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RNS Number : 1587Z
Close Brothers Group PLC
21 January 2022
Scheduled Trading Update
-------------------------
Close Brothers Group plc ("the group" or "Close Brothers") today
issues its scheduled pre-close trading update ahead of its 2022
half year end. Close Brothers will release its half year results
for the six months ending 31 January 2022 on 15 March 2022.
All statements in this release relate to the five months to 31
December 2021 ("the period") unless otherwise indicated.
Adrian Sainsbury, Chief Executive Officer
"We have seen good momentum in our business, as we continue to
make the most of opportunities in our core markets. We are
navigating the current environment effectively and remain confident
that our proven and resilient model, supported by the hard work and
expertise of our people, leave us well positioned to protect, grow
and sustain our business over the long term."
Group and divisional performance
The group has performed well, with good loan book growth at
strong margins in Banking and continued growth momentum in Close
Brothers Asset Management ("CBAM"), although trading income in
Winterflood has moderated since the end of the 2021 financial
year.
Our Common Equity Tier 1 ("CET1") ratio was 15.7% at 31 December
2021 (31 July 2021: 15.8%), well above the applicable minimum
regulatory requirement(1) .
In Banking , we have seen good demand across our businesses. The
loan book increased 2.9% to GBP8.69 billion (31 July 2021: GBP8.44
billion) driven by good new business levels in Asset Finance and
Motor Finance and improved utilisation in Invoice Finance, despite
continued high repayments in the Property business.
The annualised net interest margin remained strong as we
continued to focus on our pricing discipline.
Our key strategic investment programmes are progressing well and
we continue to exercise rigorous control of our costs while
remaining mindful of inflationary pressures.
The underlying credit performance of the loan book was strong,
and our lending remains predominantly secured, prudently
underwritten and diverse. The annualised bad debt ratio was broadly
in line with the previous financial year (FY 2021: 1.1%) and
includes the impact of updated loss rate assumptions for the
Novitas business(2) .
CBAM has continued to deliver good growth in the period,
achieving annualised net inflows of 8% (FY 2021: 7%) and benefiting
from rising markets. Managed assets grew to GBP16.6 billion (31
July 2021: GBP15.6 billion) and total client assets increased to
GBP18.0 billion (31 July 2021: GBP17.0 billion).
As highlighted in the Q1 2022 trading update, Winterflood's
trading performance has moderated since the end of the 2021
financial year. As a result, operating profit in the period is
broadly in line with the H1 2020 run rate (H1 2020 operating
profit: GBP10.6 million). There were no loss days in the
period.
Outlook
The group has performed well so far this year and expects to
deliver a solid first half performance across our businesses.
Although we remain mindful of ongoing uncertainty, we are well
placed to continue to make the most of opportunities in the
remainder of the year.
Footnotes
1 The group's capital ratios are presented on a transitional
basis after the application of IFRS 9 transitional arrangements
which allows banks to add back to their capital base a proportion
of the IFRS 9 impairment charges during the transitional period.
Without their application, and excluding the benefit related to the
treatment of software assets at 31 December 2021, the CET1 ratio
would be 14.3%. In line with the amended CRR, effective on 23
December 2020, the CET1 capital ratio at 31 December 2021 includes
a c.40bps benefit related to software assets which are exempt from
the deduction requirement for intangible assets from CET1. The
Prudential Regulation Authority ("PRA") published PS17/21
'Implementation of Basel standards' on 9 July 2021, confirming the
removal of this benefit from the CET1 capital ratio from 1 January
2022. The applicable minimum regulatory requirement, excluding any
PRA buffer was 7.6% at 31 December 2021.
2 In July 2021, the group decided to cease permanently the
approval of lending to new customers across all of the products
offered by Novitas Loans ("Novitas"), a wholly owned subsidiary of
Close Brothers acquired in 2017, and withdraw from the legal
services financing market. This followed a strategic review of
Novitas, which concluded that the overall risk profile of the
business is no longer compatible with our long-term strategy and
risk appetite. As of 31 July 2021, Novitas had a loan book net of
provisions of GBP181.5 million, representing 2.1% of the group's
total loans at this date.
Enquiries
Sophie Gillingham Close Brothers Group plc 020 3857 6574
Camila Sugimura Close Brothers Group plc 020 3857 6577
Kimberley Taylor Close Brothers Group plc 020 3857 6233
Irene Galvan Close Brothers Group plc 020 3857 6217
Sam Cartwright Maitland 07827 254561
About Close Brothers
Close Brothers is a leading UK merchant banking group providing
lending, deposit taking, wealth management services and securities
trading. We employ over 3,700 people, principally in the UK. Close
Brothers Group plc is listed on the London Stock Exchange and is a
member of the FTSE 250.
Cautionary Statement
Certain statements included within this announcement may
constitute "forward-looking statements" in respect of the group's
operations, performance, prospects and/or financial condition.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
"anticipates", "aims", "due", "could", "may", "will", "should",
"expects", "believes", "intends", "plans", "potential", "targets",
"goal" or "estimates". By their nature, forward-looking statements
involve a number of risks, uncertainties and assumptions and actual
results or events may differ materially from those expressed or
implied by those statements. Accordingly, no assurance can be given
that any particular expectation will be met and reliance should not
be placed on any forward-looking statement. Additionally,
forward-looking statements regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. Except as may be required
by law or regulation, no responsibility or obligation is accepted
to update or revise any forward-looking statement resulting from
new information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast. This
announcement does not constitute or form part of any offer or
invitation to sell, or any solicitation of any offer to subscribe
for or purchase any shares or other securities in the company or
any of its group members, nor does it constitute a recommendation
regarding the shares or other securities of the company or any of
its group members. Past performance cannot be relied upon as a
guide to future performance and persons needing advice should
consult an independent financial adviser or other professional.
Statements in this announcement reflect the knowledge and
information available at the time of its preparation. Liability
arising from anything in this announcement shall be governed by
English law. Nothing in this announcement shall exclude any
liability under applicable laws that cannot be excluded in
accordance with such laws.
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END
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