In response to the Financial Conduct Authority’s (FCA) review of historical motor finance commission arrangements, Close Brothers Group plc’s Board issued a market update, highlighting significant uncertainty about the potential financial impact and expressing the need to plan for various outcomes.

The Board, adhering to relevant accounting standards, has currently deemed it unnecessary to recognise a provision in the group’s Half-Year 2024 results regarding the FCA’s review. Despite this uncertainty, the company emphasised its robust business performance, citing disciplined growth, strong margins, and stable credit performance in its Banking division. The division generated approximately £112 million of adjusted operating profit (“AOP”) for the six months ending January 31, 2024.

Close Brothers Asset Management reported strong annualised net inflows of 9%, while Winterflood positioned itself for a recovery in investor confidence. The group anticipates an overall AOP of around £94 million after accounting for Group (central functions) net expenses.

Maintaining a strong capital, funding, and liquidity position, Close Brothers Group revealed CET1 and total capital ratios of 12.5% and 16.4%, respectively, at the end of December 2023. The leverage ratio stood strong at 12.7%, reflecting a conservative approach to funding.

Acknowledging the need to plan for potential outcomes of the FCA review, the Board opted not to pay dividends on ordinary shares for the current financial year. The reinstatement of dividends in the 2025 financial year and beyond will be reviewed once the FCA concludes its process and the financial consequences for the group are assessed.

To further build capital strength, Close Brothers Group will implement actions such as optimising risk-weighted assets and continuing cost management initiatives.

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The Board expressed confidence that these measures will fortify the group’s capital position, enabling continued support for customers and safeguarding the valuable franchise. A comprehensive update is expected during the Group’s half-year 2024 results.

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