LONDON, Sept 24 (Reuters) British investment bank Close Brothers posted a 21 percent rise in annual profit on Monday and said it would pay a special dividend as it was confident about its resilience and long-term growth prospects.
The mid-tier investment bank said it would pay a special dividend of 25 pence per share following exceptional returns from its private equity and property business.
''This provides clear evidence of the strength of Close Brothers' balance sheet and their confidence in the future. We maintain our buy recommendation for Close Brothers with our 900 pence target price,'' KBC analyst Robin Savage said.
Close Brothers reported pretax profit of 190 million pounds (2 million) for the year to end-July and said its total assets had risen 12 percent to 5.4 billion pounds.
''Close Brothers final results exceeded our top end of consensus expectations. All divisions performed well,'' Savage said.
The group said its bad debt had remained at 1.1 percent of loans and it did not expect this to deteriorate.
''The market as a whole has mis-priced risk, but we have stuck to our guns and kept to our normal way of doing things ... There is no sign of bad debt increasing,'' Chief Executive Colin Keogh told Reuters.
The credit crunch started with banks facing losses because of investments linked to risky U.S. mortgage debt and has spread to markets around the world. The Northern Rock recently suffered the first run on a British bank in more than a century as it was forced to seek funding lines from the Bank of England.
''Inevitably you don't get the dislocation and uncertainty that we have seen over the past few weeks just walking straight through and the world going back as it was before. There will be an effect on the M&A market; some sort of slowdown is almost inevitable,'' Keogh said.
Close Brothers shares, which have underperformed the UK general financial sector by 24 percent over the last 12 months, were up 4.5 percent at 842 pence by 0745 GMT, valuing it at around 1.2 billion pounds.
''Overall this is a good set of results. We are showing diversity and resilience, so we are very pleased with the headline numbers.
The two businesses that have done well are asset management and corporate finance,'' Keogh said.
The group said it would pay a final ordinary dividend of 25p per share, giving a total for the year of 37p, up 14 percent from the year before.
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