The operating pretax profit of Close Brothers Group, a U.K. merchant banking group, has more than halved in fiscal 2023. This decline is primarily attributed to provisions made in the first half of the year related to its subsidiary, Novitas Loans. Despite this setback, the company saw improved performance in the second half.
Operating Pretax Profit
Close Brothers Group reported an operating pretax profit of £112.0 million ($136.8 million) for the year ended July 31, compared to £232.8 million in the previous year.
Adjusted Operating Profit
By excluding its legal loans arm, Novitas, the company’s adjusted operating profit decreased from £274.1 million to £220.1 million. This decline is due to forward-looking impairment provisions and lower income from its Winterflood business, which experienced subdued trading activity.
Net Interest Income
Net interest income slightly increased to £592.6 million from £578.0 million, resulting in a net interest margin of 7.6%.
Balance Sheet Strength
Close Brothers Group ended the period with a common equity Tier 1 ratio of 13.3%, a decrease from 14.6% in the previous year.
The board declared a final dividend of 45.0 pence per share, bringing the full-year dividend to 67.5 pence per share, slightly higher than the previous year’s payout of 66.0 pence.
Chief Executive Adrian Sainsbury expressed confidence in the company’s future prospects, stating that they are well-positioned to resume their long-term track record of earnings growth and returns. Close Brothers Group is building on the momentum of the second half of fiscal 2023 and has experienced a positive start to the 2024 financial year.