Close Brothers Group (LSE:CBG) reported a statutory pre-tax loss of £60.3m for the year ended 31 July, narrower than the £122.4m loss a year earlier but still driven by a mounting motor finance redress provision.
The specialist lender added £164.7m to that provision during the year, taking the total to approximately £320m, unchanged since its third-quarter trading update.
Adjusted operating profit, which strips out the provision and other one-off items, fell 17% to £120.3m from £144.3m, as adjusted operating income dropped 6% to £642.9m and net interest margin narrowed to 6.9% from 7.2%. Return on average tangible equity fell to 5.5% from 7.1%. The loan book held flat at £9.5bn but rose 2% on an underlying basis, with all divisions returning to growth in the final quarter. Adjusted operating expenses fell to £430.9m from £445.1m, better than guidance, as the group delivered £36m of annualised cost savings against a £25m target.
"We are now a simpler, more focused specialist bank, better positioned to serve customers, invest in growth and enhance returns for shareholders," said chief executive Mike Morgan, adding he remains "fully committed to returning the group to double-digit returns by FY 2028."
Close Brothers will not pay a final dividend, citing continued uncertainty over legal challenges to the FCA's motor finance consumer redress scheme. The group's CET1 capital ratio stood at 14.1%, above its 12-13% medium-term target range, after absorbing the provision.
It sold Close Brewery Rentals and Winterflood Securities during the year as part of a wider simplification of the group, and now expects to exceed £60m of annualised cost savings by the end of FY 2027.