Boss of Brewin Dolphin says conditions worst for 35 years

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Reporting a 5% rise in first-half profits, he said: "These results have been achieved against a market background more challenging than at any time since the early 1970s."

The growth in profits to £21.8 million came entirely from the stockbroker's discretionary fund management side, which increased its operating profit by 23% to £11 million in the six months to the end of March.

Profits on the investment banking side were hit as Brewin, along with many of its rivals in the small and medium companies sector, saw a real downturn in activity. Operating profits dropped from £2.5 million to £1 million and Matheson said the firm was working on the basis that there would be no significant flotation work in the second half of the year.

He added that he still expected "a reasonably stable outcome from investment management" but cautioned that there remained a risk of further adverse movements in the market as the credit crunch continued. "Despite the difficult conditions we expect a creditable outcome for the group for the year," he said.

Funds under management declined from £25.1 billion to £23 billion in the past sixmonths. Within this, there was a fall in discretionary funds under management from £10.7 billion to £10.4 billion. The first-half dividend is up by 5.2% to 3.375p, paid out of earnings up by 5.9% at 7.2p.

Matheson said the firm had continued to expand organically and by acquisitions, and had opened a new office in Nottingham. It recruited 29 more fund managers during the half-year.