Pre-tax profits in 1992, announced yesterday, showed a fall from pounds 74.3m to pounds 65m. But Charles Hambro, chairman of the bank, which owns 52 per cent of Hambro Countrywide, the estate agency chain, pointed to a marked improvement in its markets.
'House sales have been on a rising trend since the new year, house prices have also begun to rise, the company has been operating profitably since March and has been able to service the increased business without increasing its overheads.'
Analysts were sanguine about Countrywide's 1992 losses, which rose from pounds 8.2m to pounds 12.2m. The bank attributed these to the weak housing market and higher investment in the long-term development of the business.
Philip Gibbs of BZW said: 'We think there will be a big recovery in earnings at Hambros this year. The bank is very highly geared to a recovery in the housing market. We forecast pre-tax profits of pounds 105m for 1993.'
Mr Hambro said that 1992 had been the fifth successive year of difficult trading conditions for the financial sector, and that recent signs of recovery in the UK had come too late for the results of two of Hambros' three main operating areas.
Profits from direct investments fell from pounds 18.6m to pounds 12.5m, adjusted to include an investment gain of pounds 12m from the flotation of Hambro Insurance Services this spring. Retail financial services, the Countrywide operation, also suffered increased losses. Only the mainstream banking division, which still dominates the company's capital employed, increased profits from pounds 73.4m to pounds 73.8m.
The banking side managed this despite increased provisions against bad debts of pounds 24m, up from pounds 13m and representing a little over 1 per cent of lending assets. Sir Adam Ridley, executive director corporate communications, said these covered a substantial number of small bad debts rather than any big single items.
Sir Adam said that the increased dividend of 14p against 13.8p last time was a 'positive but guarded comment on prospects'.
In the banking division, corporate finance made progress in central Europe but markets at home were difficult, said Sir Adam. Treasury, Eurobond trading and asset finance had all done well. He denied some analsyts' suggestions that this represented a draining move into more capital intensive areas, and stressed that Hambros 'has plenty of spare capital on the balance sheet'.
The bank is keen to exploit new openings in post-communist central Europe. Last year it helped to sell the Kwidzyn pulp mill in Poland, one of the biggest privatisations. In Hungary it is advising on the sale of the Kereskedelmi es Hitel Bank.
Analysts are still worried by outstanding legal claims arising from the Reksten shipping group saga.
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