The merchant banking group, Close Brothers, saw operating profits increase 1% to £128.9m in H1 2022 and reported adjusted operating profits as £129.8m.
The marginal growth came from increased incomes from the banking division and asset management division of 12% and 14% respectively despite being held back by the Winterflood drop in income.
Adrian Sainsbury, group Chief Executive Officer, stated, “we delivered a good performance in the first half of the 2022 financial year, with strong income growth in the Banking division and positive momentum in Asset Management, while Winterflood saw reduced trading opportunities following the exceptional highs experienced during the Covid-19 period.”
The banking division saw an increase of 26% in adjusted operating profit to £120.2m in H1 2022 with demand in their lending business increasing.
The adjusted operating profit increased 18% to £14.5m in H1 2022 in the asset management division with an annualised net inflows of 8% due to increased customer activity.
Loan book growth saw an 8.2% increase with an annualised net interest margin of 7.9%.
Excluding the Novitas’ loan book, their annualised bad debt ratio is 0.2%, however with Novitas included, the bad debt ratio is 1.1%.
Despite the 3.4% decrease in property repayments, asset finance increased by 4.2%, motor finance saw a 4% increase and invoice finance increased by 3.6%, contributing to £7.5bn of the £8.8bn in H1 2022 to the closing loan book and operating lease assets.
Winterflood saw a decrease in business with economies reopening and lockdown retail traders returning to the office. Winterflood operating profits saw a massive decrease from £34.2m in H1 2021 to £8.8m in H1 2022.
The ROE for the firm is 12.2% and CET1 ratio is 15.1%.
The interim dividend increased from 18p to 22p in H1 2022 with the firm recovering to the state prior to the pandemic.
“We are pleased to declare an interim dividend of 22.0p, returning to the pre-pandemic level and reflecting the group’s strong underlying performance and continued confidence in our business model,” said Sainsbury.
“Looking ahead, we are mindful of the highly uncertain external environment, including the impact of increasing geopolitical tensions and rising inflation on our customers and wider financial market conditions.”
“Nevertheless, we remain well placed to continue delivering on our long track record of profitability and disciplined growth.”
Close Brothers shares were trading down 6.6% to 1,128p in broad market sell off on Tuesday.