BCCI fallout helps Cater Allen result

CATER ALLEN, the discount house, announced post-tax profits up 44 per cent to pounds 11.7m for the year to 30 April 1993 as its banking operations benefited from a flight to quality by local authorities that were formerly customers of BCCI.

David White, deputy chairman, said that before BCCI's closure 18 months ago Cater Allen had no UK local authority clients. 'Now there are over 40 . . . who deposit their short-term cash surpluses with the bank.' Post-tax profits for the bank and trust division rose from pounds 2.8m to pounds 3.4m.

Cater has traditionally announced results post-tax, but from next year will have to comform with Schedule 9 of the Companies Act. On this basis it said yesterday that pre-tax profits for the year to April were pounds 18.78m. It also disclosed its hidden reserves for the first time, which totalled pounds 7.56m

The central discount house operation did not earn the same kind of windfall profits as other money market firms on Black Wednesday. Mr White said Cater took a deliberately cautious approach,

However, the discount house called the subsequent fall in UK interest rates correctly, and its profits rose from pounds 3.5m to pounds 5.3m. The stock lending arm's profits nearly doubled from pounds 2.4m to pounds 4.1m.

The only real blackspot was Lloyd's of London, the insurance market, where Cater's losses rose from pounds 473,000 to pounds 1.26m. Mr White said he expected 'less losses next year and a return to profit the year after. We believe Lloyd's is the recovery situation of the 1990s.'

The shares eased 3p to 507p.