Close Brothers Group Plc · LSE:CBG
Close Brothers — H1 2009 Earnings Presentation
31 slides from Close Brothers's earnings presentation, Mar 10, 2009
Slide 1: Close Brothers Group Interim results 2009
Close Brothers Group Interim results 2009 10 March 2009
Slide 2: Cautionary statement
Cautionary statement Regarding information in this presentation Certain statements included in this presentation may constitute "forward-looking statements" in respect of the Group’s operations, performance, prospects and/or financial condition. By their nature, forward looking statements involve a
Slide 3: Agenda
Agenda 1. Introduction – Colin Keogh, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business overview – Colin Keogh, Group Chief Executive 4. Q&A Page 3
Slide 4: First half 2009 highlights
First half 2009 highlights A sound overall Group performance in tough markets • Strong performance in Securities • Solid performance in Banking but increasing bad debts • Asset Management and Corporate Finance impacted by difficult markets • Remain soundly funded and well capitalised • Maintained in
Slide 5: Agenda
Agenda 1. Introduction – Colin Keogh, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business overview – Colin Keogh, Group Chief Executive 4. Q&A Page 5
Slide 6: Financial highlights: Summary income statement
Financial highlights Summary income statement First half 2009 First half 2008 % change Full year 2008 £ million to 31 January to 31 January to 31 July Adjusted operating income(1) 266.4 253.0 5% 509.2 Adjusted operating expenses(2) (181.0) (168.1) 8% (344.2) Impairment losses on loans and advances (
Slide 7: Financial highlights: Summary income statement (continued)
Financial highlights Summary income statement (continued) First half 2009 First half 2008 % change Full year 2008 £ million to 31 January to 31 January to 31 July Adjusted operating profit(1) 62.0 75.3 (18%) 137.5 Exceptional items and other adjustments(2) (23.5) (5.5) (10.0) of which: Exceptional i
Slide 8: Financial highlights: Summary pro forma balance sheet
Financial highlights Summary pro forma balance sheet £ million 31 January 2009 31 July 2008 Change Assets CDs, loans and advances to banks 1,687.8 1,633.5 54.3 FRNs classified as available for sale 773.2 751.3 21.9 Loans and advances to customers 2,307.8 2,232.2 75.6 Settlement accounts, long tradin
Slide 9: Funding and liquidity
Funding and liquidity Soundly funded from a diverse range of sources Funding position as at 31 January 2009 • £2.3 billion loan book more than twice covered, giving good headroom and flexibility 6,000 £5,089 m • Wholesale funding of £2.2 billion with average 5,000 maturity of 23 months, compared to
Slide 10: Capital
Capital Strong capital position £ million 31 January 2009 31 July 2008 Risk Weighted Assets (notional)(1) 3,989.0 3,804.0 Core tier 1 capital 531.3 547.2 Total regulatory capital 598.5 613.6 Core tier 1 capital ratio 13.3% 14.4% Total capital ratio 15.0% 16.1% Note: (1) Notional risk weighted assets
Slide 11: Asset Management: Key figures
Asset Management Key figures £ million First half 2009 First half 2008 % change Full year 2008 Adjusted operating income(1) 49.9 69.0 (28%) 133.5 Adjusted operating expenses(2) (43.3) (51.0) (15%) (100.9) (3) Adjusted operating profit 6.6 18.0 (63%) 32.6 Closing FuM 6,870 8,869 (23%) 8,195 Average F
Slide 12: Asset Management: Income analysis
Asset Management Income analysis Adjusted operating income by type • Management fees reduced 26% to £29 million 80 - Average FuM 16% lower at £7.5 billion (2008: £69.0 m £9.0 billion) 70 - Management fees / average FuM 78 bps (2008: 8.0 88 bps) reflecting: 60 £49.9 m - Lower activity levels (0.2) 50
Slide 13: Asset Management: Funds under Management
Asset Management Funds under Management Movement in FuM Breakdown of FuM by asset class As at 31 January 2009 £ million Private Clients Funds Total 1 August 2008 3,316 4,879 8,195 Structured Products New funds raised 269 345 614 9% Redemptions, realisations Hedge Funds Equities and withdrawals (201)
Slide 14: Banking: Key figures
Banking Key figures £ million Half year 2009 Half year 2008 % change Full year 2008 Adjusted operating income(1) 115.4 99.8 16% 207.1 Adjusted operating expenses(2) (60.0) (52.5) 14% (105.1) Impairment losses on loans and advances (23.4) (9.6) 144% (27.5) Adjusted operating profit(3) 32.0 37.7 (15%)
Slide 15: Banking: Income analysis
Banking Income analysis Adjusted operating income by type 150 • Net interest and fees on loan book increased 140 19% to £102 million 130 - Average loan book increased 14% to £2,270 £115.4 m million (2008: £1,984 million) 120 110 - Net interest margin increased to 9.0% (2008: 13.1 £99.8 m 8.7%) despi
Slide 16: Banking: Loan book analysis
Banking Loan book analysis 2,500 £2,308 m £2,232 m 185 • £80 million premium finance loan book acquired 210 from Kaupthing Singer & Friedlander in August 2,000 2008 409 414 1,500 • Flat organic growth reflects cautious approach to 456 447 new lending in difficult economic environment £ million 1,000
Slide 17: Banking: Bad debt analysis
Banking Bad debt analysis 10.0% • Bad debt ratio 2.1% compared to 1.0% in H1 2008 9.0% 8.7% 8.9% 9.0% • Higher bad debts across the portfolio as 8.0% recession affects borrowers 7.0% • Planning for period of higher bad debt 6.0% 3.0% 80 5.0% 70 1.0% 1.7% 2.5% 4.0% 2.1% 60 3.0% 2.0% 50 2.0% 3.8% 1.5%
Slide 18: Corporate Finance: Key figures
Corporate Finance Key figures £ million Half year 2009 Half year 2008 % change Full year 2008 Adjusted operating income(1) 17.3 26.2 (34%) 56.5 Adjusted operating expenses(2) (20.2) (21.6) (6%) (46.5) (3) Adjusted operating profit (2.9) 4.6 (163%) 10.0 Number of transactions 33 50 (34%) 89 Operating
Slide 19: Corporate Finance: Income analysis
Corporate Finance Income analysis Adjusted operating income by type 30 • Number of transactions reduced 34% to 33 (2008: 50), with stable income per transaction £26.2 m 3.9 • Lower activity in both M&A (86% of adjusted operating income) and Debt advisory and restructuring (14%) 20 £17.3 m • UK accou
Slide 20: Securities: Key figures
Securities Key figures £ million First half 2009 First half 2008 % change Full year 2008 Adjusted operating income(1) 80.8 55.8 45% 110.0 Adjusted operating expenses(2) (47.6) (32.0) 49% (71.3) (3) Adjusted operating profit 33.2 23.8 39% 38.7 of which: Winterflood 18.7 11.8 58% 23.5 (4) Seydler 1.8
Slide 21: Securities: Income analysis
Securities Income analysis Adjusted operating income by business 100 • Winterflood income increased 42% to £55 million - Bargains / day increased 34% to 37,861 (2008: 90 28,197) £80.8 m 80 › Retail activity in financial stocks 12.7 › Increased focus on counterparty risk among 70 market participants
Slide 22: Summary of performance
Summary of performance • A sound overall group performance in tough markets • Maintained a strong capital position and remain soundly funded • Maintained interim dividend at 13.5p Page 22
Slide 23: Agenda
Agenda 1. Introduction – Colin Keogh, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business overview – Colin Keogh, Group Chief Executive 4. Q&A Page 23
Slide 24: Business overview: Focus on operational improvements
Business overview Focus on operational improvements in a difficult environment Asset Management • Ongoing restructuring of division well underway - Exit from Private Equity and Venture Capital - Goodwill impairment • Additional cost savings identified - Around 10% headcount reduction by 31 July 2009
Slide 25: Business overview (continued)
Business overview Focus on operational improvements in a difficult environment (continued) Corporate Finance • Managing costs while maintaining critical mass and expertise • Selective hiring to capitalise on future opportunities Securities • Winterflood demonstrating strength of franchise in challen
Slide 26: Outlook
Outlook • Continue to plan for difficult conditions through the remainder of the year • Focus on managing our businesses through the downturn and improving the operational performance of each of our divisions • We are confident our strong businesses and robust financial position will allow us to con
Slide 27: Agenda
Agenda 1. Introduction – Colin Keogh, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business overview – Colin Keogh, Group Chief Executive 4. Q&A Page 27
Slide 28: Close Brothers Group Interim results 2009
Close Brothers Group Interim results 2009 10 March 2009
Slide 29: Appendix
Appendix • Segmental analysis • Funding maturity profile Page 29
Slide 30: Segmental analysis: Income statement
Segmental analysis Income statement Asset Corporate £ million Management Banking Finance Securities Group Total Half year ended 31 January 2009 Adjusted operating income 49.9 115.4 17.3 80.8 3.0 266.4 Adjusted operating expenses (43.3) (60.0) (20.2) (47.6) (9.9) (181.0) Impairment losses on loans an
Slide 31: Funding maturity profile
Funding maturity profile As at 31 January 2009 £ million Total <3 months 3-12 months 1-2 years 2-5 years >5 years Loans and overdrafts from banks(1) 1,641 120 465 861 195 - Non re-course borrowings 126 - 126 - - - Promissory notes 24 - - - - 24 Subordinated loan capital 75 - - - - 75 Drawn facilitie