Market conditions remain tough. Close Brothers laments

The Banking division did much of the heavy lifting at financial services and investment management firm Close Brothers in the second half of 2011, while its Securities division coped with tough market conditions.

In a statement covering the final five months of 2011, the group said its Banking division delivered a strong performance, with the loan book growing 9% over the period to £3.8bn from the end-July figure of £3.4bn.

The division's net interest margin has remained strong, close to the level in the second half of the previous financial year, while the bad debt ratio has remained stable.

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Things are less peachy in the Securities division, as previously revealed by the group. Winterflood, its stockbroking arm, has seen the number of bargains (customer transactions) per day running at a similar level to the corresponding period of 2010, but the income per bargain has gone down a bit, reflecting reduced risk appetite from the retail investor. The Seydler unit made a small loss due to low trading volumes and very limited capital markets activity.

Close Brothers said its Asset Management division continued to make progress on its transformation, and made a small loss in the period.

Assets under management (AuM) tumbled to £8.4bn at the end of 2011 from £9.6bn at the end of July. The reduction reflects negative market movements and the previously announced redemption of £1bn relating to a third party institutional mandate, partly offset by the acquisition in the first quarter of a small independent financial adviser with around £260m of client assets. As a result, total AuM included £6.7bn (31 July 2011: £6.5 billion) of Private Clients AuM at 31 December 2011.

"Financial market conditions have remained difficult in January and are uncertain for the second half of the financial year. However, our businesses remain well positioned and we continue to see a strong performance in the Banking division," the group said.