Peel Hunt Ltd warned on cost pressures in its interim period, but expected revenue growth from the prior year, despite the downturn in financial markets.

The investment bank said it expects revenue for the six-month period to September 30 to rise 3.2% year-on-year, reaching market expectations of around £42.4 million.

Over the period, Peel Hunt said it worked with its clients amid a period of ‘adverse market conditions’, which has persisted since the end of 2021.

‘Our strong balance sheet provides financial resilience for the group and allows us to take a long-term view to build our business for the benefit of all our stakeholders,’ the company said.

Peel Hunt pointed to progress in its Investment Banking arm, noting it acted as a joint runner for fintech firm CAB Payments Holdings PLC on its initial public offering and associated equity raise - which the company said was its the largest float in the UK this year.

However, despite the revenue growth in Investment Banking, it said overall deal activity has remained ‘subdued’.

In Execution Services, which includes fixed income, trading has been ‘resilient’ despite lower volumes.

However, the firm noted that costs have increased ‘broadly’ in line with inflation, despite its focus on costs over the period. It cited inflationary cost rises, notably in service provider and technology costs, and the hit from higher interest rate rises on its debt facilities. It has mitigated this somewhat by reducing its debt by £6 million in June. Long-term debt now stands at £15 million, half that of two years prior.

‘Whilst exact timing of recovery cannot be predicted, there are encouraging signs that interest rate rises are bringing inflation under control, and we may be nearing the end of the current tightening cycle. We have the balance sheet strength and regulatory capital to weather the remainder of this cyclical downturn and are well positioned to benefit from the strength of our platform and considerable operational gearing as market conditions normalise,’ Peel Hunt said.

Shares in Peel Hunt were flat at 83.00 pence each in London on Monday late morning.

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