Close Brothers Group (CBG) Trading Update summary

Trading and financial performance

• Delivered robust Q1 performance with healthy customer demand, strong net interest margin of 7.3%, and resilient credit quality in Banking.

• Banking loan book grew 0.6% to £10.2bn, with growth in Commercial offset by higher repayments in Property and lower Retail volumes due to a temporary pause in UK motor finance lending.

• Asset Management saw annualised net inflows of 4%, with managed assets rising to £19.5bn; sale of CBAM to Oaktree Capital expected to complete early 2025.

• Winterflood posted an operating loss of £0.7m, impacted by weak market conditions, but improved from prior year.

• Group central functions reported net expenses of £14.2m, reflecting higher professional fees linked to the FCA's motor finance review.

Balance sheet and capital position

• Funding base stable at £13.0bn, with a conservative funding strategy and liquidity coverage ratio of 964%, well above regulatory requirements.

• CET1 and Total Capital ratios increased to 13.2% and 16.9%, driven by retained profit and reduced risk weighted assets.

• Sale of CBAM expected to boost CET1 ratio by ~100bps; management actions aim for CET1 ratio of 14–15% by FY25 year-end, excluding potential redress from motor finance issues.

• Ongoing review of risk weighted assets and potential risk transfers to further strengthen capital position.

Regulatory and legal developments

• FCA review and Court of Appeal judgment on historical motor finance commission arrangements create significant uncertainty.

• Application to appeal the Court's decision to the Supreme Court is planned, with expedited consideration requested.

• Financial impact of legal developments remains uncertain, depending on appeal outcome, volume of claims, and compensation levels.

• Temporary pause in UK motor finance lending lifted for most of the book; documentation and processes updated to ensure compliance.