NCB narrows losses despite 5% fall in revenue

REVENUE at NCB Stockbrokers dipped by more than a fifth in the financial year preceding Investec’s takeover of the stockbroker, new accounts show.

Accounts for the year to November 30th, 2011, show that revenue dropped to €21.5 million during the period, down from €27.7 million the previous year. That reflected a decline in the stockbroker’s institutional equity business.

However, pre-tax losses narrowed to €806,000 during the period, compared to a €1.25 million loss the previous year. The company reported an operating loss of €1.2 million, compared to a figure of €1.64 million for 2010, helped by a strong performance from its wealth management and corporate finance business.

Operating costs declined to €22.7 million, down from €28.2 million in 2010, again reflecting the company’s downsizing of its institutional equity business. NCB closed its London office and restructured its institutional equity division in Dublin during 2010.

South African firm Investec acquired NCB Stockbrokers in January for €32 million. The stockbrokers, founded by Dermot Desmond in the 1980s, was 25 per cent owned by the Quinn Group, with the remainder owned by individual shareholders and employees.

NCB has since been integrated into Investec’s operations in Dublin. A number of NCB employees from the institutional equities desk have recently left the company through a voluntary redundancy scheme, while a rationalisation process is ongoing.

NCB, whose wealth management and corporate finance division forms the bulk of its business, had about €1.3 billion in assets under management last year.

The level of client funds held on deposit in bank accounts declined in 2011 to €199 million from €207.8 million the previous year, the accounts show. Staff costs were lower, down from €13.4 million in 2010 to €11.4 million last year as NCB shed staff. The brokerage employed 119 people at the end of 2011, compared to about 135 in 2010.

As with 2010, no dividend was paid to shareholders, who most recently received a payment of €1.2 million in 2009.

Investec was founded in Johannesburg in 1974. The company entered the Irish market in 2000 when it acquired Gandon Capital Markets. The Investec Group is quoted on the Johannesburg and London stock exchanges and has a market capitalisation of about £3.4 billion.