Close Brothers Group plc

Adjusted operating income decreased 6% to GBP 643 million. Adjusted operating expenses decreased 3% to GBP 431 million, adjusted impairment losses were broadly unchanged at GBP 92 million, and adjusted operating profit fell to GBP 120 million from GBP 144 million. Statutory loss before tax narrowed to GBP 60 million from GBP 122 million, and loss after tax from continuing operations narrowed to GBP 65 million. Adjusted EPS was 47.5p and return on average tangible equity was 5.5%. The loan book was GBP 9.5 billion, underlying growth was 2% for the year and 4% in the second half, NIM was 6.9% versus 7.2% last year, and CET1 was 14.1% (pro forma Basel 3.1 estimate of 13.3%). For FY27, management expects underlying loan book growth within 5% to 10%, costs around GBP 430 million, NIM slightly below FY26, bad debt ratio below the long-term average of 1.2%, and a modest increase in RoTE. By FY28, costs are expected toward the lower end of the GBP 410 million to GBP 430 million range and the group expects double-digit returns.

Mike Morgan said the group has been reshaped into a focused specialist bank and that simplification is largely complete, leaving the company concentrated on optimize and grow. He emphasized momentum in lending, saying the business exited FY26 with good loan growth in Q4 across all divisions and that the group is confident it can deliver 5% to 10% growth through the cycle. His tone was constructive and confident, with repeated references to stronger returns, a lower cost base, and double-digit returns by FY28.

Fiona McCarthy focused on the numbers behind the turnaround: adjusted operating income of GBP 643 million, costs of GBP 431 million, impairment losses of GBP 92 million, and a CET1 ratio of 14.1% after the GBP 165 million Motor Finance charge. She highlighted that annualized savings reached about GBP 36 million in FY26, ahead of the original GBP 25 million target, and that the company expects more than GBP 60 million by end-FY27 with costs broadly stable around GBP 430 million next year. She also noted total funding of GBP 11.4 billion, liquidity resources of GBP 3 billion, average funding cost of 4.6%, and FY27 restructuring costs expected at approximately GBP 30 million to GBP 40 million.

Analysts pressed on the impact of higher rates, the timing of the Motor Finance legal process, competitive pressure if a peer is bought by a high-street bank, loan growth quality, and the uptick in fourth-quarter impairments. Management said higher rates can pressure SMEs but Close Brothers passes them through to protect margin, and that its forecasts already reflect current rate assumptions. On Motor Finance, management said the court timing after the hearing is unclear and likely several months, while on credit it said the Q4 impairment rise was tied to a small number of ring-fenced Property cases, with coverage at 5.6% for Property and 35% for Stage 3 within that portfolio.