Close Brothers upbeat on asset management

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Close Brothers has said its asset management business will move into profit this year, although subdued trading volumes have continued to drag on the financial services group’s securities division.

Close Brothers grew its assets under management 3 per cent to £8.5bn in the five months to December 31, it said in a trading update on Wednesday.

The increase reflected positive market movements, the company said, adding that its asset management division was “on track” to move into profitability during this financial year.

Close Brothers recently completed restructuring the division, a process it began in 2011, which partly involved an increased focus on growing its private client assets.

However, analysts at Numis noted that the update did not mention any net inflows in the period. “There is much work still to be done to reach the 15% operating margin the group is now targeting for 2015,” they said in a note.

Winterflood, its UK market maker business, and Seydler, its German equivalent, were both affected by a lack of retail investor activity, the company said.

Close Brothers’ banking division, however, grew its loan book 6 per cent in the year to £4.4bn. The small business lender has benefited from an unwillingness among big UK banks to lend.

Although its net interest margin was lower than the last financial year, the group said this was expected and was mostly offset by a decrease in the bad debt ratio.

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