Close Brothers Group (CBG) H2 2025 earnings summary

Executive summary

• Strengthened capital position with CET1 ratio at 13.8% (14.3% pro forma post-sale), over £400m CET1 generated or preserved since March 2024.

• Simplified portfolio via sale of Asset Management, Winterflood, and Brewery Rentals; exited loss-making vehicle hire business.

• Addressed legacy issues, including Novitas settlements and motor finance commission provisions; Novitas loan book reduced to nil.

• Focused on specialist banking, targeting SME lending in the UK and Ireland.

• Clear strategic priorities: simplify, optimize, and grow, aiming for double-digit ROTE by FY 2028.

Financial highlights

• Adjusted operating profit of £144m, down 14% year-over-year; statutory operating loss before tax of £122m due to £267m adjusting items.

• Banking division delivered £198m adjusted operating profit; group central functions loss increased to £54m.

• Loan book reduced 4% to £9.5bn, mainly from moderation measures and temporary pause in UK motor lending.

• Net interest margin strong at 7.2%, though down 20bps; bad debt ratio stable at 1%.

• No final dividend for FY 2025; dividend reinstatement to be reviewed after motor finance clarity.

Outlook and guidance

• At least £20m of additional annualized cost savings per year for the next three years, totaling £60m.

• Group adjusted expenses expected at £410m-£430m by FY 2028; £440m-£460m for FY 2026.

• Net interest margin expected to be slightly below 7% going forward.

• Bad debt ratio expected to remain below long-term average of 1.2% in FY 2026.

• Loan book growth targeted at 5%-10% through the cycle, though near-term growth may be lower due to SME sentiment and premium finance runoff.