Kleinwort's 42m pounds beats market expectations

KLEINWORT BENSON, the merchant bank, benefited from buoyant stock markets and a string of equity issues to produce better-than-expected pre-tax profits of pounds 42.2m for the six months to 30 June, double the figure for last time.

The bank, which has suffered a run of trading problems and internal strife over the past few years, is still looking for a new chief executive to replace Jonathan Agnew, who leaves today.

The share price responded to the results and rose 32p to 492p before easing back to close at 485p. Estimates for Kleinwort's profits had ranged from pounds 33m to pounds 38m.

Lord Rockley, chairman, said: 'All divisions have contributed to the profits. We want to sell ourselves as an integrated investment bank. We want to regain our pole position.' He said there was no specific timetable for finding a new chief executive.

Mr Agnew's surprise departure was announced at the beginning of May, and the search began for a candidate outside the bank. 'We have seen some people,' Lord Rockley said. 'It takes a bit of time.'

Investment management profits remained flat at pounds 10.6m, exactly the same as last time. Profits from merchant banking including securities rose from pounds 18m to pounds 36.9m and Lord Rockley said that, while all divisions contributed, treasury and equities did particularly well. The equities and corporate finance divisions combined to exploit a string of new equity issues, such as the property group Hammerson, as well as privatisations in Argentina.

Earnings per share rose from 10.8p to 24.1p. The interim dividend was increased from 5.3p to 6p, and shareholders will be offered a scrip dividend alternative.

Kleinwort made pounds 2m provisions against bad debts. Lord Rockley said the figure was so low because the bank had made heavy provisions in 1990 and 1991. He added: 'The outlook for the remainder of the year is far from certain given international tensions and potential problems in world trade, but we believe we are soundly based to pursue a policy of further growth.'