Close Brothers – Reassuringly Unexciting

Published on
  • Close Brothers Group plc (LON:CBG), the specialist lender has released a trading statement covering the three months to end October.

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Q3 2021 hedge fund letters, conferences and more

  • CEO, Adrian Sainsbury described the group’s performance in their first quarter as encouraging, with Banking strong, good momentum in Asset Management and a return to more normal levels of trading at Winterflood, the group’s market-making arm.
  • The Banking book grew by 2.4% in the quarter, with credit performance continuing to be resilient. Asset Management benefited from net inflows that ran at an annualised 8%, leaving the group managing £17.4bn (31 July £17.0bn) of client assets. Volumes of share trades at Winterfloods are now closer to the pre-pandemic level.
  • The Group are targeting being net zero in their own emissions by 2030 and are starting to consider their Scope 3 indirect emissions and how they can help customers achieve their own transitions. Tier 1 capital remained strong at 15.7%.

Close Brothers Is A Great Business

Commenting on Close Brothers’ performance, Steve Clayton, HL Select fund manager said:

“Close Brothers are making the right noises in this statement. Credit performance is strong, but provisions remain elevated, suggesting the possibility of releases ahead. Margins look to be holding firm, despite some cost pressures and whilst the “meme trading” bonanza may be fading away at Winterflood the business remains in good shape, with no loss-making days in the quarter.

But there’s nothing in here to surprise on the upside. That’s OK, because Close Brothers is a great business with stacks of capital and the ability to pay attractive dividends, year after year whilst funding its own organic growth. The shares are a touch higher this morning, against the backdrop of a moderately weak FTSE100.”

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