RE: No proven, strong, earnings, dividend cancelled prudence15 Feb 2024 07:42
The Board of Close Brothers Group plc ("the group") is updating the market following the announcement by the Financial Conduct Authority (the "FCA") of its review of historical motor finance commission arrangements.
There is significant uncertainty about the outcome of the FCA's review, and the timing, scope and quantum of any potential financial impact on the group cannot be reliably estimated at present. In accordance with the relevant accounting standards, the Board has concluded that it is currently not required or appropriate to recognise a provision in the group's Half-Year 2024 results in relation to this matter.
Our business continues to perform well, and we are confident in the strength of our business franchise. Our Banking division continues to deliver disciplined growth at strong margins and stable credit performance, and generated approximately £112 million of adjusted operating profit ("AOP") for the six months to 31 January 2024. Close Brothers Asset Management delivered strong annualised net inflows of 9% and Winterflood remains well placed for a recovery in investor confidence. We expect to report overall group AOP of approximately £94 million, after Group (central functions) net expenses.
The group has a strong capital, funding and liquidity position. At 31 December 2023, our Common Equity Tier 1 ("CET1") and Total capital ratios were 12.5% and 16.4% respectively, providing significant headroom over the minimum regulatory requirements1. Our leverage ratio, which is a measure of capital strength not affected by risk weightings, remained strong at 12.7%. Our conservative approach to funding is based on the principle of "borrow long, lend short" and we hold liquidity levels comfortably ahead of both internal risk appetite and regulatory requirements, with a Liquidity Coverage Ratio in excess of 1,000%2.
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