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Highlights
- CBG’s adjusted operating profit fell 14% to GBP 144.3M in FY25.
- CET1 capital ratio at 13.8%, despite GBP 165M provision for motor finance commissions.
- Discontinued operations contributed GBP 49.2M, up from GBP 5.1M in FY24.
Close Brothers Group PLC (LSE:CBG) released its preliminary results for the fiscal year ending 31 July 2025. Adjusted operating profit from continuing operations decreased 14% to GBP 144.3M (FY24: GBP 167.6M), reflecting lower income combined with higher costs, partially offset by reduced impairment charges. Statutory operating loss before tax amounted to GBP 122.4M, compared with GBP 132.7M profit in FY24, mainly due to a GBP 165M provision related to motor finance commissions, losses from rental businesses, and a GBP 33M provision for proactive customer redress.
Discontinued operations, including Close Brothers Asset Management and Winterflood, produced a profit of GBP 49.2M (FY24: GBP 5.1M). Adjusted basic earnings per share from continuing operations were 59.3p (FY24: 75.8p). Basic loss per share from continuing operations was 99.8p (FY24: 56.2p), and including discontinued operations, the basic loss per share was 66.9p (FY24: 59.7p). No dividend was declared for FY25 due to uncertainty surrounding the FCA’s review of motor finance commissions.
Capital Position and Balance Sheet
The CET1 capital ratio stood at 13.8% (pro-forma 14.3% after Winterflood sale), with a Tier 1 ratio of 15.8% and a total capital ratio of 17.8%. The loan book fell 4% to GBP 9.5B (FY24: GBP 9.8B), while net interest margin remained stable at 7.2% (FY24: 7.4%). Return on average tangible equity (RoTE) declined to 7.1% (FY24: 9.3%), with return on opening equity at 6.2% (FY24: 7.9%). Expense/income ratio increased to 65% from 62% in FY24.
Strategic Initiatives
Mike Morgan, CEO, stated:
"Our performance in the 2025 financial year reflects the actions we have taken to strengthen our capital position and simplify the business. We delivered adjusted operating profit of GBP 144 million, highlighting the resilience of our underlying businesses…The task now is to accelerate from here. I am confident we are on the right path and that we will return this business to double-digit returns."
Outlook for FY26
For FY26, Close Brothers anticipates a slightly lower net interest margin, below 7%, and a bad debt ratio under 1.2%. Adjusted operating expenses are expected in the GBP 440–460M range. Restructuring costs of c.GBP 5–10M are projected, with operational and complaints-related expenses from motor finance commissions expected in single-digit millions. CET1 capital ratio is forecasted to remain above 12–13% in the near term.
