Numis revenue to fall 14 per cent as it maintains a gloomy outlook for 2023
City broker Numis said today that its revenue has taken another hit from weak capital markets as it warned that things are unlikely to improve this year.
In a trading update, Numis said revenue in the first half of the 2023 financial year is expected to be about £64m, around 14 per cent lower than last year.
The London-based firm said the “continued scarcity” of transactions in the UK equity capital market has dented revenue.
Equities revenue will also be lower than last year after a strong start to the year faded.
Although the firm said it is “well positioned” to benefit from a recovery in capital markets, it noted there is unlikely to be a “meaningful change in market conditions in the short term”.
This means there won’t be any “meaningful pick-up” in the IPO market for the rest of the financial year.
The firm, however, said the outlook for M&A remains encouraging, with a record first half for its advisory division.
It said the outlook for its advisory business remained positive, reflecting continued activity in the UK mid-market and “the strength of our corporate relationships”.
Numis described the performance as “resilient” given the “weaker overall investment banking markets”, and said that its balance sheet remains strong with its liquidity and capital positions enabling the firm to “deliver shareholder returns and continued investment”.
At the time of reporting, its share price was down 2.4 per cent.
Mid-cap brokers have struggled in recent months as macroeconomic volatility has put a halt on IPOs and equity raises.
According to recent EY figures, London IPO activity raised just £1.6bn across 2022 after a bumper year in 2021, which saw £16.3bn raised in a post-pandemic floatation frenzy.
In its most recent full year results, released in December, profit at Numis fell 72 per cent after capital markets deals slumped to a ten year low.