Close Brothers – A Highly Profitable Lending Company

  • Close Brothers Group plc (LON:CBG), the British group specializing in banking, asset management and market making, has provided an update on its performance in the three months to the end of April. CEO Adrian Sainsbury said the group performed well, with continued good momentum in its lending business.
  • The banking division increased the loan portfolio by 1.8% in the quarter, Close Bros. highlighting the strength of margins in new business written.

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Q1 2022 Hedge Fund Letters, Talks & More

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  • Asset management saw an inflow of 5% more assets, but market movements were negative, leading to a slight decline in total assets under management at the end of the quarter.
  • Winterflood, the group’s market making business, has seen improvement, although trading remains volatile. Winterflood suffered just one loss day during the quarter, underscoring the strength of its risk controls.
  • The market reacted positively to the statement, with shares rising 1.7% in early trading this morning.

Close Brothers band performance

Commenting on the Close Brothers report, Steve Clayton, fund manager at HL Select, said:

London Value Investor Conference: Joel Greenblatt on value investing in 2022

The first London Value Investor Conference was held in April 2012 and has since grown to become the largest gathering of value investors in Europe, bringing together some of the best investors every year. At this year’s conference, held on May 19, Simon Brewer, the former Morgan Stanley CIO and senior adviser to Read More

“Our UK funds invest in Close Brothers because of its disciplined approach to lending. When the group lends money, its leaders do not get paid for lending the money, but for seeing it return with a profit. Even at a time when consumer confidence is at a 40-year low, Close Brothers runs a very profitable lending business, with high levels of capital reserves. Provision for bad debts has increased slightly, but aside from a previously known issue in their former litigation lending business, now in decline, bad debts remain incredibly low at just 0.5%.

The group’s strong margins make it an excellent cash generator, which has allowed it to significantly increase the dividend over time. This year we expect the group to pay 66p per share, the same level the group paid in 2019 before the pandemic. At this level, stocks will yield an attractive return of 6.1%, hedged almost 2x. »

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