Close Brothers Group plc · LSE:CBG
Close Brothers — H1 2016 Earnings Presentation
28 slides from Close Brothers's earnings presentation, Mar 8, 2016
Slide 1: Interim Results H1 2016
Interim Results H1 2016 8 March 2016
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 Solid performance in more challenging market conditions • Continued to generate strong returns and growth in earnings, AEPS +5% to 61.1p – Maintained prudent underwriting and strong financial position • Banking performed well, in line with expectations at this stage of the cycle – Loan
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 Solid performance % • AOP up 2% to £111 million £ million H1 2016 H1 20151 change Banking 108.4 106.4 2% – Continued growth in Banking Securities 6.8 10.3 (34%) – Securities impacted by difficult market conditions Asset Management 8.4 5.1 65% Group (12.4) (13.2) (6%) – Continued
Slide 7: Income statement
Income statement Continued earnings growth and ongoing investment % • Revenues +3% to £341 million £ million H1 2016 H1 2015 change – Continued growth in Banking and Asset Management Adjusted operating income 341.0 330.4 3% • 5% increase in expenses with Adjusted operating expenses (213.1) (202.5) 5
Slide 8: Conservative funding and liquidity
Conservative funding and liquidity Maintain prudent position Diverse funding sources High quality asset base £ billion £ billion 9.0 9.0 7.7 1 8.0 Deposits 1.0 1.0 6.0 6.0 4.6 Other wholesale2 Other assets3 Treasury assets 3.0 Bonds 3.0 6.0 Loan book 1.6 0.5 1.0 Equity 0.0 0.0 31 January 2016 31 Jan
Slide 9: Prudent capital position
Prudent capital position Strong CET1 maintains flexibility 31 31 Group CET1 ratio January July % 15% £ million 2016 2015 change Common equity tier 1 capital 846 813 4% Total regulatory capital 870 848 3% 10% 13.7% 13.6% Risk weighted assets 6,218 5,932 5% 5% FY 2015 H1 2016 • Capital position remain
Slide 10: Banking
Banking Delivering strong returns • Income up 5% to £258 million % – Growth across most businesses £ million H1 2016 H1 2015 change Adjusted operating income 258.1 244.8 5% • £133 million expenses up 12% Adjusted operating expenses (133.0) (119.1) 12% – Ongoing investment in growth initiatives Impai
Slide 11: Banking: Solid growth
Banking Solid growth Loan book size by business unit • 4.0% loan book growth to £6.0 billion £ million – With good demand across our markets 5,969 +4.0% 6,000 5,738 • Retail increased 2.9% 1,359 +4.6% – Continued growth in motor finance with strong 1,299 market volumes – Premium growth driven by new
Slide 12: Banking: Key ratios remain strong
Banking Key ratios remain strong Performance ratios • 0.6% bad debt ratio a long-term low – Favourable economic 10% environment and long-term credit 8.8% quality 8.5% 8% • Net interest margin of 8.5% – Remains strong despite continued price competition 6% • Strong returns maintained 4.0% 4% 3.7% – 3
Slide 13: Securities
Securities Continued profitability despite challenging market conditions Winterflood results • Difficult market conditions in the first half % £ million H1 2016 H1 2015 change – Falling equity markets, increased volatility and lower activity Adjusted operating income1 35.2 41.9 (16%) Adjusted operat
Slide 14: Asset Management
Asset Management Continued progress % • Income up 9% to £47 million £ million H1 2016 H1 2015 change – 10% increase in investment Adjusted operating income 47.0 43.3 9% management income Income on client assets 44.9 42.9 5% • Revenue margin increase Advice and other services 16.7 17.2 (3%) to 90bps
Slide 15: Asset Management: Good net inflows
Asset Management Good net inflows Total Client Assets • Good net inflows £0.3 billion / 8% £ billion managed assets2 11.0 Disposal of • Total client assets reduced to £9.1 corporate assets billion 1.3 10.0 – Disposal £1.3 billion corporate 0.3 assets completed in the period (0.4) (0.3) 9.0 Managed a
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 Well positioned for the long-term Leading Generate positions in strong and specialist sustainable markets Strong returns funding, capital and liquidity Long-term Prudent expertise underwriting Reinvest to Strong financial enhance our position to customer support our proposition clients thro
Slide 18: Banking: Strong profitability generates opportunity for investment
Banking Strong profitability generates opportunity for investment Technology leasing Consumer finance New Green energy initiatives Ireland Strengthen existing offerings Products People Technology Maintain core business model Strong capital, High quality loan Strong customer funding and book relation
Slide 19: Banking: Track record of strong returns through the cycle
Banking Track record of strong returns through the cycle Long-term trends 12% 10% Net interest margin Average: 9.1% H1 2016: 8.5% 8% 6% Return on net loan book 4% H1 2016: 3.7% Average: 3.5% Bad debt 2% Average: 1.5% H1 2016: 0.6% 0% FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 H1 16
Slide 20: Winterflood
Winterflood Well positioned in difficult markets Difficult market conditions Adjusted operating profit • Falling equity markets and lower levels of £ million activity 60 H1 – Market retail volumes down 10% in the first H2 40 21 half 29 18 20 12 13 15 28 25 8 10 Well positioned 12 19 13 8 7 10 7 • St
Slide 21: Asset Management: Continued progress
Asset Management Continued progress Well positioned Ongoing development Continued progress • Integrated approach 1. Adviser force • Good net inflows − Financial advice and Recruitment − Breadth of investment Training distribution management Acquisitions • Increasing profit • Client focused 2. Distri
Slide 22: Conclusion
Conclusion Well positioned for the long term • Long track record of growth and profitability throughout the cycle • Businesses remain well positioned – Continued growth opportunities for Banking in existing and new markets › Investing to extend and protect our successful business model › Maintaining
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 2016 Appendix
Interim Results H1 2016 Appendix
Slide 25: Proven track record
Proven track record Long history of profitable growth through the cycle £ billion £ million 7.0 240 H1 2016 +4.0% 220 6.0 2013 – 2015 200 +11% p.a 180 5.0 160 Credit crunch 140 4.0 2009 - 2012 +20% p.a 120 Easy credit 3.0 100 2004 - 2007 Bear market +4% p.a 80 2000 - 2003 2.0 +22% p.a 60 Recession 1
Slide 26: New growth initiatives
New growth initiatives Long history of developing new products and entering adjacent markets Loan book, £ billion 2014 2015 2016 Renewable Consumer Technology 7.0 energy finance leasing 2008 2011 2007 Mid-ticket leasing Larger 6.0 Bridging / property Brewery rentals ticket 2012 refurbishment invoice
Slide 27: Banking: Loan book and lending statistics by business
Banking Loan book and lending statistics by business Closing loan H1 2016 loan Average loan Typical loan Number of Typical LTV1 book (£m) book growth size2 maturity3 customers Motor finance 1,633.3 2.1% 75 – 85% £6k 2 – 3 years 300k Premium finance 699.0 5.0% 90% £500 10 months 1.9m Asset finance 1,
Slide 28: 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