TIDMCBG
RNS Number : 6161T
Close Brothers Group PLC
16 November 2023
Press Release
Scheduled Trading Update
-------------------------
16 November 2023
Embargoed for release until 7.00 am on 16 November 2023.
Close Brothers Group plc ("the group" or "Close Brothers") today
issues its scheduled trading update relating to the first quarter
of its 2024 financial year from 1 August 2023 to 31 October
2023.
Adrian Sainsbury, Chief Executive Officer, said:
"Performance in the first quarter of 2024 reflected continued
momentum in Banking, whilst our market-facing businesses were
impacted by unfavourable market conditions.
In Banking, we delivered loan book growth across our businesses,
strong margins and a stable credit performance. CBAM delivered
strong net inflows, at the top end of our target range, helped by
our hiring strategy. At Winterflood, performance was impacted by
further weakening of investor appetite but we remain well placed
for any recovery.
We are successfully implementing our strategy in the current
environment, leveraging our long-term relationships, the deep
expertise of our people and our customer-centric approach to
deliver disciplined growth. By maintaining our pricing discipline,
active management of costs and consistent approach to lending
through the cycle, we are able to support our customers and clients
through these uncertain times."
Performance in the three months to 31 October 2023
In Banking , the loan book increased 3.0% in the quarter (3.4%
excluding Novitas and the Irish Motor Finance business in run-off)
and 7.5% year-on-year to GBP9.8 billion (31 July 2023: GBP9.5
billion), reflecting a continuation of the momentum seen in the
second half of the 2023 financial year. We saw good demand in
Commercial, despite the roll-off of Government supported lending,
driven by strong new business volumes in Leasing and Invoice
Finance. In Retail, growth in the UK Motor Finance and Premium
Finance businesses more than offset the run-off of the Irish Motor
Finance book. The Property loan book continued to grow as we saw
drawdowns from our strong pipeline.
We are pleased to confirm that the acquisition of Bluestone
Motor Finance (Ireland) DAC was completed on 31 October 2023. This
provides a platform for us to re-establish our Motor Finance
business in Ireland and deliver disciplined growth in a market that
remains a strategic priority for the group, following the cessation
of our previous partnership in the Republic of Ireland last
year.
The annualised year-to-date net interest margin remained strong
at 7.6% (7.5% excluding Novitas) (FY 2023: 7.7%, 7.6% excluding
Novitas), reflecting our focus on maintaining pricing discipline in
a higher interest rate environment.
We continued to invest in our strategic programmes and are
making further progress with our cost management initiatives, with
growth in Banking costs in full-year 2024 expected to be within the
8-10% range, as outlined in our full-year 2023 results
announcement.
The annualised year-to-date bad debt ratio was stable at 1.0%
(FY 2023: 0.9% excluding Novitas) (1) . There has been no material
change in relation to Novitas in the quarter.
Whilst we have not seen a significant impact on credit
performance, we continue to monitor closely the evolving impacts of
higher inflation and cost of living on our customers. We remain
confident in the quality of our loan book, which is predominantly
secured, prudently underwritten, diverse, and supported by the deep
expertise of our people.
Close Brothers Asset Management ("CBAM") delivered strong
year-to-date annualised net inflows of 10% (FY 2023: 9%), with the
new bespoke investment managers continuing to contribute
significantly to the overall inflow rate. As previously outlined,
our successful hiring strategy continues to impact CBAM's cost base
in the near term.
In the quarter, managed assets decreased slightly to GBP16.2
billion (31 July 2023: GBP16.4 billion) and total assets decreased
to GBP17.0 billion (31 July 2023: GBP17.3 billion), primarily
reflecting unfavourable market movements.
Winterflood's performance has been adversely impacted by a
further weakening of investor appetite and market uncertainty,
resulting in an operating loss of GBP2.5 million in the first
quarter.
The Group (central functions) (2) reported net expenses of
GBP9.5 million in the quarter (Q1 2023: net expenses of GBP7.1
million), with the year-on-year movement primarily driven by net
interest expenses from debt issued by the holding company in June
2023(3) .
We maintained our strong balance sheet and the prudent
management of our financial resources.
Our funding base increased to GBP12.7 billion (31 July 2023:
GBP12.4 billion) and we grew our retail deposit base by 5% to
GBP4.4 billion in the quarter, reflecting the strength of our
Savings proposition. Our liquidity coverage ratio was substantially
above regulatory requirements as we maintained our prudent
liquidity position.
Our Common Equity Tier 1 ("CET1") capital and Total Capital
ratios were 12.7% and 14.7%, respectively, at 31 October 2023 (31
July 2023: 13.3% and 15.3%). The reduction in the quarter was
primarily driven by loan book growth (c.40bps) and the Bluestone
Motor Finance acquisition (c.20bps)(4) . We remain committed to
optimising further our capital structure, including the issuance of
debt capital market securities if appropriate, targeting a CET1
capital ratio range of 12% to 13% over the medium term.
Outlook
Our Banking business is sustaining its growth momentum and
focusing on pricing discipline, and remains well positioned to make
the most of opportunities in the current environment. In CBAM, we
remain committed to driving growth organically, through high
quality hiring, and through in-fill acquisitions. Winterflood is
well positioned for when investor confidence recovers.
Footnotes
1 At 31 October 2023, there was a 32.5% weighting to the
baseline scenario, 30.0% to the upside and 37.5% to the downside
scenarios (unchanged from 31 July 2023). Moody's October
unemployment forecast for Q4 2023 under the baseline scenario is
4.4%, 4.1% under the upside scenario and ranges between 4.6% and
4.9% in the downside scenarios. Moody's October inflation forecast
for Q4 2023 under the baseline scenario is 5.0%, 4.6% for the
upside scenario and ranges between 3.8% and 3.1% in the downside
scenarios. Moody's October forecast for the Bank of England base
rate for Q4 2023 is 5.3% in the baseline scenario, 5.3% in the
upside scenario and ranges from 5.2% to 5.1% in the downside
scenarios.
2 Group consists of central functions (such as finance, legal
and compliance, risk and human resources) as well as the
non-trading head office company and consolidation adjustments and
is set out in order that the information presented reconciles to
the consolidated income statement.
3 In June 2023, Close Brothers Group plc issued a GBP250 million
senior unsecured bond at an interest rate of 7.75% with the net
proceeds to be used for general corporate purposes.
4 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 and Total capital ratios would
be 12.6% and 14.5%, respectively. The applicable minimum CET1 and
Total capital ratio regulatory requirements, excluding any
applicable PRA buffer, were 9.5% and 13.4% at 31 October 2023. The
group's capital ratios are unaudited and include unverified profits
net of foreseeable dividend.
Financial Calendar (provisional)*
As announced at the Preliminary Results 2023, going forward, the
group has decided to discontinue the issuance of pre-close trading
updates in order to align more closely with prevailing market and
industry practice.
The provisional financial calendar for the remainder of the 2024
financial year is as follows:
Half Year Results 2024 19 March 2024
Q3 2024 Trading Update 22 May 2024
------------------
Preliminary Results 24 September 2024
2024
------------------
* All dates are subject to change.
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
Ingrid Diaz Close Brothers Group plc 020 3857 6088
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 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTKELFFXFLBFBX
(END) Dow Jones Newswires
November 16, 2023 02:00 ET (07:00 GMT)
Close Brothers (LSE:CBG)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Close Brothers (LSE:CBG)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024