September 24, 2019 / 7:04 AM / in a month

UPDATE 1-Close Brothers annual profit slips; CEO Prebensen to step down

(Adds analysts estimate, background on volatility)

Sept 24 (Reuters) - Merchant bank Close Brothers Group Plc on Tuesday posted lower annual profit and said Chief Executive Officer Preben Prebensen will leave the company at a time when it faces a downturn in its market-facing businesses.

Prebensen has decided to leave after a decade in the role and will remain with Close Brothers for the next 12 months, the mid-cap firm said in a separate statement.

His departure comes as Close Brothers’ market-maker business, Winterflood, reported a near 30% plunge in full-year profit due to what the company called “low levels of investor risk appetite throughout the year”.

That was reflected in a 40% drop year to date in the CBOE Volatility index versus a 130% surge in 2018.

Market volatility generally tends to bolster profits at firms such as Winterflood, but it has recently been rather unimpressive as traders wait out macroeconomic events, including U.S.-China trade war and the UK’s painfully long Brexit process.

Winterflood facing challenging conditions contributed in part to a 3% fall in adjusted operating profit to 270.5 million pounds ($336.39 million) for the 12 months ended July 31, roughly in line with the 270 million pounds estimated by 14 analysts as per company-supplied consensus.

The company, which also provides loans, wealth management and securities trading services, reported a slight dip in net interest margin to 7.9% from 8%, while loan book climbed 5.7% to 7.6 billion pounds. ($1 = 0.8041 pounds) (Reporting by Muvija M in Bengaluru; Editing by Rashmi Aich)

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