Peel Hunt Ltd on Thursday reported that its profit slumped in the first six months of its financial year as its investment banking division took a big hit due to low volumes in equity markets.

In the six months that ended September 30, Peel Hunt’s pretax profit slumped to £61,000 from £21.6 million in the same period last year. It said this reflected ‘operational gearing in the business’.

The London-based investment bank reported revenue of £41.1 million, down 42% from £71.4 million in the same period last year.

Peel Hunt’s investment banking revenue fell 64% to £11.9 million from £32.7 million last year. It said there were ‘very low volumes of activity, particularly in terms of equity issuance’. It hopes that its strategy of ‘joined-up broking’ will put it in a good position when market conditions normalise.

Revenue from Execution Services fell 35% to £15.5 million from £24.0 million last year. It said revenue is diversified across a ‘growing number of trading strategies’.

Research & Distribution revenue fared better, but still fell 7% to £13.7 million from £14.7 million last year. Volumes were lower compared to the first half of 2022 but performance was resilient as the company continued to expand its offering to ‘a wider universe of hedge funds, sovereign wealth funds, overseas funds and family offices, which have opened up new commission opportunities.’

In the short term, it said the outlook for capital markets and transactional activity remains challenging.

Chief Executive Officer Steven Fine said: ‘Challenging market conditions have persisted throughout our first half as the macroeconomic and geopolitical backdrop has continued to have an adverse impact on markets and investor sentiment. Equity capital markets activity has been at a multi-decade low and market volumes have reduced materially during this period. This is due to several factors including investor redemptions, institutional investors building up cash positions and retail investors being more cautious as equity markets responded to rising inflation, the cost-of-living crisis and the possibility of a lengthy UK recession.’

Shares in Peel Hunt were trading 6.0% lower at 78.00 pence each in London on Thursday afternoon.

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