Market swings hit Charles Stanley's securities arm

The market turmoil that has caused wild swings in global stocks since mid-summer has hit profits at the stockbroker Charles Stanley, which warned of the impact on its bottom line yesterday.

Shares in the company closed 9.5 per cent lower at 245p after it said the volatility had hit commissions and corporate finance fees at its securities division. And although it accounts for less than 10 per cent of overall revenue, the fall in profits there, along with the impact of inflation on fixed costs, meant that profits in the six months to the end of September were lower than those in the same period last year.

The update comes after European shares last week rounded off their worst quarter since the collapse of Lehman Brothers. With concerns about the eurozone taking centre stage, the FTSE Eurofirst 300 index fell by more than 17 per cent between July and September. In London, the FTSE 100 booked its worst three-month run since 2002, falling by nearly 14 per cent as investors took fright.

Unlike the small securities arm, Charles Stanley's key private client and financial services businesses performed well over the half year, with investment management fees and financial services revenue ahead of last year's figures. The result is that, while profits are lower, revenue over the six-month period is expected to come in "at the same level" as last year.

Alongside the performance in the private client and financial services arms, the company has also been helped by cost reductions. The last quarter saw the departure of two senior executives and one sales trader in the securities arm, with replacements being recruited from within, a spokesman said.