New team helps Close Bros interims rise 30%

Close Brothers, the niche merchant bank, pleased investors with better-than-expected half-year results, with particularly good earnings from the Hill Samuel corporate finance team it acquired from Lloyds TSB last year. The shares rose 6.5p to 387.5p yesterday in a flat market, after it announced pre-tax profits for the six months to 31 January 1997 up 30 per cent at pounds 28.2m.

This was well ahead of forecasts of pounds 25m to pounds 26m. Asset finance, Brian Winterflood's market-making business, and merchant banking improved their performances.

Rod Kent, chief executive, said: "Merchant banking improved its share of our profits, up from 22 to 26 per cent. The five-strong team from Hill Samuel has fitted in well with our smaller operation, and together they've completed 18 deals worth over pounds 1bn in the half year.

"I think some people may have been worried that the move to an order- driven system in the stock markets may have hit Winterfloods, but now it looks like order driven won't be used for the smaller cap companies which Winterfloods specialises in."

Close Brothers' earnings per share rose 21 per cent to 15.31p, and the half-time payout was raised 19 per cent to 3.80p.

The figures had analysts upgrading their forecasts for the full year. Robert Mumby of BZW said: "These were a very good set of results across the board, and ahead of my estimate of pounds 26m. The share price could go higher by 10 per cent by the time of the finals." Mr Mumby discounted the possibility of a bid for Close, saying its businesses were "too specialist. It wouldn't be a strategic acquisition for anyone."

Mr Kent also thought a bid unlikely, but added: "God and other banks move in mysterious ways."

Mr Kent warned that "although the forthcoming general election may cause a temporary slowdown in some of our businesses, the UK economy remains strong and we remain confident of our prospects".

Martin Cross, an analyst with UBS, said the only drawback to the bank was that 100 per cent of its business was in the UK. "A new government may put the brakes on corporate activity. But the second half looks to be more of the same and I'm raising my estimate for the full year by 10 per cent to pounds 54.5m-pounds 55m."