MERCHANT banking group Close Brothers yesterday delivered a battling update as it attempts to calm investor nerves after a poor start to the year.

In a trading update for its third quarter, Close Brothers reported that its loan book increased by two per cent to £9.2bn. This was driven by a strong new business in commercial lending as well as a slowdown in repayments in property finance.

Its year-to-date net interest margin remained at 7.8 per cent.

The update comes after a bruising start to the year. At its half year results in March, the firm set aside £100m to cover bad loans from legal-finance specialist Novitas, dragging its adjusted operating profits down 90 per cent to £12.6m.

Close Brothers gave no new update on the Novitas loans, but reaffirmed its belief the provisions "adequately reflect the remaining risk".

Fellow merchant bank Arbuthnot also delivered a trading statement for the four months of the year, confirming that it was continuing to benefit from the Bank of England's interest rate hikes. Deposits grew £165m "despite the turbulence".

(c) 2023 City A.M., source Newspaper