Close Brothers Group (LSE:CBG) trading update for the third quarter of its 2026 financial year revealing it has increased its provision for motor finance commissions to £320 million, which will result in an additional income statement charge of £303 million in the quarter.
The group, the UK-focused specialist lender, reported the loan book rose 1% in the quarter to £9.3 billion (31 January: £9.2 billion) and by 2% on an underlying basis, with the annualised year-to-date net interest margin at 7.0% (H1 2026: 7.1%) and an expectation that NIM will be slightly lower than 7% for the 2026 financial year.
Credit remained resilient with an annualised year-to-date bad debt ratio of 0.8% (H1 2026: 0.8%), and the group reiterated it expects the bad debt ratio for the 2026 financial year to remain below its long-term average of 1.2%.
Management said it has accelerated cost actions and now expects to exceed its target of c.£25 million of annualised savings by the end of the 2026 financial year and to deliver adjusted operating expenses below its prior guidance of c.£450 million.
It also now expects the group's operating loss to be at the lower end of the previously guided c.£45-50 million range.
"Our capital position remains strong after absorbing the additional provision for motor finance commissions, enabling investment in future growth to further support the UK economy," said Mike Morgan, Chief Executive.
Close Brothers reported a CET1 ratio of 14.3% and a total capital ratio of 19.5% at 30 April, noting the CET1 ratio reflects the additional £30 million provision in relation to motor finance commissions and the total capital ratio benefited from the issuance of 6.125% Subordinated Tier 2 Notes due 2036.
Close Brothers said it has delivered a solid quarter and, subject to current macroeconomic developments, remains on track to deliver the 2026 financial year in line with guidance.
