TIDMCBG
RNS Number : 4175A
Close Brothers Group PLC
24 May 2023
Press Release
Scheduled Trading Update
-------------------------
24 May 2023
Embargoed for release until 7.00 am on 24 May 2023.
Close Brothers Group plc ("the group" or "Close Brothers") today
issues its scheduled trading update relating to the third quarter
of its 2023 financial year. All statements in this release relate
to the period from 1 February 2023 to 30 April 2023 ("the quarter")
unless otherwise indicated.
Adrian Sainsbury, Chief Executive Officer
"We performed well in the third quarter, with loan book growth
accelerating, a strong net interest margin and stable credit
performance in Banking. The Asset Management division delivered
increased net inflows, although trading activity remained subdued
in Winterflood.
We are seeing good demand in our Banking business and the
consistent application of our model, combined with our strong
financial position, enables us to continue supporting our customers
and clients. Following a difficult first half, we are well placed
to make the most of opportunities in the current environment."
Divisional performance
In Banking , the loan book increased 2.0% in the quarter to
GBP9.2 billion(1) , corresponding to year-to-date growth of 1.3%
(3.9% excluding Novitas and the Irish Motor Finance business). This
was driven primarily by continued strong new business volumes in
Commercial, as well as increased drawdowns and a slowdown in
repayments in Property Finance. The Retail book declined primarily
as the run-off of the Irish Motor Finance business more than offset
a stable UK Motor loan book.
The annualised year-to-date net interest margin remained strong
at 7.8% (7.6% excluding Novitas) (FY 2022: 7.8%, 7.5% excluding
Novitas), reflecting both pricing discipline on new lending and
actions taken to optimise the group's liability mix and funding
costs in a rising rate environment.
While we continued to see pressure from the current inflationary
environment, we remain focused on cost discipline and
efficiency.
The annualised year-to-date bad debt ratio was 2.6% (H1 2023:
3.6%) reflecting the significant provisions taken against Novitas
in the first half of the 2023 financial year. As announced
previously, we believe these provisions adequately reflect the
remaining risk of credit losses for the Novitas loan book.
Excluding Novitas, the annualised year-to-date bad debt ratio
was 0.9% (H1 2023: 1.1%), reflecting a broadly stable credit and
arrears performance in the quarter (2) . We continue to monitor
closely the evolving impacts of rising inflation and cost of living
on our customers and 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 delivered strong year-to-date
annualised net inflows of 9% (H1 2023: 6%), notwithstanding market
uncertainty, with a significant contribution from new hires. We
continue to invest in our hiring strategy and have a strong
pipeline of new business. Managed assets increased to GBP16.1
billion (31 January 2023: GBP15.7 billion) and total client assets
increased to GBP17.0 billion (31 January 2023: GBP16.9
billion).
The cyclical trends reported in the first half have continued to
impact Winterflood's performance, with retail investor appetite
remaining subdued. Nevertheless, the team's experience and focus on
managing risk resulted in no loss days in the quarter. Winterflood
has a long track record of trading profitably in a range of market
conditions and remains well positioned to take advantage when
investor confidence recovers.
Strong capital, funding and liquidity positions
We maintained our strong balance sheet and the prudent
management of our financial resources. Our Common Equity Tier 1
("CET1") ratio was 14.0% at 30 April 2023 (31 January 2023: 14.0%),
significantly above the applicable minimum regulatory
requirement(3) . Our conservative approach to funding is based on
the principle of "borrow long, lend short", with the average
maturity of funding allocated to the loan book exceeding the
average loan book maturity by four months (up from two months at 31
January 2023). Our diverse funding base was stable at GBP11.9
billion and we grew customer deposits to GBP7.4 billion in the
quarter, reflecting the strength of our Savings proposition. Retail
deposits make up approximately half of our deposit base and are
predominantly term or notice accounts, with the majority protected
by the Financial Services Compensation Scheme(4) . We maintained
our prudent liquidity position, with our liquidity coverage ratio
substantially above regulatory requirements at 1,067% (12-month
average to 30 April 2023). Our credit ratings remained strong,
reflecting the group's financial resources and consistent risk
appetite(5) .
Outlook
Although we remain mindful of the impact of rising inflation and
interest rates on our customers and wider financial market
conditions, our proven model and financial strength mean we are
well placed to make the most of opportunities over the remainder of
the financial year.
As outlined at the Half Year 2023 results, we are committed to
resuming our track record of earnings growth and returns by
focusing on disciplined growth, cost efficiency and capital
optimisation.
Footnotes
1 The loan book is presented including operating lease
assets.
2 At 30 April 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 2022). Moody's April unemployment forecast
for Q4 2023 under the baseline scenario is 4.3%, 3.9% under the
upside scenario and ranges between 4.7% and 6.6% in the downside
scenarios. Moody's April inflation forecast for Q4 2023 under the
baseline scenario is 4.5%, 4.2% for the upside scenario and ranges
between 3.0% and -0.6% in the downside scenarios. Moody's April
forecast for the Bank of England base rate for Q4 2023 is 4.5% in
the baseline scenario, 4.7% in the upside scenario and ranges from
4.1% to 2.6% in the downside scenarios.
3 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 13.7%.
The applicable minimum regulatory requirement, excluding any
applicable PRA buffer, was 8.5% at 30 April 2023.
4 Retail deposits protected by the Financial Services
Compensation Scheme ("FSCS") include third party platform and
Self-Invested Personal Pensions ("SIPP") deposits. Approximately
80% of the group's retail deposits, as measured in April 2023 are
insured by FSCS.
5 At 30 April 2023, Moody's Investor Services rated Close
Brothers Group as "A2/P1" and Close Brothers Limited as "Aa3/P1",
with a "stable" outlook for both and Fitch Ratings rated both Close
Brothers Group and Close Brothers Limited as "A-/F2", with a
"negative" outlook.
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 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 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.
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
TSTNKNBKFBKDQPB
(END) Dow Jones Newswires
May 24, 2023 02:00 ET (06:00 GMT)
Close Brothers (LSE:CBG)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
Close Brothers (LSE:CBG)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024
