Close Brothers has announced that poor performance from its securities division impacted on its results for the second half of 2011.

The financial services firm claimed that income from trading in securities at its Winterflood and Seydler units had been hit by ‘increased market volatility’ and ‘reduced investor risk appetite’.

It also reported a slump in its assets under management (AUM) in the second half of last year, down 12.5 per cent to £8.4 billion on 31 December 2011 from £9.6 billion on 31 July 2011.

The FTSE 250 firm attributed the drop to ‘negative market movements’ and the previously announced redemption of £1 billion in institutional assets.

However, its banking arm delivered strong growth during the six months, with a 9 per cent increase in the loan book to £3.8 billion in the five months to the end of December.

Close Brothers said, ‘As expected, the group’s first half performance will be affected by a lower contribution from securities notwithstanding a continued strong performance from banking.

‘Financial market conditions have remained difficult in January and are uncertain for the second half of the financial year.

‘However, our businesses remain well positioned and we continue to see a strong performance in the banking division.’

Broker Numis Securities kept its ‘hold’ rating on the stock but stated that it may cut its earnings estimates for the firm.

Shares in Close Brothers opened down at 631.6p before recovering to trade just 0.46 per cent lower at 655.5p at 10am.