Prospects For Close Brothers Share Price In 2024

Looking for promising stocks in the UK financial sector? With expertise in business lending, wealth management, and more, Close Brothers Group plc may warrant a spot on your watchlist. 

We’ll take an in-depth tour of Close Brothers’ historical share price performance to equip you with the knowledge needed to evaluate this investment opportunity.

An Introduction to Close Brothers Group

The Close Brothers Group plc was founded back in 1878 and is headquartered in London. It’s listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

Close Brothers provides lending to small businesses and individuals across various sectors like agriculture, healthcare, and motor finance. The group also offers wealth management services and securities trading. 

As of 2022, Close Brothers employed over 3,700 people and reported total assets under management, which, as of July 2023, are $17.41 billion.

The company operates three primary divisions:

• Commercial: Provides specialist financing and deposits for small and medium enterprises
• Retail: Offers motor finance for cars, motorcycles and light commercial vehicles
• Property: Specialist property finance, including short-term residential development finance

Tracking the Close Brothers Share Price History

At the start of 2023, the Close Brothers share price stood at 1,139 pence (its highest level for the year). Over the next three months, the price fell gradually to 1,092p in April 2023. This marked the beginning of a steep decline as macroeconomic headwinds and likely weaker financial performance started impacting investor sentiment.

By mid-May 2023, the Close Brothers share price had dropped below the 1,000p level to 987p. After a brief recovery to 1,019p in early June, the sell-off resumed. This downward momentum accelerated in July and August, with the Close Brothers share price reaching 939p and 919p, respectively.

September marked the year’s lowest point as the share price plunged to 797p, representing a massive 30% decline from January’s peak. Deteriorating market conditions and contracting valuations across the financial services sector likely contributed to this dismal performance.

Closing prices mirrored this downward trajectory throughout 2023. From a closing of 969p on January 3rd, 2023, the Close Brothers share price closed at 794p by December 29th, 2023. This reflects persistent bearish sentiment and selling pressure throughout the year.

The new year brought some positivity as the Close Brothers share price rebounded to 815p in early January 2024, and the closing price rose to 786p. However, these levels remain substantially depressed compared to the start of the previous year.

Overall, the data paints a picture of notable erosion in the company’s market value over 2023 attributable to internal and external headwinds. 

However, the mild recovery in 2024 could stem the bleeding if improved fundamentals allow the company to stabilize its position. Nevertheless, it remains well below its recent peak valuations for now.

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3 Main Factors Impacting the Share Price

Based on Close Brothers’ financial results over 2023, a few notable factors were driving the stock’s poor performance:

1. Economic Contraction

With high inflation, rising interest rates, and low consumer confidence, the UK economy shrank in 2023. This led to reduced demand for lending and higher defaults from Close Brothers’ borrowers.

2. Margin Pressure

Despite rising interest rates, Close Brothers’s net interest margin declined over the year due to higher funding costs. This squeezed the profitability of its lending activities.

3. Asset Quality Declines

The percentage of the company’s loans that were impaired rose over 2023. More customer defaults led to higher loan loss provisions.

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Forecasting the Close Brothers Share Price in 2024 and Beyond

Given the sharp declines in 2023, what could the future hold for the Close Brothers share price? As with any stock, bullish and bearish cases may play out.

The Bull Case

If inflation cools and economic growth returns in 2024, Close Brothers’ financial performance could rebound. Lending activity may pick up, credit quality improves, and investment gains return. 

The dividend yield, currently over 8.57%, also offers an attractive income stream. If performance normalizes, the share price could return to higher levels by late 2024.

The Bear Case

However, if the UK enters a protracted recession, Close Brothers will likely continue struggling with higher loan losses. Its small business lending may remain depressed for several years. And if margins remain compressed, profit growth could stagnate. 

The stock may continue to languish below 900p over the next 12-24 months. As with any investment, having a long-term perspective is prudent. Underperformance periods are expected, even for quality stocks like Close Brothers. 

Reviewing the share price trends and business fundamentals allows investors to make wise entry and exit decisions.

For further information, read this article: What is a bull market? A complete beginner’s guide

6 Tips for Smart and Informed Choices

For investors considering adding Close Brothers stock to their portfolio, here are a few tips:

1. Review the company’s latest earnings reports, conference calls, and presentations to understand the current challenges and path forward.
2. Compare the stock’s valuation metrics, like the P/E ratio, to other UK banking and financial services peers to assess relative value.
3. Given the economic uncertainty, consider dollar cost averaging over several months rather than investing a lump sum all at once.
4. Reinvesting dividends from Close Brothers shares can allow you to accumulate more stock over time, enhancing returns.
5. Use stop losses to contain downside risk if the share price continues declining.
6. Maintain a well-diversified portfolio so any single stock only represents a small portion of your capital.

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Bottomline

As you can see, carefully tracking the Close Brothers' share price history provides critical insights for investors. While 2023 proved difficult, the company retains solid banking franchises that may rebound with an improved economy. 

Wise investors stay informed and patient when navigating the inevitable ups and downs of the markets. Looking ahead, Close Brothers’ proven business model and experienced management team position the company to emerge stronger when conditions improve. 

Though risks always exist, long-term shareholders who stick to their investment plan may be rewarded for their perseverance. 

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“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”