Final Results

Summary by AI ^BETAClose X

Close Brothers Group PLC reported preliminary results for the year ended July 31, 2025, with an adjusted operating profit of £144 million. The company's CET1 capital ratio reached 13.8%, increasing to approximately 14.3% pro-forma after the Winterflood sale. A £165 million provision for motor finance commissions remained unchanged. The company delivered £25 million in annualised cost savings and plans to achieve at least £20 million more annually for the next three years. The group reported a statutory operating loss before tax of £122.4 million, while profit from discontinued operations, net of tax, was £49.2 million. The loan book reduced by 4% to £9.5 billion. No final dividend will be paid for the 2025 financial year.

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Close Brothers Group (CBG)

UK 100

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1.	Please refer to definitions on pages 28 to 30.
2.	Adjusted measures are presented on a basis consistent with prior periods and exclude amortisation of intangible assets on acquisition, to present the performance of the group's acquired businesses consistent with its other businesses; and any exceptional and other adjusting items which do not reflect underlying trading performance. Further detail on the reconciliation between operating and adjusted measures can be found in Note 2 "Segmental Analysis". Please refer to the basis of presentation on page 5 for further information.
3.	Discontinued operations relate to Close Brothers Asset Management and Winterflood, which have been classified as "Discontinued Operations" in the group's income statement for the 2024 and 2025 financial years in line with the requirements of IFRS 5. The related assets and liabilities are classified as held for sale on the group's balance sheet at 31 July 2025. Please refer to Note 23 "Discontinued Operations and assets and liabilities classified as held for sale".
4.	Refer to Note 4 "Earnings per Share" for the calculation of basic and adjusted earnings per share.
5.	Return on opening equity and return on average tangible equity have been restated for financial year 2024 to exclude discontinued operations. Return on average tangible equity uses adjusted operating profit after tax from continuing operations, less AT1 coupons (2025: £88.7 million, 2024: £113.5 million). Average tangible equity excludes discontinued operations. Average tangible equity is calculated based on closing equity per the balance sheet (2025: £1,735.5 million, 2024: £1,842.5 million), less AT1 (2025 and 2024: £197.6 million), less intangibles (2025: £166.3 million, 2024: £266.0 million), less CBAM and Winterflood tangible equity (2025: £90.6 million, 2024: £155.9 million).
6.	Loan book includes operating lease assets of £1.3 million (31 July 2024: £1.0 million) and excludes £165.0 million (31 July 2024: £222.4 million) of operating lease assets related to Close Brothers Vehicle Hire, which is in wind-down, and £41.0 million of operating lease assets related to Close Brewery Rentals Limited (31 July 2024: £44.5 million) which has been classified as held for sale on the group's balance sheet as at 31 July 2025.

•	On 1 August 2025, the Supreme Court gave its judgment, in which Close Brothers Limited ("CBL") successfully overturned the Court of Appeal's judgment in respect of the Hopcraft case. The provision charge in respect of motor finance commissions recognised in the income statement at the half year of £165.0 million has been reassessed in light of all available information and recent developments and remains unchanged
•	We have strengthened our capital position in response to the motor finance commissions uncertainty, with over £400 million of CET1 capital generated or preserved as of 31 July 2025
•	The structure of our group has been simplified with the sale of Close Brothers Asset Management, Winterflood and Close Brewery Rentals Limited, and our Premium Finance Business has been repositioned to predominantly focus on Commercial Lines
•	We have also successfully settled the long-standing litigation issued by Novitas allowing us to move forward and exit from this business
•	We are implementing a proactive customer redress programme in Motor Finance, following the identification of historical deficiencies in certain operational processes in relation to the early settlement of loans. This has resulted in a separate provision of £33.0 million in the 2025 financial year
•	We have decided to exit our Vehicle Hire business, which has been loss making in a challenging market environment. Together with the impact of declining asset values, this has resulted in an impairment charge of £30.0 million
•	We have delivered £25 million of annualised cost savings by the end of the 2025 financial year through streamlining of our technology, suppliers, property and workforce
•	We will deliver at least c.£20 million of additional annualised savings per annum in each of the next three years, through further consolidation of centrally provided functions, selective outsourcing and offshoring, and the simplification, rationalisation and automation of technology, including automation and the use of artificial intelligence
•	Our activities have been refocused on areas that offer attractive risk-adjusted returns. We are broadening our product offering in Property Finance, expanding distribution in Motor Finance, and have a renewed focus on growing our commercial lines business in Premium Finance. Our Commercial business is expanding into adjacent products, such as commercial mortgages, and is focused on scaling new, specialist teams, such as agriculture
•	These actions set a clear path back to double digit RoTE by the 2028 financial year, and rising thereafter. We plan to provide a full update on our pathway to rising RoTE early next year, once we have clarity on the outcome of the FCA's consultation on an industry wide redress scheme in respect of motor finance commissions and its impact on the group

•	Adjusted operating income decreased 2% to £681.2 million (2024: £698.4 million), primarily reflecting lower income in Banking, as the loan book reduced
•	Adjusted operating expenses increased 3% to £445.1 million (2024: £433.5 million), primarily reflecting higher Group (central functions) expenses
•	Adjusted operating profit decreased 14% to £144.3 million (2024: £167.6 million), driven by a decline in income and higher costs, partly offset by lower impairment charges
•	The group's return on average tangible equity (excluding discontinued operations) ("RoTE") decreased to 7.1% (2024: 9.3%)
•	The group reported a statutory operating loss before tax of £122.4 million (2024: statutory operating profit before tax of £132.7 million). Underlying operating profit was more than offset by adjusting items, notably a £165.0 million provision charge in relation to motor finance commissions, operating losses before tax from our rentals businesses totalling £47.5 million, and a separate £33.0 million provision for a proactive customer remediation programme initiated by the group related to early settlements of loans in the Motor Finance business
•	In Banking, the loan book reduced 4% to £9.5 billion (31 July 2024: £9.8 billion), primarily driven by the temporary pause in UK motor lending following the Court of Appeal's judgment in October 2024, loan book moderation measures, and lower activity in some of our markets in the second half. The net interest margin remained strong at 7.2% (2024: 7.4%), as we maintained our focus on pricing discipline. Banking adjusted operating profit reduced to £198.3 million (2024: £212.9 million), due to a decline in income and a marginal increase in operating expenses
•	Profit from discontinued operations, net of tax, was £49.2 million (2024: £5.1 million)
•	Common Equity Tier 1 ("CET1") ratio at 13.8% (31 July 2024: 12.8%) or 14.3%, on a pro-forma basis at 31 July 2025 reflecting the benefit from the sale of Winterflood. This includes the impact of the £165.0 million provision charge in relation to motor finance commissions
•	As previously outlined, given the continued uncertainty regarding the outcome of the FCA's review of motor finance commission arrangements and any potential financial impact, the group will not pay a final dividend on its ordinary shares for the 2025 financial year

•	Loan book: We have repositioned the business to focus on segments where we see mid to high single digit growth potential through the cycle, leaving us well positioned to benefit as the economy and demand recover
•	Net interest margin: In the 2026 financial year, we expect the net interest margin to be slightly lower than 7%, reflecting loan book mix impacts
•	Bad debt ratio: We expect the bad debt ratio for the 2026 financial year to remain below our long-term average of 1.2%

•	Costs
	•	We are committed to delivering at least c.£20 million of additional annualised savings per annum in each of the next three years. As a result, we expect the group's adjusted operating expenses to be within the £410-430 million range by the 2028 financial year
	•	In the 2026 financial year, we expect to deliver c.£20 million of annualised savings. As a result, we expect the group's adjusted operating expenses to be within the £440-460 million range
•	Adjusting items
	•	We expect to incur c.£5-10 million of restructuring costs in the 2026 financial year as we implement further cost management actions
	•	We expect complaints handling expenses and other operational and legal costs in relation to motor finance commissions to be in the single-digit millions in the 2026 financial year

•	Dividends: As previously outlined, the reinstatement of dividends will be reviewed once there is further clarity on the financial impact of the FCA review of motor finance commission arrangements
•	Capital: In the near-term, we expect to maintain our CET1 capital ratio above our medium-term target range of 12% to 13%, based on our current assessment of the provision in respect of motor finance commissions

Camila Sugimura	Close Brothers Group plc	020 3857 6577
Sam Cartwright	H/Advisors Maitland	07827 254 561

1.	Income Statement presented includes continuing and discontinued operations. Adjusted measures are presented on a basis consistent with prior periods and exclude any exceptional and adjusting items which do not reflect underlying trading performance. Current exceptional and adjusting items include; customer remediation provisions, operational or legal costs incurred in relation to an event that is deemed to be adjusting, businesses that are held for sale, the Vehicle Hire business which is in wind-down, restructuring costs and amortisation of intangible assets on acquisition. Please refer to the Basis of Presentation on page 5 for further information.
2.	Close Brewery Rentals Limited which is held for sale as at 31 July 2025. Please refer to page 24 for more detail.
3.	Close Brothers Vehicle Hire business is being exited. Please refer to page 24 for more detail.
4.	Discontinued operations relate to Close Brothers Asset Management and Winterflood, which have been classified as "Discontinued Operations" in the group's income statement for the 2024 and 2025 financial years in line with the requirements of IFRS 5. The related assets and liabilities are classified as held for sale on the group's balance sheet as at 31 July 2025.
5.	Refer to Note 4 "Earnings per Share" for the calculation of basic and adjusted earnings per share.
6.	Return on opening equity and return on average tangible equity have been restated for financial year 2024 to exclude discontinued operations.

1.	Includes operating lease assets of £166.3 million (31 July 2024: £267.9 million).
2.	Treasury assets comprise cash and balances at central banks and debt securities held to support the Banking division.
3.	Market-making assets and liabilities comprise settlement balances, long and short trading positions and loans to or from money brokers.
4.	Assets and liabilities relating to CBRL and discontinued operation Winterflood have been classified as held for sale on the group's balance sheet at 31 July 2025. Please refer to Note 23 "Discontinued operations and assets and liabilities classified as held for sale"
5.	Borrowings comprise debt securities in issue, loans and overdrafts from banks and subordinated loan capital
6.	Equity includes the group's £200.0 million Fixed Rate Reset Perpetual Subordinated Contingent Convertible Securities (AT1 securities), net of £2.4 million transaction costs, which are classified as an equity instrument under IAS 32.

1.	Numbers relate to core funding and exclude working capital facilities at the business level.
2.	Unsecured funding excludes £1.5 million (31 July 2024: £55.1 million) of non-facility overdrafts included in borrowings and includes £nil (31 July 2024: £140.0 million) of undrawn facilities.
3.	Includes £250.0 million of funds raised via a senior unsecured bond with a five-year tenor by Close Brothers Group plc, the group's holding company, in June 2023, with proceeds currently used for general corporate purposes.
4.	Total funding as a percentage of loan book includes £207.3 million (31 July 2024: £267.9 million) of operating lease assets in the loan book figure, of which £41.0 million for Close Brewery Rentals Limited are classified as held for sale as at 31 July 2025.
5.	Simple weighted average of the applicable funding allocated to the loan book. The applicable funding excludes equity (except AT1 instruments) and deducts funding held for liquidity purposes.

1.	Asset Finance totals exclude £165.0 million (31 July 2024: £222.4 million) of operating lease assets related to Close Brothers Vehicle Hire, which is in wind-down, and £41.0 million of operating lease assets related to Close Brewery Rentals Limited (31 July 2024: £44.5 million) which has been classified as held for sale on the group's balance sheet as at 31 July 2025.
2.	The Motor Finance loan book includes £32.1 million (31 July 2024: £92.8 million) relating to the Republic of Ireland Motor Finance business, which is in run-off following the cessation of our previous partnership in the Republic of Ireland from 30 June 2022.
3	Includes operating lease assets of £1.3 million (31 July 2024: £1.0 million).

•	Establishing the criteria for a significant increase in credit risk;
•	Determining the appropriate definition of default;
•	Determining the impact of the FCA's motor commissions review on the group's goodwill impairment assessment; and
•	Determining the affected customers in the motor finance commissions provisioning assessment, with further judgement and estimation then applied on the level of compensation and appropriate scenarios.

•	quantitative assessment: the lifetime probability of default ("PD") has increased by more than an agreed threshold relative to the equivalent at origination. Thresholds are based on a fixed number of risk grade movements which are bespoke to each business to ensure that the increased risk since origination is appropriately captured;
•	qualitative assessment: events or observed behaviour indicate credit deterioration. This includes a wide range of information that is reasonably available including individual credit assessments of the financial performance of borrowers as appropriate during routine reviews, plus forbearance and watch list information; or
•	backstop criteria: the "30 days past due" backstop is met.

•	Forward-looking macroeconomic information incorporated into expected credit loss models. This was also a key estimate in the prior year;
•	Adjustments by management to model calculated expected credit losses due to limitations in the group's expected credit loss models or input data, which may be identified through ongoing model monitoring and validation of models. This was also a key estimate in the prior year;
•	Estimate of future cash flow forecasts in the calculation of value in use for the testing of goodwill for impairment in relation to the Banking division cash generating units, in particular Motor Finance, due to lower cash flow forecasts. This was also a key estimate in the prior year; and
•	Estimate of the expected future rental incomes and disposal values in the calculation of value in use for the operating lease assets of Close Brothers Vehicle Hire; and
•	Estimates and assumptions applied in the calculation of the provision relating to motor finance commissions. These assumptions are the total cost of credit thresholds ("TCC"), which is a key factor in determining affected customers, claim rates and scenario weightings. Claim rate is defined as the estimated cost of customer remediation (based on customer engagement with redress invitation) as a percentage of the estimated cost of the eligible in scope population.

	Five-year average (calendar years 2025 to 2029)
	Baseline	Upside (strong)	Downside (mild)	Downside (moderate)	Downside (protracted)
At 31 July 2025
UK GDP growth	1.6%	2.3%	1.1%	0.8%	0.7%
UK unemployment	4.7%	4.1%	4.9%	6.7%	7.6%
UK HPI growth	2.5%	4.2%	0.8%	(1.0)%	(3.5)%
BoE base rate	3.0%	3.1%	2.7%	2.0%	1.5%
Consumer Price Index	2.2%	2.3%	1.6%	1.2%	0.9%
Weighting	32.5%	30%	20%	10.5%	7%

	Five-year average (calendar years 2024 to 2028)
	Baseline	Upside (strong)	Downside (mild)	Downside (moderate)	Downside (protracted)
At 31 July 2024
UK GDP growth	1.5%	2.3%	1.1%	0.6%	0.4%
UK unemployment	4.6%	4.0%	4.8%	6.6%	7.4%
UK HPI growth	2.5%	4.2%	0.9%	(1.0)%	(3.5)%
BoE base rate	3.5%	3.6%	3.2%	2.5%	2.0%
Consumer Price Index	2.1%	2.2%	1.5%	1.2%	0.8%
Weighting	32.5%	30%	20%	10.5%	7%

	Five-year period (calendar year 2024 to 2028)
	Baseline		Upside (strong)		Downside (mild)		Downside (moderate)		Downside (protracted)
	Peak	Trough	Peak	Trough	Peak	Trough	Peak	Trough	Peak	Trough
At 31 July 2024
UK GDP growth	7.7%	0.7%	11.8%	0.7%	5.5%	(1.4)%	2.8%	(4.2)%	2.2%	(6.3)%
UK unemployment	4.8%	4.3%	4.3%	3.7%	4.9%	4.3%	7.4%	4.3%	8.6%	4.3%
UK HPI growth	13.3%	0.7%	27.2%	0.7%	4.4%	(5.7)%	0.9%	(14.2)%	0.9%	(23.4)%
BoE base rate	5.3%	2.5%	5.3%	2.5%	5.3%	2.1%	5.3%	1.1%	5.3%	0.6%
Consumer Price Index	3.6%	2.0%	3.6%	2.0%	3.6%	(0.4)%	3.6%	(1.1)%	3.6%	(2.0)%
Weighting	32.5%		30%		20%		10.5%		7%

•	For the majority of the portfolios, the modelled expected credit loss provision has been recalculated under the upside strong and downside protracted scenarios described above, applying a 100% weighting to each scenario in turn. The change in provision requirement is driven by the movement in risk metrics under each scenario and resulting impact on stage allocation.
•	Expected credit losses based on a simplified approach, which do not utilise a macroeconomic model and require expert judgement, are excluded from the sensitivity analysis.
•	In addition to the above, key considerations for the sensitivity analysis are set out below, by segment:
	-	In Commercial, the sensitivity analysis excludes Novitas, given the low materiality of remaining provisions.
	-	In Retail, the sensitivity analysis does not apply further stress to the expected credit loss provision on loans and advances to customers in Stage 3, because the measurement of expected credit losses is considered more sensitive to credit factors specific to the borrower than macroeconomic scenarios.
	-	In Property, the sensitivity analysis excludes individually assessed provisions, and certain sub-portfolios which are deemed more sensitive to credit factors than the macroeconomic scenarios.

1.	Total assets for the Banking operating segments comprise the loan book and operating lease assets only. The Commercial operating segment includes the net loan book of Novitas of £nil.
2.	Balance sheet includes £3,117.6 million assets and £11,353.5 million liabilities attributable to the Banking division primarily comprising the treasury balances described in the second paragraph of this note.
3.	Discontinued operations on the balance sheet comprise Winterflood Securities. See Note 23. The assets and liabilities of Winterflood Securities presented in this table include intercompany balances for the purposes of segmental reporting.

1.	Discontinued operations represent the Asset Management division sold on 28 February 2025 and Winterflood shown as held for sale - see Note 23

1.	Total assets for the Banking operating segments comprise the loan book and operating lease assets only. The Commercial operating segment includes the net loan book of Novitas of £62.4 million.
2.	Balance sheet includes £2,970.1 million assets and £11,358.1 million liabilities attributable to the Banking division primarily comprising the treasury balances described in the second paragraph of this note.
3.	Discontinued operations on the balance sheet comprise Winterflood Securities. See Note 23. The assets and liabilities of Winterflood Securities presented in this table include intercompany balances for the purposes of segmental reporting.

1.	Comparative information restated following the classification of Close Brothers Asset Management and Winterflood as discontinued operations. See Notes 2 and 23.
2.	Disallowable items and other permanent differences largely relate to the non-deductible provision in relation to motor finance commissions.

1.	Comparative information restated following the classification of Close Brothers Asset Management and Winterflood as discontinued operations. See Notes 2 and 23.
2.	Excludes the adjusting items set out in the table below and the associated tax effect.

1.	Close Brothers Asset Management was sold to Oaktree Capital Management, L.P. on 28 February 2025 - see Note 23.
2.	Intangible assets relating to Winterflood Securities and Close Brewery Rentals have been reclassified to assets held for sale - see Note 23.

1.	Right of use assets primarily relate to the group's leasehold properties.
2.	Close Brothers Asset Management was sold to Oaktree Management, LP on 28 February 2025 - see Note 23.
3.	Property, plant and equipment relating to Winterflood Securities and Close Brewery Rentals have been reclassified to assets held for sale - see Note 23.

Final Results

Summary by AI BETAClose X

Companies

UK 100

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Summary by AI ^BETAClose X

1.	The contingent convertible securities are classified as an equity instrument for accounting but treated as AT1 for regulatory capital purposes, see note 13.
2.	Under CRR Article 26, a deduction for foreseeable charges has been recognised at 31 July 2025 and 31 July 2024. The deduction at 31 July 2025 reflects charges for the coupon on the group's contingent convertible securities.
3.	Under CRR Article 36, a deduction for securitisations positions, which are subject to a 1,250% risk weight, but alternatively are allowed to be deducted from CET1 has been recognised at 31 July 2025. For more information on this securitisation with the British Business Bank, refer to the Group Capital section of the Financial Overview. The deduction is applicable from 31 July 2025 (31 July 2024: £nil).
4.	The group has elected to apply IFRS 9 transitional arrangements for 31 July 2025, which allow the capital impact of expected credit losses to be phased in over the transitional period.
5.	Shown after applying IFRS 9 transitional arrangements and the CRR transitional and qualifying own funds arrangements in force at the time. Without their application, at 31 July 2025 the CET1 capital ratio would be 13.7%, tier 1 capital ratio 15.7% and total capital ratio 17.8% (31 July 2024: CET1 capital ratio 12.7%, tier 1 capital ratio 14.6% and total capital ratio 16.5%).

•	the loan is considered as performing and there is no past-due amount according to the amended contractual terms;
•	a minimum two-year probation period has passed from the date the forborne exposure was considered as performing, during which time regular and timely payments have been made; and
•	none of the customer's exposures with Close Brothers are more than 30 days past due at the end of the probation period.

	31 July 2025 £ million	31 July 2024 £ million
Commercial	112.9	118.5
Retail	50.6	42.8
Property	242.6	202.5
Total	406.1	363.8

	31 July 2025 Number of customers supported	31 July 2024 Number of customers supported
Commercial	948	839
Retail	14,880	12,275
Property	54	52
Total	15,882	13,166

•	repricing risk - the risk presented by assets and liabilities that reprice at different times;
•	embedded optionality risk - the risk presented by contractual terms embedded into certain assets and liabilities; and
•	basis risk - the risk presented by a mismatch in the reference interest rate for assets and liabilities.

•	EaR measures short-term impacts to earnings, highlighting any earnings sensitivity, should interest rates change unexpectedly.
•	EV measures longer-term earnings sensitivity, highlighting the potential future sensitivity of earnings, and any risk to capital, should interest rates change unexpectedly

	31 July 2025 £ million	31 July 2024 £ million
0.5% increase	2.1	0.1
2.5% increase	10.1	0.5
0.5% decrease	(2.1)	(0.1)
2.5% decrease	(9.3)	(0.8)