Close Brothers Group (CBG) H1 2025 earnings summary

Executive summary

• Statutory operating loss before tax of £103m, mainly due to a £165m provision for motor finance commissions, despite robust underlying profit and strong margins.

• Strategic sale of CBAM completed, generating an estimated £59m–£60m gain and boosting CET1 capital ratio by 120bps to 13.4% pro forma.

• Management actions generated or preserved £360m CET1 capital over 12 months.

• No interim dividend declared due to ongoing uncertainty from FCA review and Supreme Court appeals on motor finance commissions.

• Focused on simplification, operational efficiency, and sustainable growth, with annualised cost savings of £25m targeted by FY25.

Financial highlights

• Adjusted operating profit down 15% year-over-year to £75m; return on tangible equity at 7.4%.

• Operating loss before tax of £103m, mainly from the £165m motor commission provision.

• Banking delivered underlying profit of £104m; loan book reduced 3% to £9.8bn due to seasonality and selective lending.

• Net interest margin strong at 7.3%; bad debt ratio at 1%.

• Winterflood delivered a £0.8m operating loss amid challenging markets; WBS AuA up 27% to £17.5bn.

Outlook and guidance

• Selective loan book growth to resume in H2, with full-year loan book expected broadly flat year-on-year.

• Net interest margin for FY25 guided to around 7%, slightly below H1 exit rate.

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

• CET1 capital ratio to be maintained at the top end of 12–13% target range.

• Annualised cost savings of £25m expected by FY25 end; adjusted operating expenses in Banking to rise by ~1%.