The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Close Brothers’ share price has hit a record high since the financial services company announced a 25% jump in full-year profits in September. The ramp up in retailer investor’s risk appetite assisted Winterflood Securities, owned by Close Brothers Group, to post a 57% jump in annual profits. The banking division revealed a 15% increase in profits; this was largely driven by strong demand for motor and property loans. The asset management arm now has £9.6 billion in assets under management (AuM), this represents a 4% rise on the year. The full-year dividend was hiked to 32.5p from 29.5p.
In October, the London-headquartered company announced the sale of its German securities business, Close Brothers Seydler Bank AG, to Oddo & Cie for €46 million. The sale registered a one off gain worth £10 million to the British finance house.
Seydler Bank AG covered 400 medium to small capitalisation businesses which were mostly German and French. Close Brothers will plough the profits back into the business and focus more on its home-based securities, wealth management and lending business divisions. Given the growing divergence between the UK and the central European economies, financial services will be more sought after at home than abroad.
Equity analysts are bullish on Close Brothers; out of the 14 recommendations, nine are buys ratings, four are holds and only one is a sell. The average target price is £14.98, which is fractionally higher than the current price. Equity analysts are moderately bullish on Investec, which has one buy rating attached to the stock and two holds.
Year to date, Close Brothers' share price is up 6.7%. This is a considerably smaller return than Investec’s share jump of 37% over the same period, although Investec’s share price (£5.91) is still a long way from its all-time high of £7.85 in 2007.
The finance house will report is full-year figures in September 2015, and analysts are anticipating revenue of £716 million and adjusted net income of £174 million. That represents an 8.6% and 13.7% increase on last year’s figures.
Close Brothers' shares have been in an upward trend since early 2012. The stock is receiving support at £14, below that the 50-week moving average of £13.68 is the next level of support. A positive first-quarter update and an optimistic outlook could send the share price through £15, beyond that lies £16.