TIDMCBG
RNS Number : 2160T
Close Brothers Group PLC
21 July 2022
Press Release
Scheduled Trading Update
-------------------------
21 July 2022
Embargoed for release until 7.00 am BST on 21 July 2022.
Close Brothers Group plc ("the group" or "Close Brothers") today
issues its scheduled pre-close trading update ahead of its 2022
financial year end. Close Brothers will release its results for the
full year ended 31 July 2022 on 27 September 2022.
All statements in this release relate to the 11 months to 30
June 2022 unless otherwise indicated.
Adrian Sainsbury, Chief Executive Officer
"We have delivered a solid performance so far this year despite
the uncertain backdrop. Performance in the Banking division was
strong as we continued to see good demand across our lending
businesses and remain focused on maximising growth in each of our
markets, whilst actively identifying new opportunities that align
with our disciplined approach. While our market-facing businesses
were negatively impacted by falling markets, we continued to see
healthy net inflows in CBAM and remain well placed to navigate
changes in the market environment at Winterflood.
Our proven model, strong financial position and deep expertise
leave us well positioned to continue to support our customers and
clients, whilst continuing to deliver on our long track record of
profitability and disciplined growth."
Group and divisional performance
The group delivered a solid performance in the first 11 months
of the financial year. The strong performance in the Banking
division reflected loan book growth and an improved margin,
although Close Brothers Asset Management ("CBAM") and Winterflood
were negatively impacted by market movements.
Our Common Equity Tier 1 ("CET1") ratio was 14.8% at 30 June
2022 (30 April 2022: 14.9%), significantly above the applicable
minimum regulatory requirement(1) .
In Banking , the loan book increased 5.0% in the first 11 months
of the financial year to GBP8.9 billion (31 July 2021: GBP8.4
billion). This was primarily driven by healthy new business volumes
in Commercial and high demand in Motor Finance, with the Property
book slightly down as high repayments more than offset strong
drawdowns from our pipeline. Since the Q3 trading update, we
continued to see good demand and momentum in the loan book.
The annualised year-to-date net interest margin remained strong
at 7.8% and increased marginally on the 2021 financial year (FY
2021: 7.7%) primarily reflecting lower cost of funds.
The year-to-date bad debt ratio of 1.2% (0.6% excluding Novitas)
remained stable (Q3 2022: 1.2%, 0.5% excluding Novitas) and
included the recognition of further IFRS 9 provisions to take into
account updated macroeconomic forecasts since the Q3 trading
update(2) . Whilst we are not yet seeing a discernible impact from
the current economic uncertainty and rising inflation on our
customers, we continue to closely monitor the performance of the
book.
CBAM has continued to attract client assets and delivered
year-to-date annualised net inflows of 5% (Q3 2022: 5%, FY 2021:
7%), despite the impact of volatile market conditions on wider
client sentiment. Since the Q3 trading update, managed assets have
decreased to GBP14.8 billion (30 April 2022: GBP15.4 billion) and
total client assets have decreased to GBP16.0 billion (30 April
2022: GBP16.7 billion), reflecting negative market movements.
Winterflood's performance year-to-date has been adversely
affected by reduced trading opportunities following the exceptional
highs experienced during the Covid-19 period, which has been
exacerbated by falling markets and their impact on investor
sentiment, particularly since the Q3 trading update. Winterflood
Business Services achieved a strong performance in the period, with
continued growth in income and client assets.
Outlook
We have achieved a solid performance in the first 11 months of
the year against a backdrop of rising inflation and heightened
market uncertainty. We are in a strong position to take advantage
of opportunities and continue delivering on our long-term track
record of growth and profitability.
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, the CET1 capital ratio would be 14.0%.
The applicable minimum regulatory requirement, excluding any
applicable PRA buffer, was 7.6% at 30 June 2022.
2 At 30 June 2022, there was a 32.5% weighting to the baseline
scenario, 30.0% to the upside and 37.5% to the downside scenarios
(30 April 2022: 40.0% baseline, 20.0% upside, 40.0% downside).
Moody's unemployment forecast for 2022 under the baseline scenario
is 3.8%, 3.7% under the upside scenario and ranges between 4.0% and
4.2% in the downside scenarios. Moody's inflation forecast for 2022
under the baseline scenario is 9.6%, 9.3% for the upside scenario
and ranges between 10.1% and 11.9% in the downside scenarios.
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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