ago

UK lender Close Brothers sees higher first-half profit as loan book grows

Jan 25 (Reuters) - British lender Close Brothers Group said on Thursday first-half profit is expected to rise, driven by strength in its banking and asset management divisions and higher trading income from market maker Winterflood.

The company also said Finance Director Jonathan Howell had decided to leave after ten years in the role. [nRSY8543Ca

Howell would stay on as finance director until the annual general meeting in November, Close Brothers said, adding it was looking for his successor.

The merchant banking group, which provides loans and wealth management and securities trading services, said the loan book at its banking division rose 2.6 percent to 7.1 billion pounds ($10.13 billion) over the five-month period ended Dec. 31, boosted by growth in its premium finance and property business.

“Still finding some attractive loan growth in competitive markets and refusing to budge on pricing, Close is doing all the right things and the non banking businesses remain in a sweet spot,” KBW analysts said.

Close Brothers said in motor and asset finance, where the environment remains competitive, it would maintain underwriting and pricing discipline.

The loan book expansion follows the company’s warning in September that its banking business would face challenges due to a “highly competitive” environment.

Close Brothers, founded in 1878 as a merchant bank to provide farm mortgages in Iowa, said trading activity remained high at its market maker Winterflood.

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 by December end, from 11.2 billion pounds at the end of July, with managed assets jumping 8.2 percent in the five-month period.

($1 = 0.7012 pounds)

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri

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