Close Brothers Group plc · LSE:CBG
Close Brothers — H1 2015 Earnings Presentation
26 slides from Close Brothers's earnings presentation, Mar 10, 2015
Slide 1: Interim Results H1 2015
Interim Results H1 2015 10 March 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: H1 2015 highlights
Introduction H1 2015 highlights • Continued good performance as proven business model continues to deliver – Adjusted operating profit up 16% to £109 million – Adjusted earnings per share up 19% to 58.2p • Prudent capital and funding position – Common equity tier one capital ratio of 13.6% and lever
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 Good first half performance Continuing operations • AOP up 16% to £109 million % £ million H1 2015 H1 2014 change – Strong returns in Banking with lower bad debts Banking 106.4 89.6 19% Securities 10.3 13.4 (23)% – Securities affected by difficult Asset Management 5.1 3.2 59% ma
Slide 7: Income statement
Income statement Continue to deliver strong returns Income statement • Good income growth driven by % Banking and Asset Management £ million H1 2015 H1 2014 change Adjusted operating income 330.4 306.8 8% • Expense/income ratio improved slightly to 61% (2014: 62%) Adjusted operating expenses (202.5)
Slide 8: Balance sheet
Balance sheet Simple balance sheet and prudent funding position Diverse funding sources Simple and transparent balance sheet £ million 31 31 10,000 January July £ million 2015 2014 Change 8,000 7,193 7,193 Loans and advances to customers 5,461 5,290 171 Treasury assets 1,062 1,217 (155) 6,000 Securi
Slide 9: Capital
Capital Prudent capital position provides flexibility CET1 ratio 31 31 % January July % £ million 2015 2014 change 16 Common equity tier 1 capital 756 711 6% 12 Total regulatory capital 812 780 4% 8 13.1% 13.6% Risk weighted assets 5,568 5,446 2% 4 0 • Strong capital position further improved 31 Jul
Slide 10: Banking
Banking Continued strong performance and improving returns • Income up 12% to £245 million % – Driven by year on year loan book £ million H1 2015 H1 2014 change growth Adjusted operating income 244.8 217.8 12% Adjusted operating expenses (119.1) (105.5) 13% • Expenses up 13% to £119 million – Ongoin
Slide 11: Banking: Continued loan book growth
Banking Continued loan book growth Loan book size by business unit • 3.2% loan book growth, modest reduction £ million year on year (H1 2014: 4.5%) 6,000 – Continued growth opportunities despite 5,461 +3.2% increasing competition 5,290 5,000 1,233 +7.3% • Retail increased 1.8% 1,150 – Modest growth
Slide 12: Banking: Strong returns reflect quality of loan book
Banking Strong returns reflect quality of loan book Performance ratios • Improving returns with RoNLB at 4.0% 10% – Reflects prudent and consistent 8.8% 8.8% loan book underwriting 8% • Net interest margin of 8.8% – Unchanged year on year despite 6% increasing price competition • Continued improveme
Slide 13: Securities
Securities Difficult trading conditions Winterflood results1 • AOP down 23% to £10 million % – Includes £3 million profit from an £ million H1 2015 H1 2014 change investment gain Adjusted operating income 41.9 48.3 (13%) Adjusted operating expenses (31.6) (34.9) (9%) • Continued difficult market con
Slide 14: Asset Management
Asset Management Steady progress % • Income up 7% to £43 million £ million H1 2015 H1 2014 change – Good growth in investment Operating income 43.3 40.5 7% management revenue Advice and other services 17.2 17.6 (2%) Investment management 25.7 22.4 15% • Modest increase in expenses – Predominantly fi
Slide 15: Asset Management: 5% AuM growth in the first half
Asset Management 5% AuM growth in the first half Assets under Management • £10.2 billion AuM up 5% in the first £ billion half 11 • £710 million inflows – Good new business from advisers, bespoke fund managers and 3rd party IFAs 0.7 (0.6) 10 0.4 • £590 million outflows includes large legacy mandate
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 Proven business model continues to deliver • Proven business models produce good results in a range of market conditions AOP (£m) 94 109 – Increasing returns in Banking with bad debt 63 63 81 continuing to reduce H1 2011 H1 2012 H1 2013 H1 2014 H1 2015 – Winterflood trading profitably and m
Slide 18: Banking: Sustainable lending model in an evolving market
Banking Sustainable lending model in an evolving market An evolving market environment • Solid loan book growth • Competition steadily increasing Small, short- term, predominantly Core attributes remain unchanged secured • Support profitability and sustainable growth through cycle • Long track recor
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 H1 2015 average 17% 200 RoE 28% 20% 5.0 180 RoNLB 4.0% 3.5% Bad debt ratio 0.7% 1.5% 160 10 year1 average loan 4.0 Net interest margin 8.8% 9.1% book growth: 12% 140 120 3.0 100 6%
Slide 20: Winterflood
Winterflood Well positioned for a cyclical recovery Difficult market conditions Adjusted operating profit • Low retail investor risk appetite £ million 60 • Political and economic uncertainty • Volatile trading conditions 40 21 29 18 21 22 20 12 13 Benefit from distinctive business model 28 25 8 10
Slide 21: Asset Management
Asset Management Steady progress in AuM Evolving market environment Assets under Management • Retail distribution review At 31 January, £ billion • Demographic changes 12 • Pension changes 10.2 +18% 10 9.3 8.6 8.9 High quality, integrated client proposition 2.7 8 2.8 • Financial planning advice 2.9
Slide 22: Outlook
Outlook Well positioned in all of our businesses • We are well positioned to deliver good results in a range of market conditions – In Banking we see continued growth opportunities whilst focusing on our risk and returns – Winterflood remains sensitive to prevailing conditions, but is well positione
Slide 23: 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 23
Slide 24: Interim Results H1 2015 Appendix
Interim Results H1 2015 Appendix 10 March 2015
Slide 25: 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 1,483 1.7% 75 – 85% £6k 2 – 3 years 254k Premium finance 648 2.2% 90% £500 10 months 1.6m Asset
Slide 26: 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