Close Brothers, the lending and investment company, said that falling stock markets have dented parts of its business in the past few months, although its bank has grown its corporate loan book by nearly 5pc.
Like many companies managing money for savers and institutions, Close said the volatile equity markets have made it difficult to produce returns in some portfolios. It also sold a £1.3bn book of corporate finance earlier in the year, making the fall in assets appear worse.
The FTSE 250 company said market declines had contributed to a 13pc fall in assets under management to £9.4bn in the last five months of 2015, even as clients continued to bring in new money.
Winterflood, the group’s market-making business, also felt the pain of a 5pc fall in the FTSE 100 last year and the subdued appetite for trading and new share issues on London’s junior stock market Aim. Close said the stock market rout at the start of 2016 had continued to put the dampeners on Winterflood.
Close’s banking business fared better, with its loan book growing 4.9pc to £6bn. The bank focuses on lending and asset finance for smaller businesses.
“Market conditions have been weaker in the first half but we remain confident in a satisfactory outcome for the year,” the company said.
Shore Capital analyst Gary Greenwood said he would knock a couple of percent off his profit forecasts following the update. “While the performance of the banking division is broadly as we had anticipated and is consistent with first quarter trends, both Winterflood and asset management have continued to be negatively impacted by weak market conditions,” he wrote.
Close Brothers’ shares, which have fallen 16pc in the past year, opened more than 1pc higher after the announcement.
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