Close Brothers in a close shave
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The interim results were always going to be testing as legacy issues slashed profits
The market had been well prepared for Close Brothers’ (CBG) scrappy half-year results after the diversified financial services group disclosed large losses on its Novitas loan book – Novitas was a legal services lender that financed litigation via intermediaries that the company acquired in 2017. The £90mn impairment charge Close Brothers took on the loan book was the main reason why reported profits were so drastically reduced. Management expects provisions to adequately cover any further charges related to Novitas as the loan book is run off.
Analysts at Panmure Gordon said in a note: “At this stage in the cycle there should be much to commend Close, but trust in the model has inevitably taken a knock of late.”
Full article here: https://www.investorschronicle.co.uk/news/2023/03/14/close-brothers-in-a-close-shave/
Author: Julian Hofmann, Investors’ Chronicle
Rae Maile
Managing Director, Research Analyst, Financials & Tobacco
