Close Brothers Group plc · LSE:CBG
Close Brothers — H1 2013 Earnings Presentation
33 slides from Close Brothers's earnings presentation, Mar 12, 2013
Slide 1: Interim Results 2013
Interim Results 2013 12 March 2013
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 Strictly private and confidential 3
Slide 4: Introduction: First half 2013 highlights
Introduction First half 2013 highlights • Continued to deliver on our strategic priorities and achieved a good first half performance – Adjusted operating profit up 26% to £80 million • Maintained discipline of lending principles in Banking – Strong profit growth with solid loan book growth and impr
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 Strictly private and confidential 5
Slide 6: Financial Highlights
Financial Highlights Good result in first half 2013 First half 2013 First half 2012 £ million to 31 January to 31 January % change Adjusted operating profit 79.8 63.2 26% Adjusted EPS 41.8p 31.9p 31% Profit attributable to shareholders 58.8 50.5 16% Basic EPS (after exceptional items) 40.4p 34.8p 16
Slide 7: Performance by division
Performance by division Strong profit growth in first half 2013 Adjusted operating profit/(loss) • Strong performance in Banking with profit up £ million H1 2013 H1 2012 % change 26% – Loan book growth 6% in first half Adjusted operating profit 79.8 63.2 26% – Improved bad debt performance Of which:
Slide 8: Summary balance sheet
Summary balance sheet Maintained strong balance sheet • Simple and transparent balance Summary Balance Sheet sheet 31 January 31 July £ million 2013 2012 Change Assets • Total assets increased 10% to £7.0 Loans and advances to billion customers 4,373 4,126 247 – Loan book up 6% to £4.4 billion, Trea
Slide 9: Funding
Funding Diverse range of funding sources with prudent maturity profile Funding position at 31 January 2013 • Total funding increased to £6.2 £ million billion, 142% of loan book 7,000 6,202 6,202 • Continued access to diverse range 6,000 of funding sources – Deposits increased £0.5 billion to 5,000
Slide 10: Treasury assets and liquidity
Treasury assets and liquidity Maintained sound level of high quality liquidity Treasury assets £ million • Prudent level of high quality liquid assets 1,186 1,200 – Bank of England deposits and gilts – Increase to £1.1 billion reflects timing of new funding not yet deployed in the loan 1,000 book 1,
Slide 11: Capital
Capital Strong capital position maintained Capital ratio 31 January 31 July % % Total Total £ million 2013 2012 change 16 14.5% 14.3% Core tier 1 capital 648 621 4% 12 Total regulatory capital 732 703 4% Core tier 1 Core tier 1 8 12.8% 12.7% Risk weighted assets 5,106 4,860 5% 4 0 • Strong capital p
Slide 12: Banking
Banking Strong profit growth in the period First half 2013 First half 2012 £ million to 31 January to 31 January % change Net interest and fees on loan book1 189.3 172.7 10% Treasury and other non-lending income 6.4 3.8 68% Adjusted operating income 195.7 176.5 11% Adjusted operating expenses (92.2)
Slide 13: Banking: Solid loan book growth
Banking Solid loan book growth in the period Loan book size by business unit • Solid growth of 6% in H1 £ million – Slightly lower growth rate due to moderation in demand in some markets 5,000 4,373 +6% 4,126 • Retail increased 7% 4,000 828 – Solid growth in Motor finance, albeit below +6% 782 prior
Slide 14: Banking: Consistently strong returns
Banking Consistently strong returns Performance ratios • Return on net loan book of 3.7% – Focus on protecting credit quality 12% and returns through disciplined lending criteria 10% 9.6% 9.2% 8.9% • Continued reduction in bad debt ratio to 1.2% 8% – Further improvement in Property and Commercial 6%
Slide 15: Securities
Securities Performance reflects continued difficult market conditions First half 2013 First half 2012 £ million to 31 January to 31 January % change Adjusted operating income 47.9 51.6 (7)% Adjusted operating expenses (37.4) (38.4) (3)% Adjusted operating profit 10.5 13.2 (20)% Of which: Winterflood
Slide 16: Securities: Winterflood consistently profitable
Securities Winterflood consistently profitable in a difficult market Income and profitability Key figures £ million H1 2013 H2 2012 H1 2012 80 Average bargains per day 42k 45k 48k 69 Income per bargain £6.52 £6.28 £6.09 Loss days 1 7 6 60 55 • Performance impacted by ongoing low client 44 trading vo
Slide 17: Asset Management
Asset Management Improved performance reflecting progress in the period First half 2013 First half 2012 £ million to 31 January to 31 January % change Income on AuM 36.0 32.9 9% Advice and other services¹ 16.6 14.5 14% Investment management 19.4 18.4 5% Other income² 1.2 1.0 20% Adjusted operating i
Slide 18: Asset Management: Increase in AuM
Asset Management Increase in AuM AuM • Good sales momentum resulting in £ million £0.5 billion inflows 9,000 – Sales from own advisers, fund managers and third party IFAs 506 (573) 601 • Outflows of £0.6 billion – Including institutional redemptions 8,000 and maturity of a legacy structured fund 8,8
Slide 19: Asset Management: Income drivers
Asset Management Income drivers – AuM and revenue margin AuM at 31 January 2013 (£ billion) • Ongoing focus on improving mix to 10 8.9 expand revenue margin 8.3 – Overall margin increased from 73 8 to 84 bps in the year 4.0 3.6 Total 6 Managed • Total advised assets of £4.9 billion £6.0bn – Revenue
Slide 20: 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 Strictly private and confidential 20
Slide 21: Business update: Banking
Business update Banking • Captured sustainable growth while maintaining specialist lending model • Maintained lending discipline during strong growth of last several years – Developing strong customer relationships and maintaining high repeat business – Well positioned in our markets with increased
Slide 22: Banking: specialised, niche lending
Business update Banking – specialised, niche lending with overall consistent strong returns Loan book distribution by size at 31 Jan 2013 • Predominantly small ticket lending £ billion – 49% of loan book under £50k loan size 3.0 49% • Typically short term lending 2.0 – 60% has a residual maturity le
Slide 23: Business update: Securities
Business update Securities • Difficult market environment continued for Securities – Low trading volumes reflecting subdued retail investor risk appetite • Winterflood maintained leading market position in core market-making – Performance as expected in these market conditions • Seydler maintained l
Slide 24: Winterflood: consistently profitable with leading market position
Business update Winterflood – consistently profitable with leading market position UK retail market average daily volumes1 • Winterflood’s volumes correlate to low trading volumes in retail market 70k • Remain confident in business model and leading market position in core retail market- making 60k
Slide 25: Asset Management: integrated proposition
Business update Asset Management – integrated proposition • Professional, investment-savvy, goal-based financial advice – Integrated investment management Bespoke & complex – National availability – Flexible service: face to face, telephone, on-line – Consolidated reporting – Transparent pricing – S
Slide 26: Asset Management: continues to make progress
Business update Asset Management – continues to make progress • Good sales momentum to new clients with significant proportion into our investment products – Strong endorsement of quality of proposition and investment products – External recognition from 3rd party IFAs • Ongoing integration of back
Slide 27: Outlook
Outlook Well placed for remainder of 2013 financial year • Good performance in H1 – businesses remain well placed for rest of 2013 – Continued solid prospects in Banking and expect a similar performance in H2 – In Securities, Winterflood is well positioned for any sustained market recovery – Asset M
Slide 28: 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 Strictly private and confidential 28
Slide 29: Interim Results 2013
Interim Results 2013 12 March 2013
Slide 30: Appendix
Appendix Page 31 Income Statement 32 Funding maturity profile 33 Banking Strictly private and confidential 30
Slide 31: Income Statement
Income Statement Good result in first half 2013 First half 2013 First half 2012 £ million to 31 January to 31 January % change Adjusted operating income 283.0 261.8 8% Adjusted operating expenses (177.4) (168.7) 5% Impairment on loans and advances (25.8) (29.9) (14)% Adjusted operating profit 79.8 6
Slide 32: Funding maturity profile
Funding maturity profile Prudent funding maturity 3-12 £ million Total <3 months months 1-2 years 2-5 years >5 years Loans and overdrafts from banks1 12 12 - - - - Debt securities in issue 851 - 501 - 350 - Subordinated loan capital 77 - - - - 77 Loans against FRN portfolio 66 - 66 - - - Drawn facil
Slide 33: Banking: Loan book and lending statistics by business
Banking Loan book and lending statistics by business Loan book (£ million) 31 January 2013 31 July 2012 % change Retail 1,820.6 1,707.8 7% Motor finance 1,164.4 1,086.8 7% Premium finance 656.2 621.0 6% Commercial 1,724.0 1,635.9 5% Asset finance 1,420.9 1,327.2 7% Invoice finance 303.1 308.7 (2)% P