Close Brothers Group PLC on Tuesday reported a steady performance for the first half of its financial year, with profit held back by reduced trading opportunities for Winterflood, following exceptional highs experienced during the Covid pandemic.

Shares in the London-based merchant banking group were 8.1% lower at 1,109.83 pence on Tuesday in London.

For the six months ended January 31, Close Brothers posted an operating pretax profit of £128.9 million, up 1.5% from £127.0 million the year before.

This was attributed to growth from the group’s Banking and Asset Management business, which was offset by a weaker performance from Winterflood Business Services.

Winterflood, which provides outsourced dealing and custody services for asset managers and platforms, suffered a 74% drop in operating profit to £8.8 million, due to the moderation in retail trading activity and a change in the mix of trading volumes.

Close Brothers reported a 0.5% drop in operating income to £471.6 million from £474.0 million - with interest income up 4.4% at £341.1 million from £326.8 million but a 13% drop in non-interest income to £179.8 million from £208.4 million.

Close Brothers’ loan book rose 8.2% year-on-year to £8.60 billion from £7.95 billion, due to new business levels in Asset Finance and Motor Finance, in addition to increased sales volumes in Invoice Finance.

The company’s net interest margin for the first half rose to 7.9% from 7.7%.

Close Brothers declared an interim dividend of 22.0 pence per share, a 22% increase from 18.0p a year prior.

‘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,’ said Chief Executive Officer Adrian Sainsbury.

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