Close Brothers Group Plc · LSE:CBG
Close Brothers — FY2015 Earnings Presentation
29 slides from Close Brothers's earnings presentation, Sep 22, 2015
Slide 1: Preliminary Results FY 2015
Preliminary Results FY 2015 22 September 2015
Slide 2: Disclaimer
Disclaimer Certain statements included or incorporated by reference within 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 number of risks, unc
Slide 3: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business update – Preben Prebensen, Group Chief Executive 4. Q&A 3
Slide 4: Introduction
Introduction Another year of strong performance • Strong financial performance building on long track record – Adjusted operating profit up 16% to £225 million – Adjusted earnings per share up 19% to 120.5p – RoE increased to 19.5% • Continued investment to support and sustain our differentiated mod
Slide 5: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business update – Preben Prebensen, Group Chief Executive 4. Q&A 5
Slide 6: Financial highlights
Financial highlights Continued improvement in profitability and returns Continuing operations • AOP up 16% to £225 million % £ million 2015 2014 change – Sixth consecutive year of double digit growth in Banking AOP Banking 208.7 181.6 15% Securities 24.6 26.6 (8%) – A solid result in Securities give
Slide 7: Income statement
Income statement Continued strong performance Income statement • Revenues +10% to £690 million – Strong growth in Banking and % £ million 2015 2014 change Asset Management Adjusted operating income 689.5 627.9 10% • Expense/income ratio improved slightly to 61% (2014: 62%) Adjusted operating expense
Slide 8: Balance sheet
Balance sheet Simple and transparent balance sheet Strong funding position Simple and transparent balance sheet £ million 10,000 31 July 31 July £ million 2015 2014 Change 8,000 7,520 7,520 Loans and advances to customers 5,738 5,290 448 6,000 3,501 £5.7 billion 4,481 Treasury assets 1,173 1,217 (44
Slide 9: Capital
Capital Strong capital position underpinned by prudent approach CET1 ratio 31 July 31 July % % £ million 2015 2014 change 16 +0.6% Common equity tier 1 capital 813 711 14% Total regulatory capital 848 780 9% 12 Risk weighted assets 5,932 5,446 9% 13.1% 13.7% 8 4 • Improved capital position 31 July 2
Slide 10: Banking
Banking Sixth consecutive year of double digit AOP growth • Income up 12% to £499 million % – Strong growth in all businesses £ million 2015 2014 change Adjusted operating income 498.6 446.7 12% • Expenses up 12% to £248 million Adjusted operating expenses (248.0) (221.0) 12% – Increase in volume re
Slide 11: Banking: Continued loan book growth
Banking Continued loan book growth Loan book size by business unit • 8.5% loan book growth to £5.7 billion £ million – Delivered further growth despite increasing competition 6,000 5,738 +8.5% – Maintained margins and strict lending criteria 5,290 1,299 +13.0% 5,000 • Retail increased 8.3% 1,150 – M
Slide 12: Banking: All ratios improved year on year
Banking All ratios improved year on year Performance ratios • Net interest margin of 8.8% – Focus on maintaining our margins 10% 8.8% 8.6% • 0.8% bad debt ratio declined for 6th consecutive year 8% – Focus on credit quality and favourable economic environment 6% • RoNLB increased to 3.8% 4% 3.7% 3.8
Slide 13: Securities
Securities Resilient business model Winterflood results • Mixed market conditions in the year – Volatility and lower risk appetite % £ million 2015 2014 change seen in the first half Adjusted operating income1 94.6 96.1 (2%) – Conditions improved in second half Adjusted operating expenses (70.0) (69
Slide 14: Asset Management
Asset Management Good progress continues % • Income up 13% to £96 million £ million 2015 2014 change – Higher investment management Operating income 95.6 84.4 13% income Income on client assets 90.2 83.8 8% – Includes one-off private equity income Advice and other services 36.1 36.6 (1%) Investment
Slide 15: Asset Management: Strong growth in managed assets
Asset Management Strong growth in managed assets Total Client Assets • £10.8 billion total client assets +11% £ billion • Total managed assets +16% to £8.0 billion 12.0 10.8 +11% – Strong inflows reflect good demand 9.7 2.8 +1% › £0.7 billion net inflows, 10% of opening 2.8 total managed assets 8.0
Slide 16: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business update – Preben Prebensen, Group Chief Executive 4. Q&A 16
Slide 17: Overview
Overview Executing our clear and consistent strategy Consistent growth £ million • Build and sustain leading market 250 19.5% 25% positions 17.9% 200 20% 15.8% 150 13.1% 12.5% 15% • Maintain a prudent and efficient 100 10% financial position 50 5% 131 134 167 194 225 0 0% 2011 2012 2013 2014 2015 •
Slide 18: Banking
Banking Deliver consistent profitability over the long term Focus on our core attributes which differentiate Loan book by business us as competition returns £ million • Local presence in niche markets – Expertise of our people is key Property • Strong customer relationships 1.3 Motor – High levels o
Slide 19: Proven track record
Proven track record Long history of profitable growth through the cycle £ billion £ million 6.0 220 10 year Key metrics 2015 average 200 RoE 27% 21% 5.0 180 RoNLB 3.8% 3.5% Bad debt ratio 0.8% 1.5% 160 4.0 Net interest margin 8.8% 9.1% 140 Loan book growth 8.5% 11.5% +20% 120 3.0 100 +4% 80 2.0 +22%
Slide 20: Banking Initiatives
Banking Initiatives Long history of developing new products and entering adjacent markets £ billion 2015 7.0 2014 Retail 2011 Green energy finance 2008 Mid-ticket leasing Larger 2012 2007 ticket 6.0 Bridging / property Ireland Close Brewery invoice Rentals refurb 2005 2009 5.0 Asset finance 1999 Mot
Slide 21: Winterflood
Winterflood Well positioned for a cyclical recovery Maintained our leading market position Adjusted operating profit • Provide continuous liquidity to our customers £ million 60 • Trade profitably in challenging conditions H1 H2 – 14 loss days, predominantly in the first half 40 21 29 18 • Diverse b
Slide 22: Asset Management
Asset Management Good progress in the underlying business Clear strategy focused on UK private clients Underlying profitability • Disposal of corporate business agreed since £ million 15.0 20% year end 15% 15% 10.0 11% • Good underlying growth in core business 10% excluding corporate 12.7 5.0 – Oper
Slide 23: Asset Management Division
Asset Management Division Our integrated proposition Our Clients Our Services What Sets Us Apart Families and private Support evolving client needs One of few to offer an individuals integrated solution Wealth creating Integrated approach providing financial advice and investment High quality proces
Slide 24: Outlook
Outlook Well positioned in all of our businesses • We remain confident that our strategy and proven business model will continue to deliver both attractive propositions for our clients, and long-term value for our shareholders – We see continued opportunities for growth in the Banking division, whil
Slide 25: Save the Date
Save the Date Banking Division Investor Seminar We will be holding an investor seminar on the Banking division Thursday 26th November 2015 9am – 12pm Close Brothers Group 10 Crown Place London EC2A 4FT 25
Slide 26: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business update – Preben Prebensen, Group Chief Executive 4. Q&A 26
Slide 27: Preliminary Results FY 2015 Appendix
Preliminary Results FY 2015 Appendix 22 September 2015
Slide 28: Banking: Loan book and lending statistics by business
Banking Loan book and lending statistics by business Lending Closing loan Loan book Average loan Typical loan Number of Typical LTV1 statistics book (£m) growth (%) size2 maturity3 customers Motor finance 1,600.3 9.7% 75 – 85% £6k 2 – 3 years 300k Premium finance 665.7 5.0% 90% £500 10 months 1.8m A
Slide 29: LENDING │ DEPOSITS │ WEALTH MANAGEMENT │ SECURITIES
Close Brothers Group plc 10 Crown Place London EC2A 4FT 020 7655 3100 enquiries@closebrothers.com LENDING │ DEPOSITS │ WEALTH MANAGEMENT │ SECURITIES www.closebrothers.com