REG - Close Bros Grp PLC - Scheduled Trading Update

Close BrothersAnnouncement

18/11/2021 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211118:nRSR7466Sa&default-theme=true

RNS Number : 7466S  Close Brothers Group PLC  18 November 2021

 

 

 Scheduled Trading Update

Close Brothers Group plc ("the group" or "Close Brothers") today issues its
scheduled trading update relating to the first quarter of its 2022 financial
year from 1 August 2021 to 31 October 2021 ("the quarter").

Adrian Sainsbury, Chief Executive Officer

"We are encouraged by our performance at this early stage of the financial
year as we continue to make the most of opportunities arising in the current
environment. Although the economic trajectory remains uncertain, the strengths
of our proven and resilient model, together with the expertise of our people,
leave us well placed to continue supporting our customers and clients and to
protect, grow and sustain our business over the long term.

Our responsibility towards the environment remains at the forefront of our
minds. In addition to targeting being operationally net zero through our Scope
1 and 2 emissions by 2030, we have now started an assessment of our indirect
Scope 3 emissions as we look to better understand our impact and how we can
help with the transition to a lower carbon future."

Group and divisional performance

The group has made an encouraging start to the year, with a strong performance
in Banking and good growth momentum in Close Brothers Asset Management
("CBAM"), although in Winterflood, trading income has continued to moderate
since the end of the 2021 financial year.

We maintained a strong capital position, with a Common Equity Tier 1 ("CET1")
capital ratio of 15.7% at 31 October 2021 (31 July 2021: 15.8%), significantly
above the applicable minimum regulatory requirement(1).

In Banking, the loan book increased 2.4% in the quarter to £8.6 billion (31
July 2021: £8.4 billion). This was driven by improved utilisation in Invoice
Finance, along with good demand in the Asset and Motor Finance businesses. The
Property book remained stable from 31 July 2021.

The annualised net interest margin remained strong as we continued to focus on
our pricing discipline.

We are making good progress with our key strategic investment programmes to
protect, grow and sustain our business model. We continue to exercise rigorous
management of business as usual costs, although we are mindful of inflationary
pressures, particularly on staff costs.

The credit performance of the loan book as a whole remained strong. We remain
confident in the quality of our lending, which is predominantly secured,
prudently underwritten and diverse. Our impairment provisions continue to
reflect the improved but still uncertain economic outlook(2).

CBAM has seen good growth momentum, benefiting from strong net inflows and
rising markets in the period. The business achieved annualised net inflows of
8% (FY 2021: 7%) and increased managed assets to £16.0 billion (31 July 2021:
£15.6 billion). Total client assets grew to £17.4 billion (31 July 2021:
£17.0 billion).

Winterflood has experienced further moderation of trading performance since
the end of the 2021 financial year, with income in the quarter reverting to
close to pre-Covid-19 levels, reflecting a market wide slowdown in retail
trading activity and a change in the mix of trading volumes in the quarter.
The team's experience and focus on managing risk resulted in no loss days in
the quarter.

Outlook

While the economic trajectory remains uncertain, we have made an encouraging
start to the year.

We are well positioned to maximise opportunities in the current environment
and remain confident in the long-term growth prospects of our Banking
businesses.

In Asset Management, we are well placed to benefit from the proven, ongoing
demand for our services and continue to invest to support the long-term growth
potential of the business.

Winterflood is well positioned to continue trading profitably in a range of
market conditions but remains sensitive to changes in the market environment.
We remain focused on growing Winterflood Business Services.

Footnotes

1 The group's capital ratios are presented on a transitional basis after the
application of IFRS 9 transitional arrangements which allows banks to add back
to their capital base a proportion of the IFRS 9 impairment charges during the
transitional period. Without their application, and excluding the benefit
related to the current treatment of software assets, the CET1 ratio would be
14.3%. In line with the amended CRR, effective on 23 December 2020, the CET1
capital ratio at 31 October 2021 includes a c.40bps benefit related to
software assets which are exempt from the deduction requirement for intangible
assets from CET1. The Prudential Regulation Authority ("PRA") published
PS17/21 'Implementation of Basel standards' on 9 July 2021, confirming the
reversal to the earlier position. This will result in the reversal of this
benefit and reduction of the CET1 capital ratio upon implementation on 1
January 2022. The applicable minimum regulatory requirement, excluding any PRA
buffer was 7.6% at 31 October 2021.

2 Expected credit losses reflect the application of macroeconomic scenarios,
which have been updated to include more recent externally sourced scenarios on
a monthly basis since the start of the pandemic. At 31 October 2021,
weightings remained unchanged since the Full Year 2021 results with 20%
weighted to the upside scenario, 40% to the baseline scenario and 40% to
downside scenarios. The modelled impact of macroeconomic scenarios and their
respective weightings is overlaid with expert judgment in relation to stage
allocation and coverage ratios at the individual portfolio level,
incorporating our experience and knowledge of our customers, the sectors in
which they operate, and the assets that we finance.

Enquiries

 Sophie Gillingham  Close Brothers Group plc  020 3857 6574
 Camila Sugimura    Close Brothers Group plc  020 3857 6577
 Kimberley Taylor   Close Brothers Group plc  020 3857 6233
 Irene Galvan       Close Brothers Group plc  020 3857 6217
 Sam Cartwright     Maitland                  07827 254561

 

 

 

About Close Brothers

Close Brothers is a leading UK merchant banking group providing lending,
deposit taking, wealth management services and securities trading.  We employ
over 3,700 people, principally in the UK. Close Brothers Group plc is listed
on the London Stock Exchange and is a member of the FTSE 250.

Cautionary Statement

Certain statements included within this announcement may constitute
"forward-looking statements" in respect of the group's operations,
performance, prospects and/or financial condition. Forward-looking statements
are sometimes, but not always, identified by their use of a date in the future
or such words as "anticipates", "aims", "due", "could", "may", "will",
"should", "expects", "believes", "intends", "plans", "potential", "targets",
"goal" or "estimates". By their nature, forward-looking statements involve a
number of risks, uncertainties and assumptions and actual results or events
may differ materially from those expressed or implied by those statements.
Accordingly, no assurance can be given that any particular expectation will be
met and reliance should not be placed on any forward-looking statement.
Additionally, forward-looking statements regarding past trends or activities
should not be taken as a representation that such trends or activities will
continue in the future. Except as may be required by law or regulation, no
responsibility or obligation is accepted to update or revise any
forward-looking statement resulting from new information, future events or
otherwise. Nothing in this announcement should be construed as a profit
forecast. This announcement does not constitute or form part of any offer or
invitation to sell, or any solicitation of any offer to subscribe for or
purchase any shares or other securities in the company or any of its group
members, nor does it constitute a recommendation regarding the shares or other
securities of the company or any of its group members. Past performance cannot
be relied upon as a guide to future performance and persons needing advice
should consult an independent financial adviser or other professional.
Statements in this announcement reflect the knowledge and information
available at the time of its preparation. Liability arising from anything in
this announcement shall be governed by English law. Nothing in this
announcement shall exclude any liability under applicable laws that cannot be
excluded in accordance with such laws.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTDKOBBFBDDPDD