This announcement contains inside
information
Press Release
Trading update and dividend announcement
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15 February 2024
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Embargoed for release until 7.00 am
on 15 February 2024.
The Board of Close Brothers Group
plc ("the group") is updating the market following the announcement
by the Financial Conduct Authority (the "FCA") of its review of
historical motor finance commission arrangements.
There is significant uncertainty
about the outcome of the FCA's review, and the timing, scope and
quantum of any potential financial impact on the group cannot be
reliably estimated at present. In accordance with the relevant
accounting standards, the Board has concluded that it is currently
not required or appropriate to recognise a provision in the group's
Half-Year 2024 results in relation to this matter.
Our business continues to perform
well, and we are confident in the strength of our business
franchise. Our Banking division continues to deliver disciplined
growth at strong margins and stable credit performance, and
generated approximately £112 million of adjusted operating profit
("AOP") for the six months to 31 January 2024. Close Brothers Asset
Management delivered strong annualised net inflows of 9% and
Winterflood remains well placed for a recovery in investor
confidence. We expect to report overall group AOP of approximately
£94 million, after Group (central functions) net
expenses.
The group has a strong capital,
funding and liquidity position. At 31 December 2023, our Common
Equity Tier 1 ("CET1") and Total capital ratios were 12.5% and
16.4% respectively, providing significant headroom over the minimum
regulatory requirements1. Our leverage ratio, which is a
measure of capital strength not affected by risk weightings,
remained strong at 12.7%. Our conservative approach to funding is
based on the principle of "borrow long, lend short" and we hold
liquidity levels comfortably ahead of both internal risk appetite
and regulatory requirements, with a Liquidity Coverage Ratio in
excess of 1,000%2.
While there is no certainty
regarding any potential financial impact as a result of the FCA's
review, the Board recognises the need to plan for a range of
possible outcomes. It is a long-standing priority of the group to
maintain a strong balance sheet and prudent approach to managing
its financial resources. To that end, the Board considers it
prudent for the group to further build capital strength, while
supporting our customers and business franchise.
Therefore, the group will not pay
any dividends on its ordinary shares for the current financial
year, and the reinstatement of dividends in the 2025 financial year
and beyond will be reviewed once the FCA has concluded its process
and any financial consequences for the group have been
assessed3.
In addition, the Board is
implementing a range of actions to further accrete capital
including optimising Risk Weighted Assets and continued delivery of
our cost management initiatives.
The Board is confident that these
actions will further build our capital strength, leaving the group
in a strong position to continue to support our customers and
protect our valuable franchise. The group will provide a further
update at its Half-Year 2024 results.
Inside information
This announcement contains
information which is deemed by the Company to constitute inside
information within the meaning of the UK version of the European
Union's Market Abuse Regulation ((EU) No. 596/2014). Upon the
publication of this announcement via the Regulatory Information
Service, the inside information is now considered to be in the
public domain. The person responsible for arranging the
release of this information on behalf of the Company is Sarah
Peazer-Davies, Company Secretary.
Footnotes
1 The group's capital ratios are
presented on a transitional basis after the application of IFRS 9
transitional arrangements which allow 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 and
Total capital ratios would be 12.4% and 16.2%, respectively. The
applicable minimum CET1 and Total capital ratio regulatory
requirements, excluding any applicable PRA buffer, were 9.5% and
13.4% respectively at 31 December 2023. The group's capital ratios
are unaudited and include unverified profits net of foreseeable
dividends. At 31 December 2023, the related foreseeable dividend
accrual was c.£40 million or c.40 bps of CET1.
2 Liquidity Coverage ratio presented
as a 12-month average to 31 December 2023.
3 This decision does not affect the
payment of interest on any other capital instrument issued by the
group including its Fixed Rate Resetting Additional Tier 1
Perpetual Subordinated Contingent Convertible
Securities.
Financial Calendar (provisional)*
Close Brothers will release its
Half-Year results for the six months ending 31 January 2024 on 19
March 2024. The provisional financial calendar for the remainder of
the 2024 financial year is as follows:
Half Year Results 2024
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19 March 2024
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Q3 2024 Trading Update
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22 May 2024
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Preliminary Results 2024
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24 September 2024
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* All dates are subject to
change.
Further information
Investor
Relations FAQs | Close Brothers Group
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
Sam
Cartwright
H/Advisors
Maitland
07827 254561
Neil Bennett
H/Advisors
Maitland
07900 000777
About Close Brothers
Close Brothers is a leading UK
merchant banking group providing lending, deposit taking, wealth
management services and securities trading. We employ
approximately 4,000 people, principally in the United Kingdom and
Ireland. Close Brothers Group plc is listed on the London Stock
Exchange and is a constituent of the FTSE 250.
Cautionary Statement
Certain statements included or incorporated by reference
within this announcement may constitute "forward-looking
statements" in respect of the group's operations, performance,
prospects and/or financial condition. All statements other than
statements of historical fact are, or may be deemed to be,
forward-looking statements. 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. There are also
a number of factors that could cause actual future operations,
performance, financial conditions, results or developments to
differ materially from the plans, goals and expectations expressed
or implied by these forward-looking statements and forecasts. These
factors include, but are not limited to, those contained in the
Group's annual report (available at: https://www.closebrothers.com/investor-relations).
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. Past performance cannot be relied
upon as a guide to future performance and persons needing advice
should consult an independent financial adviser.
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 shall it or any part of it
or the fact of its distribution form the basis of, or be relied on
in connection with, any contract or commitment or investment
decisions relating thereto, nor does it constitute a recommendation
regarding the shares or other securities of the company or any of
its group members. 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.