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City stockbrokers' profits crash 60% after 'challenging year'

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
A worker on IG Index's trading floor looks at her computer screens as markets tumble globally, in London September 22, 2011. World stocks and commodities tumbled on Thursday as weak data from China crystallized investor fears about a global recession one day after a grim economic outlook from the U.S. Federal Reserve.   Stocks tumbled more than 4 percent and commodities took a beating. Weak data from Germany and China helped push investors to safe U.S. government bonds, where benchmark yields again touched lows not seen in 60 years. REUTERS/Andrew Winning (BRITAIN - Tags: BUSINESS TPX IMAGES OF THE DAY)
A City of London trader. Photo: Andrew Winning/Reuters

Profits and revenue crashed last year at City of London stockbroker Numis (NUM.L), as deal making and trading dried up.

Numis, one of the City’s best known mid-market stockbrokers, said Wednesday that revenues fell 18% to £111.6m in the 12 months to September 2019. Pre-tax profit crashed 60.7% to £12.4m in the period.

The firm blamed a decline in UK dealmaking and trading activity due to political uncertainty and difficult market conditions. UK stock volatility hit its highest level since 2012 this year, Numis said.

“It has without doubt been a challenging year for everyone in the industry and our results have inevitably been impacted by the persistent political uncertainty, macro-economic factors and subdued, yet volatile markets,” co-chief executives Alex Ham and Ross Mitchinson said in a joint statement.

Revenue per-head declined by 24% and cash reserves were also run down by 24% to £84.2m.

One of the few bright spots was an increase in clients during the year, with 7 more corporates hiring Numis. It takes the total number of clients to 217.

“We continue to be actively focused on our clients and believe we are better positioned than ever to continue winning market share, achieving progress against our strategic objectives, and returning to delivering strong growth as and when market conditions improve,” Ham and Mitchinson said.

Numis said revenue in the two months since the end of its financial year had been ahead of expectations, boosted by fundraises for Bovis Homes and magazine publisher Future, and advisory work on Unite’s £1.4bn acquisition of Liberty Living.

However, Numis warned that next week’s general election was likely to dampen activity.

“Market conditions and the upcoming general election will likely impact the pipeline of deals in the short-term but we remain well positioned to progress our strategy,” Numis said in a statement.

Shares in the stockbroker fell 1.2%.