Final Results

About this update from Close Brothers Group Plc

[{"type":"text","content":"\n \n \n THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION \n \n \n Preliminary Results for the year ended 31 July 2025 \n \n \n 30 September 2025 \n \n \n Mike Morgan, Chief Executive, said: \n \n \n \"Our performance in the 2025 financial year reflects the actions we have taken to strengthen our capital position and simplify the business. We delivered adjusted operating profit of £144 million, highlighting the resilience of our underlying businesses. We achieved a CET1 capital ratio of 13.8% or c.14.3% on a pro-forma basis reflecting the sale of Winterflood, despite the impact of the £165 million provision relating to motor finance commissions, which remains unchanged. We welcomed the positive outcome of the Supreme Court judgment in August 2025, which provided much-needed clarity to the industry, and now await the outcome of the FCA consultation on the design and scope of an industry-wide redress scheme. \n \n \n Over the last year, we have taken decisive action to address legacy issues and reposition the business for growth. We have sold Close Brothers Asset Management, Winterflood and the Brewery Rentals business, and we have repositioned our Premium Finance business to focus on commercial lines. In addition, we have now successfully settled the long-standing litigation issued by Novitas. Today, we are announcing the next steps on this path by exiting the Vehicle Hire business. Whilst some of these actions have an upfront financial impact on the group, they provide the foundation for the next stage of our journey: driving efficiency and capturing growth. \n \n \n In terms of efficiency, we have delivered £25 million of annualised cost savings and will deliver at least c.£20 million of additional annualised savings per annum in each of the next three years. As we emerge as a simpler, more focused bank, we see significant growth opportunities across our chosen markets. We will use our strong market positions, reputation and specialist expertise to win in the segments where we can truly differentiate and become the specialist lender of choice for SMEs in the UK and Ireland. \n \n \n The task now is to accelerate from here. I am confident we are on the right path and that we will return this business to double-digit returns. I look forward to sharing a full update on our pathway once there is clarity on the outcome of the FCA's consultation and its impact on the group\" \n \n \n Key Financials 1 \n \n \n Unless otherwise stated, all metrics refer to continuing operations only \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Change \n \n \n \n \n % \n \n \n \n \n \n \n \n \n \n Operating (loss)/profit before tax \n \n \n (122.4) \n \n \n 132.7 \n \n \n (192) \n \n \n \n \n \n Adjusted operating profit 2 (continuing operations) \n \n \n \n 144.3 \n \n \n 167.6 \n \n \n (14) \n \n \n \n \n \n (Loss)/profit from discontinued operations, net of tax 3 \n \n \n \n 49.2 \n \n \n 5.1 \n \n \n n/a \n \n \n \n \n (Loss)/profit attributable to shareholders and other equity owners \n \n \n (77.9) \n \n \n 100.4 \n \n \n (178) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusted basic earnings per share (continuing operations) 2,4 \n \n \n \n 59.3 p \n \n \n 75.8 p \n \n \n \n \n \n \n \n \n Basic (loss)/earnings per share (continuing operations) 4 \n \n \n \n (99.8) p \n \n \n 56.2 p \n \n \n \n \n \n \n \n \n Basic (loss)/earnings per share (continuing and discontinued operations) 4,5 \n \n \n \n (66.9) p \n \n \n 59.7 p \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Ordinary dividend per share \n \n \n - \n \n \n - \n \n \n \n \n \n \n \n \n Return on opening equity 5 \n \n \n \n \n \n \n \n 6.2 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 7.9 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n Return on average tangible equity 5 \n \n \n \n \n \n \n \n 7.1 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 9.3 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Net interest margin \n \n \n \n \n \n \n 7.2 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 7.4 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Bad debt ratio \n \n \n \n \n \n \n 1.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 1.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Expense/income ratio \n \n \n \n \n \n \n 65 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 62 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n 31 July \n \n \n \n \n 2025 \n \n \n \n \n \n \n \n \n \n \n \n 31 July \n \n \n \n \n 2024 \n \n \n \n \n \n \n \n \n \n \n \n Change \n \n \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Loan book 6 \n \n \n \n £ 9.5 bn \n \n \n £ 9.8 bn \n \n \n (4) \n \n \n \n \n Net asset value (\"NAV\") per share (continuing and discontinued operations) \n \n \n £ 10.3 \n \n \n £ 11.1 \n \n \n \n \n \n \n \n Tangible net asset value (\"TNAV\") per share (continuing and discontinued operations) \n \n \n £ 9.1 \n \n \n £ 9.3 \n \n \n \n \n \n \n \n CET1 capital ratio (transitional) (continuing and discontinued operations) \n \n \n \n \n \n \n 13.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 12.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Tier 1 capital ratio (transitional) (continuing and discontinued operations) \n \n \n \n \n \n \n 15.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 14.7 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Total capital ratio (transitional) (continuing and discontinued operations) \n \n \n \n \n \n \n 17.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 16.6 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n 1. \n \n \n Please refer to definitions on pages 28 to 30. \n \n \n \n \n 2. \n \n \n Adjusted measures are presented on a basis consistent with prior periods and exclude amortisation of intangible assets on acquisition, to present the performance of the group's acquired businesses consistent with its other businesses; and any exceptional and other adjusting items which do not reflect underlying trading performance. Further detail on the reconciliation between operating and adjusted measures can be found in Note 2 \"Segmental Analysis\". Please refer to the basis of presentation on page 5 for further information. \n \n \n \n \n 3. \n \n \n Discontinued operations relate to Close Brothers Asset Management and Winterflood, which have been classified as \"Discontinued Operations\" in the group's income statement for the 2024 and 2025 financial years in line with the requirements of IFRS 5. The related assets and liabilities are classified as held for sale on the group's balance sheet at 31 July 2025. Please refer to Note 23 \"Discontinued Operations and assets and liabilities classified as held for sale\". \n \n \n \n \n 4. \n \n \n Refer to Note 4 \"Earnings per Share\" for the calculation of basic and adjusted earnings per share. \n \n \n \n \n 5. \n \n \n Return on opening equity and return on average tangible equity have been restated for financial year 2024 to exclude discontinued operations. Return on average tangible equity uses adjusted operating profit after tax from continuing operations, less AT1 coupons (2025: £88.7 million, 2024: £113.5 million). Average tangible equity excludes discontinued operations. Average tangible equity is calculated based on closing equity per the balance sheet (2025: £1,735.5 million, 2024: £1,842.5 million), less AT1 (2025 and 2024: £197.6 million), less intangibles (2025: £166.3 million, 2024: £266.0 million), less CBAM and Winterflood tangible equity (2025: £90.6 million, 2024: £155.9 million). \n \n \n \n \n 6. \n \n \n Loan book includes operating lease assets of £1.3 million (31 July 2024: £1.0 million) and excludes £165.0 million (31 July 2024: £222.4 million) of operating lease assets related to Close Brothers Vehicle Hire, which is in wind-down, and £41.0 million of operating lease assets related to Close Brewery Rentals Limited (31 July 2024: £44.5 million) which has been classified as held for sale on the group's balance sheet as at 31 July 2025. \n \n \n \n \n \n \n Strategic Highlights \n \n \n \n \n \n \n • \n \n \n On 1 August 2025, the Supreme Court gave its judgment, in which Close Brothers Limited (\"CBL\") successfully overturned the Court of Appeal's judgment in respect of the Hopcraft case. The provision charge in respect of motor finance commissions recognised in the income statement at the half year of £165.0 million has been reassessed in light of all available information and recent developments and remains unchanged \n \n \n \n \n • \n \n \n \n We have strengthened our capital position in response to the motor finance commissions uncertainty, with over £400 million of CET1 capital generated or preserved as of 31 July 2025 \n \n \n \n \n \n • \n \n \n \n The structure of our group has been simplified with the sale of Close Brothers Asset Management, Winterflood and Close Brewery Rentals Limited, and our Premium Finance Business has been repositioned to predominantly focus on Commercial Lines \n \n \n \n \n \n • \n \n \n \n We have also successfully settled the long-standing litigation issued by Novitas allowing us to move forward and exit from this business \n \n \n \n \n \n • \n \n \n \n We are implementing a proactive customer redress programme in Motor Finance, following the identification of historical deficiencies in certain operational processes in relation to the early settlement of loans. This has resulted in a separate provision of £33.0 million in the 2025 financial year \n \n \n \n \n \n • \n \n \n \n We have decided to exit our Vehicle Hire business , which has been loss making in a challenging market environment. Together with the impact of declining asset values, this has resulted in an impairment charge of £30.0 million \n \n \n \n \n \n • \n \n \n \n We have delivered £25 million of annualised cost savings by the end of the 2025 financial year through streamlining of our technology, suppliers, property and workforce \n \n \n \n \n \n • \n \n \n \n We will deliver at least c.£20 million of additional annualised savings per annum in each of the next three years, through further consolidation of centrally provided functions, selective outsourcing and offshoring, and the simplification, rationalisation and automation of technology, including automation and the use of artificial intelligence \n \n \n \n \n \n • \n \n \n \n Our activities have been refocused on areas that offer attractive risk-adjusted returns . We are broadening our product offering in Property Finance, expanding distribution in Motor Finance, and have a renewed focus on growing our commercial lines business in Premium Finance. Our Commercial business is expanding into adjacent products, such as commercial mortgages, and is focused on scaling new, specialist teams, such as agriculture \n \n \n \n \n \n • \n \n \n \n These actions set a clear path back to double digit RoTE by the 2028 financial year, and rising thereafter. We plan to provide a full update on our pathway to rising RoTE early next year, once we have clarity on the outcome of the FCA's consultation on an industry wide redress scheme in respect of motor finance commissions and its impact on the group \n \n \n \n \n \n \n \n Financial Performance \n \n \n \n \n \n \n • \n \n \n Adjusted operating income decreased 2% to £681.2 million (2024: £698.4 million), primarily reflecting lower income in Banking, as the loan book reduced \n \n \n \n \n • \n \n \n \n Adjusted operating expenses increased 3% to £445.1 million (2024: £433.5 million), primarily reflecting higher Group (central functions) expenses \n \n \n \n \n \n • \n \n \n \n Adjusted operating profit decreased 14% to £144.3 million (2024: £167.6 million), driven by a decline in income and higher costs, partly offset by lower impairment charges \n \n \n \n \n \n • \n \n \n \n The group's return on average tangible equity (excluding discontinued operations) (\"RoTE\") decreased to 7.1% (2024: 9.3%) \n \n \n \n \n \n • \n \n \n \n The group reported a statutory operating loss before tax of £122.4 million (2024: statutory operating profit before tax of £132.7 million). Underlying operating profit was more than offset by adjusting items, notably a £165.0 million provision charge in relation to motor finance commissions, operating losses before tax from our rentals businesses totalling £47.5 million, and a separate £33.0 million provision for a proactive customer remediation programme initiated by the group related to early settlements of loans in the Motor Finance business \n \n \n \n \n \n • \n \n \n \n In Banking , the loan book reduced 4% to £9.5 billion (31 July 2024: £9.8 billion), primarily driven by the temporary pause in UK motor lending following the Court of Appeal's judgment in October 2024, loan book moderation measures, and lower activity in some of our markets in the second half. The net interest margin remained strong at 7.2% (2024: 7.4%), as we maintained our focus on pricing discipline. Banking adjusted operating profit reduced to £198.3 million (2024: £212.9 million), due to a decline in income and a marginal increase in operating expenses \n \n \n \n \n \n • \n \n \n \n Profit from discontinued operations, net of tax, was £49.2 million (2024: £5.1 million) \n \n \n \n \n \n • \n \n \n \n Common Equity Tier 1 (\"CET1\") ratio at 13.8% (31 July 2024: 12.8%) or 14.3%, on a pro-forma basis at 31 July 2025 reflecting the benefit from the sale of Winterflood. This includes the impact of the £165.0 million provision charge in relation to motor finance commissions \n \n \n \n \n \n • \n \n \n \n As previously outlined, given the continued uncertainty regarding the outcome of the FCA's review of motor finance commission arrangements and any potential financial impact, the group will not pay a final dividend on its ordinary shares for the 2025 financial year \n \n \n \n \n \n \n \n Guidance \n \n \n Banking: \n \n \n \n \n \n \n • \n \n \n Loan book: We have repositioned the business to focus on segments where we see mid to high single digit growth potential through the cycle, leaving us well positioned to benefit as the economy and demand recover \n \n \n \n \n • \n \n \n \n Net interest margin: In the 2026 financial year, we expect the net interest margin to be slightly lower than 7%, reflecting loan book mix impacts \n \n \n \n \n \n • \n \n \n \n Bad debt ratio: We expect the bad debt ratio for the 2026 financial year to remain below our long-term average of 1.2% \n \n \n \n \n \n \n \n Group (central functions): \n \n \n \n \n \n \n • \n \n \n \n We expect the operating loss from Group (central functions) to be c.£50 million in the 2026 financial year, reflecting a reduction in legal and professional fees \n \n \n \n \n \n \n \n Group: \n \n \n \n \n \n \n • \n \n \n Costs \n \n \n \n \n \n \n \n • \n \n \n \n We are committed to delivering at least c.£20 million of additional annualised savings per annum in each of the next three years. As a result, we expect the group's adjusted operating expenses to be within the £410-430 million range by the 2028 financial year \n \n \n \n \n \n \n \n \n • \n \n \n \n In the 2026 financial year, we expect to deliver c.£20 million of annualised savings. As a result, we expect the group's adjusted operating expenses to be within the £440-460 million range \n \n \n \n \n \n • \n \n \n \n Adjusting items \n \n \n \n \n \n \n \n \n • \n \n \n \n We expect to incur c.£5-10 million of restructuring costs in the 2026 financial year as we implement further cost management actions \n \n \n \n \n \n \n \n \n • \n \n \n \n We expect complaints handling expenses and other operational and legal costs in relation to motor finance commissions to be in the single-digit millions in the 2026 financial year \n \n \n \n \n \n \n \n Group (ctd.): \n \n \n \n \n \n \n • \n \n \n Dividends: As previously outlined, the reinstatement of dividends will be reviewed once there is further clarity on the financial impact of the FCA review of motor finance commission arrangements \n \n \n \n \n • \n \n \n \n Capital: In the near-term, we expect to maintain our CET1 capital ratio above our medium-term target range of 12% to 13%, based on our current assessment of the provision in respect of motor finance commissions \n \n \n \n \n \n \n \n Inside information \n \n \n This announcement contains information which is deemed by the Company to constitute inside information within the meaning of the UK version of the European Union's Market Abuse Regulation ((EU) No. 596/2014). Upon the publication of this announcement via the Regulatory Information Service, the inside information is now considered to be in the public domain. The person responsible for arranging the release of this information on behalf of the Company is Sarah Peazer-Davies, Group General Counsel and Company Secretary. \n \n \n Presentation \n \n \n A virtual presentation to analysts and investors will be held today at 9.30am BST followed by a Q&A session. A webcast and dial-in facility will be available by registering at: https://webcasts.closebrothers.com/results/2025preliminaryresults \n \n \n Enquiries \n \n \n \n \n \n \n Camila Sugimura \n \n \n Close Brothers Group plc \n \n \n 020 3857 6577 \n \n \n \n \n Sam Cartwright \n \n \n H/Advisors Maitland \n \n \n 07827 254 561 \n \n \n \n \n \n \n About Close Brothers \n \n \n Close Brothers is a UK specialist banking group providing lending, deposit taking and securities trading. We employ approximately 3,000 people, principally in the United Kingdom and Ireland. Close Brothers Group plc is listed on the London Stock Exchange and is a constituent of the FTSE 250. \n \n \n Basis of presentation \n \n \n Results are presented both on a statutory and an adjusted basis to aid comparability between periods. Adjusted measures are presented on a basis consistent with prior periods and exclude any exceptional and adjusting items which do not reflect underlying trading performance. Current exceptional and adjusting items include customer remediation provisions, operational or legal costs incurred in relation to an event that is deemed to be adjusting, businesses that are held for sale, the Vehicle Hire business which is in wind-down, restructuring costs and amortisation of intangible assets on acquisition. \n \n \n Discontinued operations relate to Close Brothers Asset Management and Winterflood, which have been classified as a discontinued operation in the group's income statement for the 2025 financial year and total £49.2 million profit after tax. Figures in the 2024 financial year have been restated on the same basis. Winterflood's assets and liabilities are classified as held for sale on the group balance sheet at 31 July 2025. CBAM's assets and liabilities are not included on the group balance sheet at 31 July 2025, as the sale of the business completed on 28 February 2025. In addition, Close Brewery Rentals Limited's assets and liabilities are also classified as held for sale on the group balance sheet at 31 July 2025, as the sale completed on 31 August 2025. \n \n \n Chief Executive's Statement \n \n \n When I took on the role of Chief Executive at the start of 2025, I set out my commitment to address the issues holding back performance and to drive the group to deliver the returns we know it can generate. Our purpose and business model remain strong: we operate in markets with long-term demand, where our specialist focus, deep customer relationships and trusted brand allow us to differentiate and win. However, in recent times, our returns have fallen short of where they should be. The combination of historical complexity, elevated costs, and recent events has highlighted the need for change. I am approaching this with urgency and a focus on execution, with a leadership team that brings the right experience to deliver. \n \n \n This year, we have taken a series of decisive steps to address legacy issues and reset the business. We have strengthened our capital position in response to the motor commissions uncertainty, delivered cost actions resulting in annualised savings of around £25 million since March 2024, and simplified the group through the sale of Close Brothers Asset Management and Winterflood, the repositioning of our Premium Finance business and the disposal of our Brewery Rentals business. We have now also successfully settled the long-standing litigation issued by Novitas, allowing us to move forward and exit from this business. In addition, as part of our simplification agenda, we are announcing today our decision to exit our Vehicle Hire business, which has been loss making in a challenging market environment and is not strategically aligned with our core specialist lending expertise. Together with the impact of declining asset values, this has resulted in an impairment charge of £30.0 million in relation to the assets of this business. \n \n \n On 1 August 2025, the Supreme Court published its judgment with respect to the \"Hopcraft\", \"Johnson\" and \"Wrench\" cases in relation to motor commissions. We welcome the positive outcome of this judgment, which provided much-needed clarity to the industry, and now await the outcome of the FCA consultation on the design and scope of an industry-wide redress scheme. The provision charge in respect of motor finance commissions recognised in the income statement at the half year of £165.0 million has been reassessed in light of all available information and recent developments and remains unchanged. \n \n Our wide-ranging review of the business has also required us to take other challenging, but necessary, actions. We are implementing a proactive customer remediation programme in Motor Finance, where we have identified historical deficiencies in certain operational processes in relation to the early settlement of loans. This has resulted in a separate provision of £33.0 million in the 2025 financial year. \n   \n \n Notwithstanding the significant impact of these actions on our near-term financial performance, I am confident that they leave the group better positioned for growth going forward, with a sharper, more focused portfolio of specialist banking businesses. \n \n \n Financial Performance \n \n \n We reported a statutory operating loss before tax of £122.4 million (2024: statutory operating profit before tax of £132.7 million) from continuing operations, primarily driven by adjusting items relating to motor finance commissions, including the £165.0 million provision charge and £18.7 million associated with complaints handling and other operational and legal costs. We also recognised a £33.0 million provision for the proactive customer remediation programme in Motor Finance in relation to early settlement of loans and an operating loss before tax of £47.5 million for our rentals businesses, including the £30.0 million write-down of assets in the Vehicle Hire business. \n \n \n On an adjusted basis, excluding the impact of these items which do not reflect the underlying performance of our business and discontinued operations, the group's operating profit decreased 14% to £144.3 million (2024: £167.6 million), driven by a 2% decline in income and 3% increase in costs, partly offset by a 6% reduction in impairment charges. \n \n \n In Banking, adjusted operating profit reduced 7% to £198.3 million (2024: £212.9 million), as a 2% reduction in income and 1% increase in costs were partly offset by lower impairment charges. The loan book declined by 4% to £9.5 billion (31 July 2024: £9.8 billion) as a result of loan book moderation measures and the temporary pause in UK motor lending following the Court of Appeal's judgment in October 2024. The net interest margin remained strong at 7.2% (2024: 7.4%) and credit performance remained resilient, with a bad debt ratio of 1.0% (2024: 1.0%), below the long-term average of 1.2%. \n \n \n We maintained a strong capital, funding and liquidity position. The group's CET1 capital ratio was 13.8% at 31 July 2025, reflecting significant progress on our capital actions, and significantly above our applicable requirement of 9.7%. This includes the impact of a £165.0 million charge for the provision in relation to motor finance commissions and other adjusting items. The recently announced sale of Winterflood is expected to increase the group's CET1 capital ratio by c.55 basis points on a pro-forma basis, of which c.30 basis points will be recognised upon completion, and a further c.25 basis points is expected in due course from the reduction in operational risk weighted assets. We have raised over £1 billion of retail deposits as well as £300 million through a Motor Finance funding securitisation, supporting a continued strong funding base at £12.7 billion (31 July 2024: £13.0 billion) at 31 July 2025. We have also consciously maintained a higher level of liquidity, with a 12-month average liquidity coverage ratio (\"LCR\") to 31 July 2025 of 1,012% (31 July 2024: 1,034%), substantially above regulatory requirements. \n \n \n Executing the next stage of our journey \n \n \n With our simplification agenda now largely complete, these actions provide the foundation for the next stage of our journey: driving efficiency and capturing growth. \n \n \n We have already delivered £25 million of annualised cost savings by the end of the 2025 financial year through the streamlining of our technology, suppliers, property, and workforce, and are committed to maintaining this momentum to deliver a step change in operating profitability. We will deliver at least c.£20 million of additional annualised savings per annum in each of the next three years, through further consolidation of centrally provided functions, outsourcing and offshoring, and the simplification and rationalisation of technology, including automation and the use of artificial intelligence. I will personally oversee the planning and execution of these cost initiatives, and we have mobilised senior leaders across the group to ensure execution at pace and alignment at every level. \n \n \n In parallel, we are evaluating opportunities to optimise capital, funding and liquidity once the uncertainty around motor commissions is resolved. \n \n \n We are confident in the enduring growth opportunity across our core markets, focusing on areas that offer attractive risk-adjusted returns. In the earlier part of the year, to preserve capital, we had to turn away attractive new business that met our credit and pricing requirements, as reflected in our loan book growth performance. This, however, demonstrates the continuing demand we believe exists in our markets. \n \n \n Accordingly, we are taking steps to capture this growth opportunity. We are broadening our product offering in Property Finance, moving into larger build-to-sell loans and additional asset classes such as build-to-rent and purpose-built student accommodation; expanding distribution in Motor Finance through growth in the Irish market, and with larger partners and brokers; and have a renewed focus on growing our commercial lines business in Premium Finance. Our Commercial business is expanding into adjacent products, such as commercial mortgages, and is focused on scaling new, specialist teams such as agriculture. We intend to use our strong market positions, reputation and specialist expertise to win in the segments where we can truly differentiate and become the specialist lender of choice for SMEs in the UK and Ireland. \n \n \n Together these actions set a clear path back to double-digit RoTE by the 2028 financial year, rising thereafter. We plan to provide a full update on our pathway to rising RoTE once there is clarity on the outcome of the FCA's consultation and its impact on the group, potentially early next year, or sooner depending on when clarity is achieved. \n \n Confident in our future \n This year has been about proving that change is possible and that we can move at speed. We have tackled legacy issues head-on, reshaped the portfolio, and shown that we can take decisive actions quickly, even while navigating the uncertainty around motor commissions. While a number of these actions carry an upfront financial impact, we are confident that they will leave us well positioned for the long term. The task now is to accelerate from here. With a simpler, more focused portfolio and a leadership team focused on delivery, we are positioned to reduce costs, drive growth in our core markets and improve returns. I am confident we are on the right path and that we will return this business to double-digit returns. \n   \n \n I want to thank all of our colleagues for their professionalism, energy and commitment throughout this period of change. Their dedication and focus have been critical in delivering these early actions and in positioning the group for the future. \n Mike Morgan Chief Executive \n \n   \n \n Historical motor finance commission arrangements \n \n \n Overview of Developments in relation to Motor Finance Commissions \n \n On 11 January 2024, the Financial Conduct Authority (\"FCA\") announced that it would use its powers under section 166 of the Financial Services and Markets Act 2000 to review historical motor finance commission arrangements and sales at several firms, following high numbers of complaints from customers. The review followed the Financial Ombudsman Service's (\"FOS\") publication of its first two decisions upholding customer complaints relating to discretionary commission arrangements (\"DCAs\") against two other lenders in the market. \n   \n On 25 October 2024, the Court of Appeal published its judgment in respect of Hopcraft v Close Brothers Limited (\"CBL\") (\"Hopcraft\") upholding the appeal brought against CBL. This case, which had initially been determined in CBL's favour, was heard in early July 2024 alongside two other claims against FirstRand Bank Limited (\"FirstRand\"). \n   \n CBL obtained permission from the Supreme Court of England and Wales (the \"Supreme Court\") to appeal the Court of Appeal's judgment against CBL in respect of the Hopcraft motor finance commissions case (the \"Appeal\"). The Appeal was heard by the Supreme Court between 1 April 2025 and 3 April 2025. \n   \n On 1 August 2025, the Supreme Court gave its judgment, in which CBL successfully overturned the Court of Appeal's judgment in respect of the Hopcraft case. The Supreme Court determined that motor dealers (acting as a credit broker) do not owe fiduciary duties to their customers. As a result, the Supreme Court dismissed the Hopcrafts' claims against CBL entirely. The Supreme Court reached the same conclusion on these issues in relation to the two FirstRand cases (\"Wrench\" and \"Johnson\"). \n \n   \n On the issue in Johnson relating to unfairness under s.140A of the Consumer Credit Act 1974, the Supreme Court made clear that the test for unfairness is highly fact sensitive and takes into account a broad range of factors. On the facts of Johnson, the Supreme Court upheld the Court of Appeal's decision that the relationship between Mr Johnson and FirstRand was unfair and required FirstRand to pay Mr Johnson the value of the commission paid to the dealer plus compensatory interest at an appropriate commercial rate. \n \n \n Close Brothers welcomed the outcome of the Appeal, which provided clarity on important legal and commercial principles. Following the publication of the Supreme Court's judgment, the FCA announced on 3 August 2025 its intention to launch a public consultation by early October 2025 on an industry-wide redress scheme to compensate motor finance customers who were treated unfairly. \n \n \n Until the FCA confirms the design and scope of that scheme, there remains uncertainty as to the range of outcomes, and the financial impact to the group. \n \n \n Provisioning Assessment in relation to Motor Finance Commissions \n \n \n The provision charge in respect of motor finance commissions recognised in the income statement at the half year of £165.0 million has been reassessed in light of all available information and recent developments and remains unchanged. The ultimate cost to the group could be materially higher or lower than the provision taken and remains subject to further clarity from the FCA on the scope and design of a redress scheme. \n \n \n Please refer to Note 16 \"Other Liabilities\" for further details on the group's provisioning assessment of this matter. \n \n \n Strengthened Capital Position \n \n \n In response to the motor commissions uncertainty, we have strengthened our capital position and maintained high levels of liquidity, substantially above regulatory requirements. The group's Common Equity Tier 1 (\"CET1\") capital ratio was 13.8% at 31 July 2025, reflecting significant progress on our capital actions. These measures, which included no payment of the dividend, loan book moderation, cost-saving initiatives, organic capital generation, and the sale of Close Brothers Asset Management (\"CBAM\") (announced in September 2024 and completed in February 2025) have been successfully implemented. This resulted in over £400 million of CET1 capital generated or preserved as of 31 July 2025. \n \n \n In addition, the sale of Winterflood, announced on 25 July 2025, is expected to increase the group's CET1 capital ratio by c.55 basis points on a pro-forma basis, from 13.8% to c.14.3%, of which c.30 basis points will be recognised upon completion, and a further c.25 basis points is expected in due course from the reduction in operational risk weighted assets. The transaction is expected to complete in early 2026, subject to regulatory approval. \n \n \n Impacts of Motor Finance Commissions on the Group's Financial Performance \n \n \n The group's total operating expenses for this financial year were impacted by £194.0 million in direct and indirect costs associated with the motor finance commissions uncertainty, including the £165.0 million provision charge, which has been recognised as an adjusting item. In addition, the group incurred complaints handling and other operational and legal costs amounting to £18.7 million (also recognised as an adjusting item) and elevated Group (central functions) expenses related to professional and advisory fees of £10.3 million, which are temporary expenses expected to diminish once the uncertainties in relation to motor finance commissions are resolved. \n \n As previously announced, Close Brothers temporarily paused UK motor finance lending on 25 October 2024. Lending resumed on 2 November 2024, with all channels fully operational from January 2025. Underwriting volumes have now returned to pre-pause levels, and used car finance demand remains strong and consistent with levels seen prior to the Court of Appeal judgment. \n All relevant new business processes now include updated documentation to ensure customers are informed about broker relationships and commission amounts before signing credit agreements. Additionally, measures are in place to verify that credit brokers comply with these requirements. \n \n Update on Claims and Complaints \n \n \n The FCA has extended the time firms have to respond to complaints about motor finance involving both DCAs and non-DCAs until after 4 December 2025. This extension is part of a broader pause introduced to allow the FCA to complete its review into historical commission arrangements and to avoid inconsistent outcomes across the industry. Consumers now have until 29 July 2026 or 15 months from the firm's final response to escalate complaints to the FOS. \n \n \n There are a number of complaints against Close Brothers relating to motor finance commission arrangements that have been referred to the FOS for a determination. To date, no final FOS decisions have been made upholding these complaints. \n \n \n Since the judgment by the Supreme Court on 1 August 2025 and the subsequent announcement by the FCA on 3 August 2025, we have seen a slight reduction in complaints from Claims Management Companies (\"CMCs\") and Claims Law Firms (\"CLFs\"), with other channels unchanged. However, we have also seen an increase in enquiries from CMCs and CLFs, highlighting their continued interest in this matter. \n \n \n We have also taken steps to enhance our operational capabilities to respond to increased complaints volumes and potential changes, such as the implementation of an industry-wide redress scheme. This included increased resourcing to manage complaints and legal expenses. In the 2025 financial year, we have incurred £18.7 million of costs associated with complaints handling and other operational and legal costs in relation to motor finance commissions. We expect these costs will be in the single-digit millions in the 2026 financial year. We continue to monitor the impact on our current handling of these complaints to ensure we have the appropriate resources to respond effectively. \n \n \n Financial overview \n \n \n Summary group income statement 1 \n \n \n \n \n \n \n Continuing operations \n \n \n \n \n \n \n 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Change \n \n \n \n \n % \n \n \n \n \n \n \n \n \n \n Adjusted operating income \n \n \n 681.2 \n \n \n 698.4 \n \n \n (2) \n \n \n \n \n Adjusted operating expenses \n \n \n (445.1) \n \n \n (433.5) \n \n \n 3 \n \n \n \n \n Adjusted impairment losses on financial assets \n \n \n (91.8) \n \n \n (97.3) \n \n \n (6) \n \n \n \n \n Adjusted operating profit \n \n \n 144.3 \n \n \n 167.6 \n \n \n (14) \n \n \n \n \n Banking \n \n \n 198.3 \n \n \n 212.9 \n \n \n (7) \n \n \n \n \n Commercial \n \n \n 112.2 \n \n \n 97.0 \n \n \n 16 \n \n \n \n \n Retail \n \n \n 18.9 \n \n \n 37.9 \n \n \n (50) \n \n \n \n \n Property \n \n \n 67.2 \n \n \n 78.0 \n \n \n (14) \n \n \n \n \n Group (central functions) \n \n \n (54.0) \n \n \n (45.3) \n \n \n 19 \n \n \n \n \n Adjusting items: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Provision in relation to motor finance commissions \n \n \n (165.0) \n \n \n - \n \n \n n/a \n \n \n \n \n Complaints handling and other operational and legal costs incurred in relation to motor finance commissions \n \n \n (18.7) \n \n \n (6.9) \n \n \n 171 \n \n \n \n \n Provision in relation to BiFD review \n \n \n - \n \n \n (17.2) \n \n \n (100) \n \n \n \n \n Provision in relation to early settlements in Motor Finance \n \n \n (33.0) \n \n \n - \n \n \n n/a \n \n \n \n \n Restructuring costs \n \n \n (2.3) \n \n \n (3.1) \n \n \n (26) \n \n \n \n \n Amortisation of intangible assets on acquisition \n \n \n (0.2) \n \n \n (0.2) \n \n \n - \n \n \n \n \n \n Operating loss from Close Brewery Rentals Limited 2 \n \n \n \n (4.1) \n \n \n (2.1) \n \n \n 95 \n \n \n \n \n \n Operating loss from Close Brothers Vehicle Hire 3 \n \n \n \n (43.4) \n \n \n (5.4) \n \n \n n/a \n \n \n \n \n Operating (loss)/profit before tax \n \n \n (122.4) \n \n \n 132.7 \n \n \n (192) \n \n \n \n \n Tax \n \n \n (4.7) \n \n \n (37.4) \n \n \n (87) \n \n \n \n \n (Loss)/profit after tax from continuing operations \n \n \n (127.1) \n \n \n 95.3 \n \n \n (233) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Discontinued operations 4 : \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Close Brothers Asset Management \n \n \n 63.9 \n \n \n 7.4 \n \n \n n/a \n \n \n \n \n Winterflood \n \n \n (14.7) \n \n \n (2.3) \n \n \n n/a \n \n \n \n \n (Loss)/profit after tax (continuing and discontinued operations) \n \n \n (77.9) \n \n \n 100.4 \n \n \n (178) \n \n \n \n \n \n Attributable to \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Shareholders \n \n \n (100.2) \n \n \n 89.3 \n \n \n (212) \n \n \n \n \n Other equity owners \n \n \n 22.3 \n \n \n 11.1 \n \n \n 101 \n \n \n \n \n (Loss)/profit after tax attributable to shareholders and other equity owners \n \n \n (77.9) \n \n \n 100.4 \n \n \n (178) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusted basic earnings per share (continuing operations) 5 \n \n \n \n 59.3 p \n \n \n 75.8 p \n \n \n \n \n \n \n \n \n Basic (loss)/earnings per share (continuing operations) 5 \n \n \n \n (99.8) p \n \n \n 56.2 p \n \n \n \n \n \n \n \n \n Basic (loss)/earnings per share (continuing and discontinued operations) 4,5 \n \n \n \n (66.9) p \n \n \n 59.7 p \n \n \n \n \n \n \n \n Ordinary dividend per share \n \n \n - \n \n \n - \n \n \n \n \n \n \n \n \n Return on opening equity 6 \n \n \n \n \n \n \n \n 6.2 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 7.9 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n Return on average tangible equity 6 \n \n \n \n \n \n \n \n 7.1 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 9.3 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n 1. \n \n \n Income Statement presented includes continuing and discontinued operations. Adjusted measures are presented on a basis consistent with prior periods and exclude any exceptional and adjusting items which do not reflect underlying trading performance. Current exceptional and adjusting items include; customer remediation provisions, operational or legal costs incurred in relation to an event that is deemed to be adjusting, businesses that are held for sale, the Vehicle Hire business which is in wind-down, restructuring costs and amortisation of intangible assets on acquisition. Please refer to the Basis of Presentation on page 5 for further information. \n \n \n \n \n 2. \n \n \n Close Brewery Rentals Limited which is held for sale as at 31 July 2025. Please refer to page 24 for more detail. \n \n \n \n \n 3. \n \n \n Close Brothers Vehicle Hire business is being exited. Please refer to page 24 for more detail. \n \n \n \n \n 4. \n \n \n Discontinued operations relate to Close Brothers Asset Management and Winterflood, which have been classified as \"Discontinued Operations\" in the group's income statement for the 2024 and 2025 financial years in line with the requirements of IFRS 5. The related assets and liabilities are classified as held for sale on the group's balance sheet as at 31 July 2025. \n \n \n \n \n 5. \n \n \n Refer to Note 4 \"Earnings per Share\" for the calculation of basic and adjusted earnings per share. \n \n \n \n \n 6. \n \n \n Return on opening equity and return on average tangible equity have been restated for financial year 2024 to exclude discontinued operations. \n \n \n \n \n \n \n Reconciliation from adjusted to statutory income statement \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusting items reconciling adjusted to statutory performance \n \n \n \n \n \n \n \n \n \n \n Summary income statement for the year ended 31 July 2025 \n \n \n \n \n \n \n Adjusted \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Provision in relation to motor finance commissions \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Complaints handling and other operational and legal costs related to motor finance commissions \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Provision in relation to the BiFD review \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Provision in relation to early settlements in Motor Finance \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Restructuring costs \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Amortisation of intangible assets on acquisition \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Close Brewery Rentals Limited loss (held for sale) \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Close Brothers Vehicle Hire loss (in wind down) \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Total adjusting items \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Statutory \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n Operating income \n \n \n 681.2 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 5.9 \n \n \n (27.6) \n \n \n (21.7) \n \n \n 659.5 \n \n \n \n \n Operating expenses \n \n \n (445.1) \n \n \n (165.0) \n \n \n (18.7) \n \n \n - \n \n \n (33.0) \n \n \n (2.3) \n \n \n (0.2) \n \n \n (9.8) \n \n \n (15.0) \n \n \n (244.0) \n \n \n (689.1) \n \n \n \n \n Impairment losses on financial assets \n \n \n (91.8) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (0.2) \n \n \n (0.8) \n \n \n (1.0) \n \n \n (92.8) \n \n \n \n \n Operating profit/(loss) before tax \n \n \n 144.3 \n \n \n (165.0) \n \n \n (18.7) \n \n \n - \n \n \n (33.0) \n \n \n (2.3) \n \n \n (0.2) \n \n \n (4.1) \n \n \n (43.4) \n \n \n (266.7) \n \n \n (122.4) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusting items reconciling adjusted to statutory performance \n \n \n \n \n \n \n \n \n \n \n Summary income statement for the year ended 31 July 2024 \n \n \n \n \n \n \n Adjusted \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Provision in relation to motor finance commissions \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Complaints handling and other operational and legal costs related to motor finance commissions \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Provision in relation to the BiFD review \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Provision in relation to early settlements in Motor Finance \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Restructuring costs \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Amortisation of intangible assets on acquisition \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Close Brewery Rentals Limited loss (held for sale) \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Close Brothers Vehicle Hire loss (in wind down) \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Total adjusting items \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Statutory \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n Operating income \n \n \n 698.4 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 6.6 \n \n \n 8.4 \n \n \n 15.0 \n \n \n 713.4 \n \n \n \n \n Operating expenses \n \n \n (433.5) \n \n \n - \n \n \n (6.9) \n \n \n (17.2) \n \n \n - \n \n \n (3.1) \n \n \n (0.2) \n \n \n (8.0) \n \n \n (12.9) \n \n \n (48.3) \n \n \n (481.9) \n \n \n \n \n Impairment losses on financial assets \n \n \n (97.3) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (0.7) \n \n \n (0.9) \n \n \n (1.6) \n \n \n (98.8) \n \n \n \n \n Operating profit/(loss) before tax \n \n \n 167.6 \n \n \n - \n \n \n (6.9) \n \n \n (17.2) \n \n \n - \n \n \n (3.1) \n \n \n (0.2) \n \n \n (2.1) \n \n \n (5.4) \n \n \n (34.9) \n \n \n 132.7 \n \n \n \n \n   \n \n Statutory operating profit \n \n \n The group reported a statutory operating loss before tax of £122.4 million (2024: statutory operating profit before tax of £132.7 million). Underlying operating profit was more than offset by a number of adjusting items. These included a £165.0 million provision charge in relation to motor finance commissions and £18.7 million of costs in relation to complaints handling and other operational and legal costs incurred in relation to motor finance commissions. The group also recorded operating losses before tax from its rentals businesses totalling £47.5 million, as well as a separate £33.0 million provision for a proactive customer remediation programme following the identification of historical deficiencies in certain operational processes related to early settlement of loans in the Motor Finance business. \n \n \n Adjusted operating profit \n \n \n Adjusted operating profit decreased 14% to £144.3 million (2024: £167.6 million), driven by a decline in income and higher costs, partly offset by lower impairment charges. \n \n \n Banking adjusted operating profit reduced 7% to £198.3 million (2024: £212.9 million), due to a decline in income and a marginal increase in expenses partially offset by a reduction in impairment losses. The operating loss in Group (central functions), which includes the central functions such as finance, legal and compliance, risk and human resources, increased to £54.0 million (2024: £45.3 million) below guidance of between £55 million and £60 million. The increase in the operating loss in Group (central functions) was primarily due to increased legal and professional fees associated with the impact of the FCA's ongoing review and the Supreme Court appeal. \n \n \n We expect the operating loss from Group (central functions) to be c.£50 million in the 2026 financial year, reflecting a reduction in legal and professional fees. \n \n \n Return on opening equity reduced to 6.2% (2024: 7.9%) and return on average tangible equity decreased to 7.1% (2024: 9.3%). \n \n \n Adjusted operating income \n \n \n Adjusted operating income decreased 2% to £681.2 million (2024: £698.4 million), primarily reflecting lower income in Banking. \n \n \n Income in the Banking division decreased 2%, primarily reflecting lower loan book balances as a result of the management actions to moderate loan book growth in the earlier part of the year. Group (central functions) income decreased 2% to £(11.7) million (2024: £(11.5) million), reflecting lower cash balances and lower interest rates. \n \n \n Adjusted operating expenses \n \n \n Adjusted operating expenses increased to £445.1 million (2024: £433.5 million), primarily reflecting higher Group (central functions) expenses. \n \n \n In the Banking division, adjusted operating expenses increased 1% to £402.8 million (2024: £399.7 million) as £15 million of cost savings were broadly offset by wage inflation and spend on technology and expansion of capabilities across the business. Expenses in the Group (central functions) rose to £42.3 million (2024: £33.8 million), primarily driven by an increase in legal and professional fees associated with the impact of the FCA's ongoing review and the Supreme Court appeals. \n \n \n Overall, the group's expense/income ratio increased to 65% (2024: 62%), whilst the compensation ratio remained flat at 34% (2024: 34%). \n \n \n Impairment charges and IFRS 9 provisioning \n \n \n Impairment charges decreased to £91.8 million (2024: £97.3 million), corresponding to a bad debt ratio of 1.0% (2024: 1.0%). Excluding Novitas, impairment charges rose to £98.6 million (2024: £90.9 million), equivalent to a bad debt ratio of 1.0% (2024: 1.0%). The increase in underlying impairment charges excluding Novitas was mainly driven by the ongoing review of provisions and coverage across our portfolio, including single name provisions in Property. This was partially offset by generally favourable performance across other businesses. Credit quality remains resilient and the bad debt ratio remains comfortably below our long-term average of 1.2%. Overall, provision coverage reduced to 2.6% (31 July 2024: 4.3%), driven by the recovery of outstanding balances in relation to Novitas. Excluding Novitas, the coverage ratio increased slightly to 2.5% (31 July 2024: 2.3%) reflecting the above-mentioned provision increases against the backdrop of a lower total loan book. \n \n \n Since the 2024 financial year end, we have updated the macroeconomic scenarios we source from Moody's Analytics to reflect the latest available information regarding the macroeconomic environment and outlook, with the weightings assigned to them remaining unchanged. At 31 July 2025, there was a 30% weighting to the upside, 32.5% weighting to the baseline, 20% weighting to the mild downside, 10.5% weighting to the moderate downside and 7% weighting to the protracted downside. \n \n \n Whilst we have not seen a significant impact on credit performance, we continue to monitor closely the evolving impacts of inflation and cost of living on our customers. We remain confident in the quality of our loan book, which is predominantly secured or structurally protected, prudently underwritten, diverse, and supported by the deep expertise of our people. Looking forward, we expect the bad debt ratio for the 2026 financial year to remain below our long-term average of 1.2%. \n \n \n Adjusting items \n \n \n We recognised £266.7 million of adjusting items in the 2025 financial year (2024: £34.9 million), including the £165.0 million provision charge relating to motor finance commissions. We also recognised £101.7 million of other adjusting items. These included the total operating losses before tax of £47.5 million from the group's rentals businesses, Close Brewery Rentals Limited (\"CBRL\") and Close Brothers Vehicle Hire (\"CBVH\"); a separate £33.0 million provision related to early settlement of loans in the Motor Finance business; £18.7 million reflecting complaints handling and other operational and legal costs incurred in relation to motor finance commissions; £2.3 million of restructuring costs and £0.2 million of amortisation of intangible assets on acquisition. \n \n \n As outlined above, the group recorded operating losses before tax from our rentals businesses. Close Brewery Rentals Limited, sold in July 2025 (with completion occurring after the end of the financial year), reported an operating loss before tax of £4.1 million. The group's Vehicle Hire business, which the group has decided to exit, reported an operating loss before tax of £43.4 million, including an impairment charge against assets of £30.0 million. Any future profit or loss impact of this business will be subject to, amongst other factors, market conditions and any movement in asset prices over the wind down period. \n \n \n We incurred £18.7 million (2024: £6.9 million) of complaints handling expenses and other operational and legal costs in relation to motor finance commissions. This included increased resourcing to manage complaints and legal expenses, notably those related to the Supreme Court appeal, as well as the unwinding of the time value discount in relation to the motor finance commissions provision. This was lower than the guidance provided at the half year 2025 results of c.£22 million as we successfully deployed automation and artificial intelligence to enhance accuracy and speed in complaints handling. We expect these costs will be in the single-digit millions in the 2026 financial year. \n \n \n We also incurred £2.3 million (2024: £3.1 million) of restructuring costs in the 2025 financial year, in line with guidance of £2-3 million. This primarily related to redundancy and associated costs. We have continued to make good progress on streamlining the workforce through the consolidation of roles across our businesses and functions, as well as through the management of vacancies. We expect to incur c.£5-10 million of restructuring costs in the 2026 financial year as we implement further cost management actions. \n \n \n Discontinued operations \n \n \n During the year, in line with the group's strategic priorities to simplify the portfolio, enhance operational efficiency and drive sustainable growth, we made announcements regarding the disposal of the following businesses: \n \n \n \n \n \n \n • \n \n \n On 19 September 2024, we announced the sale of Close Brothers Asset Management (\"CBAM\") to funds managed by Oaktree Capital Management, L.P. (\"Oaktree\") for an equity value of up to £200 million. The transaction completed on 28 February 2025. \n \n \n \n \n • \n \n \n \n On 25 July 2025, we announced the sale of Winterflood to Marex Group plc (\"Marex\") for a consideration amount of approximately £103.9 million in cash, payable by Marex to Close Brothers on completion, based on 30 April 2025 financials, subject to a £ for £ adjustment for movements in the tangible net asset value of Winterflood between 30 April 2025 and completion. The transaction is expected to complete in early 2026, subject to regulatory approval. \n \n \n \n \n \n \n \n Performance of these businesses has been presented as discontinued operations, with related assets and liabilities classified as held for sale on the balance sheet. Accordingly, the group's adjusted results are presented on the basis of continuing operations for 2025 with the figures restated on a comparable basis for 2024. \n \n \n The profit from discontinued operations, net of tax was £49.2 million (2024: £5.1 million). \n \n \n CBAM generated adjusted operating profit of £5.3 million for the seven-month period up to the completion of the transaction, less £0.7 million amortisation of intangible assets on acquisition, and a £60.8 million gain on disposal resulting in an overall operating profit before tax of £65.4 million, and a profit after tax of £63.9 million (2024: £7.4 million). \n \n \n Winterflood delivered a full year operating profit of £0.3 million (2024: loss of £1.7 million). The first half was impacted by a volatile macroeconomic environment, which was offset by a stronger performance in the second half. A goodwill impairment loss on disposal of £14.5 million was recognised on classification as held for sale, with the total loss after tax of £14.7 million (2024: loss after tax of £2.3 million). No further loss on disposal is expected to be recognised on completion of the sale in the full year 2026 financial statements. \n \n \n For further information on the discontinued operations, refer to Note 23 \"Discontinued operations and assets and liabilities classified as held for sale\". \n \n \n Tax expense \n \n \n The tax expense was £4.7 million (2024: £37.4 million). The effective tax rate for the period was (3.8)% (2024: 28.2%), including the £165.0 million provision charge (£155.7 million net of tax) in relation to motor finance commissions and the £33.0 million (£30.3 million net of tax) provision for the proactive customer remediation programme in relation to early settlement of loans in Motor Finance recognised in the financial year. Excluding the provisions, the effective tax rate would have been approximately 22%. \n \n \n The effective tax rate, excluding the provisions, was below the 25.0% UK corporation tax rate for the 2025 financial year (2024: 25.0%), primarily due to tax relief on coupons on other equity instruments. Please refer to Note 3 \"Taxation\" for further details on the group's taxation. \n \n \n Earnings per share \n \n \n Adjusted basic earnings per share (\"AEPS\") for continuing operations decreased to 59.3p (2024: 75.8p) and basic earnings per share (\"EPS\") for continuing operations decreased to (99.8)p (2024: 56.2p). \n \n \n Basic earnings per share for continuing and discontinued operations reduced to (66.9)p (2024: 59.7p). \n \n \n Both the adjusted and basic EPS calculations include the payment of the coupon related to the Fixed Rate Resetting Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities (\"AT1\"), at an annual rate of 11.125%, in November 2024 and May 2025, amounting to £22.3 million. The associated coupon is due semi-annually, with any AT1 coupons paid deducted from retained earnings, reducing the profit attributable to ordinary shareholders. \n \n \n Dividend \n \n \n Given the continued uncertainty regarding the outcome of the FCA's review of motor finance commission arrangements and any potential financial impact, the group will not pay a final dividend on its ordinary shares for the 2025 financial year. As previously stated, the decision to reinstate dividends will be reviewed by the board once there is further clarity on the financial impact of the FCA review of motor finance commissions. \n \n \n Summary group balance sheet \n \n \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n Loans and advances to customers and operating lease assets 1 \n \n \n \n 9,625.7 \n \n \n 10,098.7 \n \n \n \n \n \n Treasury assets 2 \n \n \n \n 2,770.4 \n \n \n 2,300.9 \n \n \n \n \n \n Market-making assets 3 \n \n \n \n - \n \n \n 691.8 \n \n \n \n \n \n Assets classified as held for sale 4 \n \n \n \n 934.0 \n \n \n - \n \n \n \n \n Other assets \n \n \n 741.8 \n \n \n 989.4 \n \n \n \n \n Total assets \n \n \n 14,071.9 \n \n \n 14,080.8 \n \n \n \n \n Deposits by customers \n \n \n 8,799.3 \n \n \n 8,693.6 \n \n \n \n \n \n Borrowings 5 \n \n \n \n 2,188.3 \n \n \n 2,339.2 \n \n \n \n \n \n Market-making liabilities 3 \n \n \n \n - \n \n \n 631.6 \n \n \n \n \n \n Liabilities classified as held for sale 4 \n \n \n \n 773.4 \n \n \n - \n \n \n \n \n Other liabilities \n \n \n 575.4 \n \n \n 573.9 \n \n \n \n \n Total liabilities \n \n \n 12,336.4 \n \n \n 12,238.3 \n \n \n \n \n \n Equity 6 \n \n \n \n 1,735.5 \n \n \n 1,842.5 \n \n \n \n \n Total liabilities and equity \n \n \n 14,071.9 \n \n \n 14,080.8 \n \n \n \n \n \n   \n \n \n \n \n \n 1. \n \n \n Includes operating lease assets of £166.3 million (31 July 2024: £267.9 million). \n \n \n \n \n 2. \n \n \n Treasury assets comprise cash and balances at central banks and debt securities held to support the Banking division. \n \n \n \n \n 3. \n \n \n Market-making assets and liabilities comprise settlement balances, long and short trading positions and loans to or from money brokers. \n \n \n \n \n 4. \n \n \n Assets and liabilities relating to CBRL and discontinued operation Winterflood have been classified as held for sale on the group's balance sheet at 31 July 2025. Please refer to Note 23 \"Discontinued operations and assets and liabilities classified as held for sale\" \n \n \n \n \n 5. \n \n \n Borrowings comprise debt securities in issue, loans and overdrafts from banks and subordinated loan capital \n \n \n \n \n 6. \n \n \n Equity includes the group's £200.0 million Fixed Rate Reset Perpetual Subordinated Contingent Convertible Securities (AT1 securities), net of £2.4 million transaction costs, which are classified as an equity instrument under IAS 32. \n \n \n \n \n \n \n The group maintained a strong balance sheet and continues to take a prudent approach to managing its financial resources. The fundamental structure of the balance sheet remains unchanged, with most of the assets and liabilities relating to our Banking activities. Loans and advances to customers and operating lease assets make up the majority of assets. Other items on the group's balance sheet include treasury assets and settlement balances in Winterflood which have been classified as held for sale as at 31 July 2025. Intangibles, property, plant and equipment, and prepayments are included as other assets. Liabilities are predominantly made up of customer deposits and both secured and unsecured borrowings to fund the loan book. \n \n \n Total assets remained broadly stable at £14.1 billion (31 July 2024: £14.1 billion), with increases in market-making assets, classified as held for sale, and treasury assets held for liquidity purposes offset by a 5% reduction in loans and advances to customers and operating lease assets and a reduction in other assets. \n \n \n Total liabilities were 1% higher at £12.3 billion (31 July 2024: £12.2 billion). The increase was primarily driven by higher customer deposits and market-making liabilities, classified as held for sale, which was mostly offset by a decrease in borrowings. \n \n \n Both market-making assets and liabilities, which relate to trading activity at Winterflood, were higher due to an increase in value traded at the year end. \n \n \n Assets and liabilities classified as held for sale relate to Close Brewery Rentals Limited and Winterflood. \n \n \n Total equity decreased 6% to £1.7 billion as at 31 July 2025 (31 July 2024: £1.8 billion), reflecting the statutory operating loss after tax of £77.9 million (2024: statutory operating profit after tax of £100.4 million). \n \n \n The group's return on assets excluding discontinued operations decreased to 0.7% (2024: 0.9% excluding discontinued operations). \n \n \n Group Capital \n \n \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n Common Equity Tier 1 capital \n \n \n 1,348.1 \n \n \n 1,374.8 \n \n \n \n \n Tier 1 capital \n \n \n 1,548.1 \n \n \n 1,574.8 \n \n \n \n \n Total capital \n \n \n 1,748.1 \n \n \n 1,774.8 \n \n \n \n \n Risk weighted assets \n \n \n 9,798.5 \n \n \n 10,701.2 \n \n \n \n \n Common Equity Tier 1 capital ratio (transitional) \n \n \n \n \n \n \n 13.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 12.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n Tier 1 capital ratio (transitional) \n \n \n \n \n \n \n 15.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 14.7 \n \n \n % \n \n \n \n \n \n \n \n \n \n Total capital ratio (transitional) \n \n \n \n \n \n \n 17.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 16.6 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Leverage ratio 1 \n \n \n \n \n \n \n \n 12.9 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 12.7 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n 1. \n \n \n The leverage ratio is calculated as tier 1 capital as a percentage of total balance sheet assets excluding central bank claims, adjusting for certain capital deductions, including intangible assets, and off-balance sheet exposures, in line with the UK leverage framework under the UK Capital Requirements Regulation. \n \n \n \n \n \n \n Movements in capital and other regulatory metrics \n \n \n The CET1 capital ratio increased from 12.8% to 13.8%, mainly driven by the sale of CBAM (c.155bps), recognition of other profits attributable to shareholders (c.90bps), a reduction in loan book RWAs (c.70bps) and other movements (c.10bps). These benefits were partly offset by the provision in relation to motor finance commissions (-c.145bps), a provision for a proactive customer remediation programme related to early settlement of loans in the Motor Finance business (-c.30bps), operating losses after tax in the group's Vehicle Hire business (-c.30bps), and AT1 coupon payments in the year (-c.20bps). \n \n \n CET1 capital decreased 2% to £1,348.1 million (31 July 2024: £1,374.8 million), primarily driven by the £155.7 million provision (net of tax) in relation to motor finance commissions, a provision related to early settlement of loans in Motor Finance of £30.3 million (net of tax), £30.8 million operating losses after tax in the Vehicle Hire business, and AT1 coupon payments of £22.3 million. These impacts were partly offset by the recognition of the group's other profits attributable to shareholders in the year of £92.7 million, a £60.8 million gain on disposal for CBAM together with the associated reduction in intangible assets deducted from capital of £56.9 million, and a net increase in other CET1 capital resources of £2.0 million. \n \n \n Tier 1 capital and total capital both decreased 2% to £1,548.1 million and £1,748.1 million respectively (31 July 2024: £1,574.8 million and £1,774.8 million respectively), reflecting the same movements in relation to CET1 capital. \n \n \n RWAs decreased 8% to £9.8 billion (31 July 2024: £10.7 billion), driven by a reduction in credit risk RWAs (£676.6 million) and operational risk RWAs (£224.4 million). \n \n \n The decline in credit risk RWAs was driven by a reduction in loan book RWAs (£520.9 million) across each of the Banking businesses mainly due to lower loan book balances and also reflecting the benefit of the ENABLE Guarantee Scheme within the Commercial business. There was also a decrease in other credit risk RWAs (£155.7 million) which was partly in respect of the CBAM disposal (£74.4 million). \n \n \n The reduction in operational risk RWAs was primarily driven by the CBAM disposal (£225.3 million), following approval from the Prudential Regulation Authority (\"PRA\") for a full release of its associated operational risk RWAs. \n \n \n As a result, CET1, tier 1 and total capital ratios were 13.8% (31 July 2024: 12.8%), 15.8% (31 July 2024: 14.7%) and 17.8% (31 July 2024: 16.6%), respectively. \n \n \n The sale of Winterflood, announced on 25 July 2025, is expected to increase the group's CET1 capital ratio by c.55 basis points on a pro-forma basis at 31 July 2025, from 13.8% to c.14.3%, of which c.30 basis points will be recognised upon completion, with a further c.25 basis points expected in due course from the reduction in operational risk weighted assets. The transaction is expected to complete in early 2026, subject to regulatory approval. \n \n \n The applicable CET1, tier 1 and total capital ratio requirements, including Capital Requirements Directive (\"CRD\") buffers but excluding any applicable PRA buffer, were 9.7%, 11.4% and 13.7%, respectively, at 31 July 2025. Accordingly, our CET1 capital ratio headroom of c.410bps is significantly above the applicable requirements, despite the impact from the £165.0 million provision charge in relation to motor finance commissions. \n \n \n The group applies IFRS 9 regulatory transitional arrangements which allow banks to add back to their capital base a proportion of the IFRS 9 impairment charges during the transitional period. Our capital ratios are presented on a transitional basis after the application of these arrangements. On a fully loaded basis, without their application, the CET1, tier 1 and total capital ratios would be 13.7%, 15.7% and 17.8%, respectively. \n \n \n The leverage ratio, which is a transparent measure of capital strength not affected by risk weightings, increased to 12.9% (31 July 2024: 12.7%). \n \n \n The PRA Policy Statement PS 9/24 Implementation of the Basel 3.1 standards near-final part 2 was published on 12 September 2024 with an implementation date of 1 January 2026. In January 2025, the PRA announced a one-year delay to Basel 3.1 implementation moving the effective date to 1 January 2027. The majority of rules applicable to the group remain unchanged, including the removal of the Small and Medium-sized Enterprises (\"SME\") supporting factor. We currently estimate that implementation will result in an increase of up to 10% in the group's RWAs calculated under the standardised approach. The group expects to receive a full offset in Pillar 2a requirements at total capital level for the removal of the Pillar 1 RWA SME support factor. As such, we expect the UK implementation of Basel 3.1 to have a less significant impact on the group's overall capital headroom position than initially anticipated. \n \n \n As reported in our Half Year 2025 results, following our initial application to the PRA in December 2020 to transition to the Internal Ratings Based (\"IRB\") approach, the application remains in Phase 2, with engagement continuing with the regulator. Our Motor Finance, Property Finance, and Energy portfolios, where model development is most advanced, were included in the original submission. \n \n \n Capital outlook \n \n \n In the near-term, we expect to maintain our CET1 capital ratio above the top end of our medium-term target range of 12% to 13%, based on our current assessment of the provision in respect of motor finance commissions. \n \n \n Group funding 1 \n \n \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n Customer deposits \n \n \n 8,799.3 \n \n \n 8,693.6 \n \n \n \n \n Secured funding \n \n \n 1,077.4 \n \n \n 1,205.1 \n \n \n \n \n \n Unsecured funding 2 \n \n \n \n 1,109.4 \n \n \n 1,219.1 \n \n \n \n \n Equity \n \n \n 1,735.5 \n \n \n 1,842.5 \n \n \n \n \n \n Total available funding 3 \n \n \n \n 12,721.6 \n \n \n 12,960.3 \n \n \n \n \n \n Total available funding as a percentage of loan book 4 \n \n \n \n \n \n \n \n 132 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 128 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Average maturity of funding allocated to loan book 5 \n \n \n \n 18 months \n \n \n  20 months \n \n \n \n \n \n   \n \n \n \n \n \n 1. \n \n \n Numbers relate to core funding and exclude working capital facilities at the business level. \n \n \n \n \n 2. \n \n \n Unsecured funding excludes £1.5 million (31 July 2024: £55.1 million) of non-facility overdrafts included in borrowings and includes £nil (31 July 2024: £140.0 million) of undrawn facilities. \n \n \n \n \n 3. \n \n \n Includes £250.0 million of funds raised via a senior unsecured bond with a five-year tenor by Close Brothers Group plc, the group's holding company, in June 2023, with proceeds currently used for general corporate purposes. \n \n \n \n \n 4. \n \n \n Total funding as a percentage of loan book includes £207.3 million (31 July 2024: £267.9 million) of operating lease assets in the loan book figure, of which £41.0 million for Close Brewery Rentals Limited are classified as held for sale as at 31 July 2025. \n \n \n \n \n 5. \n \n \n Simple weighted average of the applicable funding allocated to the loan book. The applicable funding excludes equity (except AT1 instruments) and deducts funding held for liquidity purposes. \n \n \n \n \n \n \n Our Treasury function is focused on managing funding and liquidity to support the Banking businesses, as well as managing interest rate risk. Our Savings business, which was integrated into the Retail business in the 2024 financial year, provides simple and straightforward savings products to both individuals and businesses, whilst being committed to providing the highest level of customer service. \n \n \n Our funding draws on a wide range of wholesale and deposit markets including several public debt securities at both group and operating company level, as well as public and private secured funding programmes and a diverse mix of customer deposits. This broad funding base reduces concentration risk and ensures we can adapt our position through the cycle. \n \n \n We have maintained a prudent maturity profile, with the average maturity of funding allocated to the loan book at 18 months (31 July 2024: 20 months), ahead of the average loan book maturity at 15 months (31 July 2024: 16 months). \n \n \n Total funding decreased 2% to £12.7 billion (31 July 2024: £13.0 billion), which accounted for 132% (31 July 2024: 128%) of the loan book at the balance sheet date. The average cost of funding 1 in Banking reduced marginally to 5.4% (2024: 5.6%) and we remain well positioned to continue benefiting from our diverse funding base and the strength of our Savings franchise. \n \n \n While customer deposits increased 1% to £8.8 billion (31 July 2024: £8.7 billion), we saw a change in the mix as we have actively sought to grow our retail deposit base. Retail customer deposits increased 20% to £6.8 billion (31 July 2024: £5.7 billion), with non-retail deposits reducing 34% to £2.0 billion (31 July 2024: £3.0 billion), in line with our funding plan for the year. In accordance with our prudent and conservative approach to funding, only 13% of total deposits are available on demand and 57% have at least three months to maturity. At 31 July 2025, approximately 87% of retail deposits were protected by the Financial Services Compensation Scheme. \n \n \n Secured funding decreased 11% to £1.1 billion (31 July 2024: £1.2 billion) as the group fully repaid its final drawings of £110 million under the Term Funding Scheme for Small and Medium-sized Enterprises (\"TFSME\"), with no remaining borrowings under the scheme. In addition, the group raised £300 million through a private motor warehouse securitisation in June 2025, which was offset by scheduled repayments for our Motor Finance securitisations. \n \n \n Unsecured funding, which includes senior unsecured and subordinated bonds, decreased 9% to £1.1 billion (31 July 2024: £1.2 billion), primarily driven by the maturity of undrawn revolving credit facilities. \n \n \n \n \n \n \n 1. \n \n \n Banking cost of funding interest expense (excluding relevant allocations to Close Brothers Vehicle Hire and Close Brewery Rentals Limited) £520.8 million (2024: £531.6 million). \n \n \n \n \n \n \n We continue to leverage the benefits from the previous investment in our customer deposit platform, which has provided us with scalability and enabled us to diversify our product offering. Deposits held through this platform now stand at over £6.6 billion. The introduction of Easy Access has provided us access to a large potential deposit pool, with balances of over £800 million (at 31 July 2025) since launching in 2023. We remain focused on growing our retail funding base through a broad range of deposit products, further optimising our cost of funding and maturity profile. \n \n \n Moody's ratings for the group and CBL (Bank deposit rating) are Baa1/P2 and A2/P1 respectively (at 27 March 2025) and both remain under 'review for downgrade' following the Supreme Court judgment. Fitch Ratings (\"Fitch\") ratings for both the group and CBL are BBB/F3 (at 6 August 2025) with a negative outlook. This follows a one notch downgrade for both the group and CBL from BBB+ to BBB. Notwithstanding recent downgrades, our credit ratings remain robust, and we retain strong access to funding markets. \n \n \n Group liquidity \n \n \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n Cash and balances at central banks \n \n \n 1,917.0 \n \n \n 1,584.0 \n \n \n \n \n Sovereign and central bank debt \n \n \n 601.6 \n \n \n 383.7 \n \n \n \n \n Supranational, sub-sovereigns and agency (\"SSA\") bonds \n \n \n 146.2 \n \n \n 145.5 \n \n \n \n \n Covered bonds \n \n \n 105.6 \n \n \n 187.7 \n \n \n \n \n Treasury assets \n \n \n 2,770.4 \n \n \n 2,300.9 \n \n \n \n \n \n \n The group continues to adopt a conservative stance on liquidity, ensuring it is comfortably ahead of both internal risk appetite and regulatory requirements. \n \n \n In light of the significant uncertainty regarding the outcome of the FCA's review of historical motor finance commission arrangements, we have consciously maintained an elevated level of liquidity, with the majority of our treasury assets held in cash and government bonds. During the year, treasury assets increased 20% to £2.8 billion (31 July 2024: £2.3 billion) and were predominantly held on deposit with the Bank of England. \n \n \n We regularly assess and stress test the group's liquidity requirements and continue to materially exceed the liquidity coverage ratio (\"LCR\") regulatory requirements, with a 12-month average LCR to 31 July 2025 of 1,012% (31 July 2024: 1,034%). In addition to internal measures, we monitor funding risk based on the CRR rules for the net stable funding ratio (\"NSFR\"). The four-quarter average NSFR to 31 July 2025 was 145.9% (31 July 2024: 134.4%) driven by increased retail deposits. \n \n \n Business Review \n \n \n Banking \n \n \n Key financials \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Change \n \n \n \n \n % \n \n \n \n \n \n \n \n \n \n Adjusted operating income \n \n \n 692.9 \n \n \n 709.9 \n \n \n (2) \n \n \n \n \n Adjusted operating expenses \n \n \n (402.8) \n \n \n (399.7) \n \n \n 1 \n \n \n \n \n Adjusted impairment losses on financial assets \n \n \n (91.8) \n \n \n (97.3) \n \n \n (6) \n \n \n \n \n Adjusted operating profit \n \n \n 198.3 \n \n \n 212.9 \n \n \n (7) \n \n \n \n \n Adjusted operating profit, pre provisions for impairment losses \n \n \n 290.1 \n \n \n 310.2 \n \n \n (6) \n \n \n \n \n Adjusting items: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Provision in relation to motor finance commissions \n \n \n (165.0) \n \n \n - \n \n \n n/a \n \n \n \n \n Complaints handling and other operational and legal costs incurred in relation to motor finance commissions \n \n \n (18.7) \n \n \n (6.9) \n \n \n 171 \n \n \n \n \n Provision in relation to BiFD review \n \n \n - \n \n \n (17.2) \n \n \n (100) \n \n \n \n \n Provision in relation to early settlements in Motor Finance \n \n \n (33.0) \n \n \n - \n \n \n n/a \n \n \n \n \n Restructuring costs \n \n \n (2.3) \n \n \n (3.1) \n \n \n (26) \n \n \n \n \n Amortisation of intangible assets on acquisition \n \n \n (0.2) \n \n \n (0.2) \n \n \n - \n \n \n \n \n Operating loss from Close Brewery Rentals Limited \n \n \n (4.1) \n \n \n (2.1) \n \n \n 95 \n \n \n \n \n Operating loss from Close Brothers Vehicle Hire \n \n \n (43.4) \n \n \n (5.4) \n \n \n n/a \n \n \n \n \n Statutory operating (loss)/profit \n \n \n (68.4) \n \n \n 178.0 \n \n \n (138) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net interest margin \n \n \n \n \n \n \n 7.2 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 7.4 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Expense/income ratio \n \n \n \n \n \n \n 58 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 56 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Bad debt ratio \n \n \n \n \n \n \n 1.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 1.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Return on net loan book \n \n \n \n \n \n \n 2.1 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 2.2 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Return on opening equity \n \n \n \n \n \n \n 8.6 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 11.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Closing loan book and operating lease assets \n \n \n 9,460.7 \n \n \n 9,831.8 \n \n \n (4) \n \n \n \n \n \n Solid underlying performance with attractive growth opportunities across our businesses \n \n Unless otherwise stated, all metrics exclude adjusting items. \n \n \n The Banking division has navigated a challenging market backdrop during the year, with SMEs continuing to show resilience amid evolving conditions, with economic uncertainty and consumer affordability remaining a key focus. Whilst the regulatory environment has also introduced significant uncertainty, the strength of our businesses and the commitment of our people have underpinned a solid performance. We remain confident in the long-term opportunities ahead for our businesses. \n \n \n Banking adjusted operating profit reduced 7% to £198.3 million (2024: £212.9 million), due to a decline in income and a marginal increase in operating expenses. \n \n \n On a statutory basis, we delivered an operating loss of £68.4 million (2024: operating profit of £178.0 million), including the provision charge of £165.0 million in relation to motor finance commissions. We also recognised £101.7 million of other adjusting items. These included the total operating losses before tax of £47.5 million from the group's rentals businesses, Close Brewery Rentals Limited, which has been sold, and Close Brothers Vehicle Hire, which is being exited. The group also recognised a separate £33.0 million provision for a proactive customer remediation programme following the identification of historical deficiencies in certain operational processes related to early settlement of loans in the Motor Finance business, £18.7 million reflecting complaints handling and other operational and legal costs incurred in relation to motor finance commissions, £2.3 million of restructuring costs and £0.2 million of amortisation of intangible assets on acquisition. \n \n \n The loan book reduced 4% during the year to £9.5 billion (31 July 2024: £9.8 billion), primarily driven by the temporary pause in UK motor lending following the Court of Appeal's judgment in October 2024, loan book moderation measures, and lower activity in some of our markets in the second half. \n \n \n Adjusted operating income decreased 2% to £692.9 million (2024: £709.9 million), mainly driven by loan book moderation measures, as well as the run-off of the legacy Republic of Ireland Motor Finance business. \n \n \n The net interest margin remained strong at 7.2% (2024: 7.4%), as we maintained our focus on pricing discipline, in line with the guidance provided during the half-year results. On an underlying basis, excluding an increase in Novitas income and favourable movements in derivatives, the net interest margin reduced to 7.1% (2024: 7.4%). This reflected continued pressure on new business margins from elevated SME funding costs in a higher rate environment, together with the impact of the resulting changes in lending mix, with larger, lower NIM, loans accounting for a greater share of new business. In the 2026 financial year, we expect the net interest margin to be slightly lower than 7%, reflecting loan book mix impacts. \n \n \n Adjusted operating expenses increased 1% to £402.8 million (2024: £399.7 million), as cost savings were broadly offset by wage inflation and spend on technology and expansion of capabilities across the business. The expense/income ratio increased to 58% (2024: 56%), while the compensation ratio reduced marginally to 30% (2024: 31%). \n \n \n Cost savings \n \n \n Since March 2024, we have delivered £25 million of annualised cost savings through streamlining of our technology, suppliers and property, and workforce, of which c.£15 million were recognised in the 2025 financial year. 2 \n \n \n We continued to build on the progress from our technology transformation, initiated in 2023, focused on simplifying and modernising our technology estate, and consolidating and increasing our use of strategic partners. This has helped create a more digitally enabled and agile IT environment that is secure, resilient and sustainable. To date, we have reduced our technology headcount by c.30%, removed approximately 146 IT applications and decommissioned over 40% of servers from our technology estate. Our migration to the Cloud is progressing at pace, reducing costs and increasing flexibility. \n \n \n We have exited two of our London premises and rationalised five Manchester sites into two new hub locations. This has resulted in the removal of c.800 desks, and the reduction of the property footprint of the Banking division by approximately one third. With regard to our suppliers, we are achieving improved commercial outcomes with our strategic partners, rationalising our supplier base, and prudently developing our use of offshore services. These actions resulted in approximately £9 million annualised savings by the end of the 2025 financial year. \n \n \n We have made good progress on streamlining the workforce through the consolidation of roles across our businesses and functions, as well as through the management of vacancies, resulting in annualised savings of approximately £16 million by the end of the 2025 financial year. \n \n \n We incurred £2.3 million of restructuring costs this year, classified as an adjusting item. These costs primarily relate to redundancy and associated expenses resulting from the cost management actions announced in March 2024 and completed by the end of the 2025 financial year. \n \n \n As outlined, the group is committed to maintaining cost momentum to deliver a step change in operating profitability. We will deliver at least c.£20 million of additional annualised savings per annum at group level in each of the next three years, through further consolidation of centrally provided functions, outsourcing and offshoring, and the simplification and rationalisation of technology, including automation and the use of artificial intelligence. As a result, we expect the group's adjusted operating expenses to be within the £410-430 million range by the 2028 financial year. \n \n \n In the 2026 financial year, we expect to deliver c.£20 million of annualised savings through a reduction in legal and professional expenses related to motor commissions, the initial benefits of Premium Finance repositioning and cost base optimisation, as well as other initiatives. As a result, we expect the group's adjusted operating expenses to be within the £440-460 million range. Banking adjusted operating expenses are expected to be marginally higher than the prior year as wage inflation and investment spend, including in technology and expansion of capabilities across the business, are expected to be largely offset by cost savings. \n \n \n \n \n \n \n 2. \n \n \n Delivered c.£25 million of annualised savings since March 2024 and by the end of the 2025 financial year. Of this, c.£3 million benefit was recognised in the 2024 financial year and a further c.£15 million in the 2025 financial year, resulting in a cumulative benefit of c.£18 million in the 2025 financial year. A remaining benefit of £7 million will be recognised in the 2026 financial year. Excludes costs to achieve. \n \n \n \n \n \n \n We expect to incur c.£5-10 million of restructuring costs in the 2026 financial year, which are expected to continue to be classified as adjusting items. \n \n \n Adjusted impairment charges decreased to £91.8 million (2024: £97.3 million), corresponding to a bad debt ratio of 1.0% (2024: 1.0%). Excluding Novitas, impairment charges rose to £98.6 million (2024: £90.9 million), equivalent to a bad debt ratio of 1.0% (2024: 1.0%). The rise in underlying impairment charges excluding Novitas was mainly driven by provision increases on existing names in the Property business. This was partially offset by generally favourable performance across other businesses. \n \n \n Since the 2024 financial year end, we have updated the macroeconomic scenarios to reflect the latest available information regarding the macroeconomic environment and outlook. The weightings assigned to these scenarios remain unchanged, although we have seen some improvements to the underlying assumptions. \n \n \n Credit quality remains resilient and the bad debt ratio remains comfortably below our long-term average of 1.2%. Overall, provision coverage reduced to 2.6% (31 July 2024: 4.3%), driven by the recovery of outstanding balances in relation to Novitas. Excluding Novitas, the coverage ratio increased slightly to 2.5% (31 July 2024: 2.3%) reflecting the above-mentioned provision increases against the backdrop of a lower total loan book. \n \n \n Whilst we have not seen a significant impact on credit performance, we continue to monitor closely the evolving impacts of inflation and cost of living on our customers. We remain confident in the quality of our loan book, which is predominantly secured or structurally protected, prudently underwritten, diverse, and supported by the deep expertise of our people. Looking forward, we expect the bad debt ratio for the 2026 financial year to remain below our long-term average of 1.2%. \n \n \n Resolution of Novitas legacy issue \n \n \n The decision was made to wind down Novitas and withdraw from the legal services financing market following a strategic review in July 2021, which concluded that the overall risk profile of the business was no longer compatible with our long-term strategy and risk appetite. As announced in 2023, we accelerated our efforts to resolve the issues surrounding this business and were pursuing formal legal action against two After the Event (\"ATE\") insurers in the litigation funding arrangements. \n \n \n We are pleased to now have settled the disputes with both ATE insurers. The two claims were settled in June 2025 and July 2025 respectively. \n \n \n Taken together, the outcomes were favourable to the provisions held at the point of settlement. Overall, the Novitas business contributed £16.1 million to adjusted operating profit in the 2025 financial year (2024: £0.2 million operating loss), including an impairment credit of £6.8 million (2024: impairment charge of £6.4 million), primarily as a result of the settlement with the insurers. We expect minimal income and operating expenses will be recognised in respect of Novitas going forward. The settlements draw a line under a legacy issue and enable the group to move forward and complete its exit from this business. \n \n \n Loan Book Analysis \n \n \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 31 July 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Change \n \n \n \n \n % \n \n \n \n \n \n \n \n \n \n Commercial \n \n \n 4,729.3 \n \n \n 4,834.7 \n \n \n (2) \n \n \n \n \n \n Asset Finance 1 \n \n \n \n 3,291.0 \n \n \n 3,388.5 \n \n \n (3) \n \n \n \n \n Invoice and Speciality Finance \n \n \n 1,438.3 \n \n \n 1,446.2 \n \n \n (1) \n \n \n \n \n Retail \n \n \n 2,878.9 \n \n \n 3,041.9 \n \n \n (5) \n \n \n \n \n \n Motor Finance 2 \n \n \n \n 1,993.5 \n \n \n 2,016.0 \n \n \n (1) \n \n \n \n \n Premium Finance \n \n \n 885.4 \n \n \n 1,025.9 \n \n \n (14) \n \n \n \n \n Property \n \n \n 1,852.5 \n \n \n 1,955.2 \n \n \n (5) \n \n \n \n \n \n Closing loan book and operating lease assets 3 \n \n \n \n 9,460.7 \n \n \n 9,831.8 \n \n \n (4) \n \n \n \n \n \n   \n \n \n \n \n \n 1. \n \n \n Asset Finance totals exclude £165.0 million (31 July 2024: £222.4 million) of operating lease assets related to Close Brothers Vehicle Hire, which is in wind-down, and £41.0 million of operating lease assets related to Close Brewery Rentals Limited (31 July 2024: £44.5 million) which has been classified as held for sale on the group's balance sheet as at 31 July 2025. \n \n \n \n \n 2. \n \n \n The Motor Finance loan book includes £32.1 million (31 July 2024: £92.8 million) relating to the Republic of Ireland Motor Finance business, which is in run-off following the cessation of our previous partnership in the Republic of Ireland from 30 June 2022. \n \n \n \n \n 3 \n \n \n Includes operating lease assets of £1.3 million (31 July 2024: £1.0 million). \n \n \n \n \n \n \n Loan book growth impacted by moderation measures; attractive opportunities across our businesses \n \n \n The loan book decreased 4% over the year to £9.5 billion (31 July 2024: £9.8 billion), driven by the temporary pause in UK motor lending following the Court of Appeal's judgment in October 2024, loan book moderation measures, and lower activity in some of our markets in the second half. \n \n \n The Commercial loan book decreased 2% to £4.7 billion (31 July 2024: £4.8 billion). Asset Finance decreased 3%, primarily due to lower volumes and large terminations in the Industrial Equipment Division. Invoice and Speciality Finance decreased 1% over the year, including a £62.4 million reduction in net loans related to Novitas, which fell to £nil following the settlement of long-standing litigation in this business. Excluding Novitas, the Invoice and Speciality Finance loan book was up 4%. \n \n \n The Retail loan book decreased 5% to £2.9 billion (31 July 2024: £3.0 billion). Notwithstanding continued robust underlying demand, the Motor Finance loan book decreased 1% reflecting loan book moderation measures and a temporary pause in UK motor lending following the Court of Appeal's judgment in Hopcraft. We have seen good growth in our recently acquired business, Close Brothers Motor Finance Ireland, which partly offset the continued run-off of the legacy Republic of Ireland motor loan book. The Premium Finance loan book reduced by 14%, due to the competitive market environment and reduced demand for Premium Finance from some of our broker partners. \n \n \n At 31 July 2025, the legacy Republic of Ireland Motor Finance business was £32.1 million and accounted for 2% of the Motor Finance loan book (31 July 2024: 5%). \n \n \n The Property loan book decreased 5% to £1.9 billion (31 July 2024: £2.0 billion), due to higher repayments, lower drawdowns, as well as lower balances in Commercial Acceptances, reflecting a more challenging economic environment which is particularly impacting the SME developer market. \n \n \n Loan book outlook \n \n \n We have repositioned the business to focus on segments where we see mid to high single-digit growth potential through the cycle, leaving us well positioned to benefit as the economy and demand recover. \n \n \n The Commercial business is well positioned for future organic growth and to extend our lending offering to SMEs. There is potential to grow our market share in the Invoice Finance market building on our expertise and competitive positioning. We also see opportunities within specific sectors of Asset Finance where we are increasing our lending footprint, such as energy, agriculture and materials handling, as well as expanding into new markets, such as commercial mortgages, which we entered last year. Our new proposition for the broker market is expected to deliver further growth and we will actively pursue participation in relevant government-backed schemes which support lending to SMEs. \n \n \n The UK's used car market is showing renewed strength with growth projected in the coming years. Our new product offering for Alternative Fuel Vehicles positions us well to capitalise on the fast-growing market of used Electric Vehicles. We also expect Motor Finance Ireland to continue its strong performance from 2025. To capture these opportunities, we are expanding distribution in Motor Finance through growth in the Irish market, and with larger partners and brokers. \n \n \n Our repositioned Premium Finance business will focus on commercial lines, where we see strongest risk-adjusted returns and long-term growth potential. We will focus on increasing our share of business with existing broker partners, developing new broker relationships and applying our underwriting capability to support higher-value cases. \n \n \n A renewed strategy in the Property business will expand our products and asset classes in order to access future growth. Whilst the Build-to-Sell market remains our core business, we also see significant opportunities in Build-to-Rent and Purpose-Built Student Accommodation, and will continue to build our market position in these sectors. We are successfully expanding our presence in new regional markets, particularly in the north of England, and have the capacity to extend our facility size to be able to fund larger projects, to support existing and new clients. \n \n \n Banking: Commercial \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2025 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n 2024 \n \n \n \n \n £ million \n \n \n \n \n \n \n \n \n \n \n \n Change \n \n \n \n \n % \n \n \n \n \n \n \n \n \n \n Adjusted operating income \n \n \n 315.6 \n \n \n 314.6 \n \n \n - \n \n \n \n \n Adjusted operating expenses \n \n \n (185.6) \n \n \n (187.5) \n \n \n (1) \n \n \n \n \n Adjusted impairment losses on financial assets \n \n \n (17.8) \n \n \n (30.1) \n \n \n (41) \n \n \n \n \n Adjusted operating profit \n \n \n 112.2 \n \n \n 97.0 \n \n \n 16 \n \n \n \n \n Adjusted operating profit, pre provisions for impairment losses \n \n \n 130.0 \n \n \n 127.1 \n \n \n 2 \n \n \n \n \n Adjusting items: \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Provision in relation to the BiFD review \n \n \n - \n \n \n (0.6) \n \n \n (100) \n \n \n \n \n Restructuring costs \n \n \n (1.4) \n \n \n (2.2) \n \n \n (36) \n \n \n \n \n Operating loss from Close Brewery Rentals Limited \n \n \n (4.1) \n \n \n (2.1) \n \n \n 95 \n \n \n \n \n Operating loss from Close Brothers Vehicle Hire \n \n \n (43.4) \n \n \n (5.4) \n \n \n n/a \n \n \n \n \n Statutory operating profit \n \n \n 63.3 \n \n \n 86.7 \n \n \n (27) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net interest margin \n \n \n \n \n \n \n 6.6 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 6.7 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n Expense/income ratio \n \n \n \n \n \n \n 59 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 60 \n \n...

View stock analysis, news, and events for Close Brothers Group Plc