REG - Close Bros Grp PLC - Final Results
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RNS Number : 3770B Close Brothers Group PLC 30 September 2025
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Preliminary Results for the year ended 31 July 2025
30 September 2025
Mike Morgan, Chief Executive, said:
"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.
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.
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.
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"
Key Financials(1)
Unless otherwise stated, all metrics refer to continuing operations only
2025 2024 Change
£ million £ million %
Operating (loss)/profit before tax (122.4) 132.7 (192)
Adjusted operating profit(2) (continuing operations) 144.3 167.6 (14)
(Loss)/profit from discontinued operations, net of tax(3) 49.2 5.1 n/a
(Loss)/profit attributable to shareholders and other equity owners (77.9) 100.4 (178)
Adjusted basic earnings per share (continuing operations)(2,4) 59.3 p 75.8 p
Basic (loss)/earnings per share (continuing operations)(4) (99.8) p 56.2 p
Basic (loss)/earnings per share (continuing and discontinued operations)(4,5) (66.9) p 59.7 p
Ordinary dividend per share - -
Return on opening equity(5) 6.2 % 7.9 %
Return on average tangible equity(5) 7.1 % 9.3 %
Net interest margin 7.2 % 7.4 %
Bad debt ratio 1.0 % 1.0 %
Expense/income ratio 65 % 62 %
2024
£ million
Change
%
Operating (loss)/profit before tax
(122.4)
132.7
(192)
Adjusted operating profit(2) (continuing operations)
144.3
167.6
(14)
(Loss)/profit from discontinued operations, net of tax(3)
49.2
5.1
n/a
(Loss)/profit attributable to shareholders and other equity owners
(77.9)
100.4
(178)
Adjusted basic earnings per share (continuing operations)(2,4)
59.3 p
75.8 p
Basic (loss)/earnings per share (continuing operations)(4)
(99.8) p
56.2 p
Basic (loss)/earnings per share (continuing and discontinued operations)(4,5)
(66.9) p
59.7 p
Ordinary dividend per share
-
-
Return on opening equity(5)
6.2 %
7.9 %
Return on average tangible equity(5)
7.1 %
9.3 %
Net interest margin
7.2 %
7.4 %
Bad debt ratio
1.0 %
1.0 %
Expense/income ratio
65 %
62 %
31 July 31 July Change
2025 2024 %
Loan book(6) £ 9.5 bn £ 9.8 bn (4)
Net asset value ("NAV") per share (continuing and discontinued operations) £ 10.3 £ 11.1
Tangible net asset value ("TNAV") per share (continuing and discontinued £ 9.1 £ 9.3
operations)
CET1 capital ratio (transitional) (continuing and discontinued operations) 13.8 % 12.8 %
Tier 1 capital ratio (transitional) (continuing and discontinued operations) 15.8 % 14.7 %
Total capital ratio (transitional) (continuing and discontinued operations) 17.8 % 16.6 %
31 July
2024
Change
%
Loan book(6)
£ 9.5 bn
£ 9.8 bn
(4)
Net asset value ("NAV") per share (continuing and discontinued operations)
£ 10.3
£ 11.1
Tangible net asset value ("TNAV") per share (continuing and discontinued
operations)
£ 9.1
£ 9.3
CET1 capital ratio (transitional) (continuing and discontinued operations)
13.8 %
12.8 %
Tier 1 capital ratio (transitional) (continuing and discontinued operations)
15.8 %
14.7 %
Total capital ratio (transitional) (continuing and discontinued operations)
17.8 %
16.6 %
1. Please refer to definitions on pages 28 to 30.
2. 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.
3. 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".
4. Refer to Note 4 "Earnings per Share" for the calculation of basic and adjusted
earnings per share.
5. 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).
6. 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.
Strategic Highlights
• 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
• 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
• 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
• We have also successfully settled the long-standing litigation issued by
Novitas allowing us to move forward and exit from this business
• 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
• 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
• 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
• 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
• 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
• 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
Financial Performance
• Adjusted operating income decreased 2% to £681.2 million (2024: £698.4
million), primarily reflecting lower income in Banking, as the loan book
reduced
• Adjusted operating expenses increased 3% to £445.1 million (2024: £433.5
million), primarily reflecting higher Group (central functions) expenses
• 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
• The group's return on average tangible equity (excluding discontinued
operations) ("RoTE") decreased to 7.1% (2024: 9.3%)
• 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
• 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
• Profit from discontinued operations, net of tax, was £49.2 million (2024:
£5.1 million)
• 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
• 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
Guidance
Banking:
• 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
• 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
• Bad debt ratio: We expect the bad debt ratio for the 2026 financial year to
remain below our long-term average of 1.2%
Group (central functions):
• 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
Group:
• Costs
• 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
• 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
• Adjusting items
• We expect to incur c.£5-10 million of restructuring costs in the 2026
financial year as we implement further cost management actions
• 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
Group (ctd.):
• 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
• 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
Inside information
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.
Presentation
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
Enquiries
Camila Sugimura Close Brothers Group plc 020 3857 6577
Sam Cartwright H/Advisors Maitland 07827 254 561
About Close Brothers
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.
Basis of presentation
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.
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.
Chief Executive's Statement
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.
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.
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.
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.
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.
Financial Performance
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.
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.
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%.
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.
Executing the next stage of our journey
With our simplification agenda now largely complete, these actions provide the
foundation for the next stage of our journey: driving efficiency and capturing
growth.
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.
In parallel, we are evaluating opportunities to optimise capital, funding and
liquidity once the uncertainty around motor commissions is resolved.
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.
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.
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.
Confident in our future
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.
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.
Mike Morgan
Chief Executive
Historical motor finance commission arrangements
Overview of Developments in relation to Motor Finance Commissions
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.
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").
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.
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").
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.
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.
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.
Provisioning Assessment in relation to Motor Finance Commissions
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.
Please refer to Note 16 "Other Liabilities" for further details on the group's
provisioning assessment of this matter.
Strengthened Capital Position
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.
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.
Impacts of Motor Finance Commissions on the Group's Financial Performance
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.
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.
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.
Update on Claims and Complaints
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.
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.
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.
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.
Financial overview
Summary group income statement(1)
Continuing operations 2025 2024 Change
£ million £ million %
Adjusted operating income 681.2 698.4 (2)
Adjusted operating expenses (445.1) (433.5) 3
Adjusted impairment losses on financial assets (91.8) (97.3) (6)
Adjusted operating profit 144.3 167.6 (14)
Banking 198.3 212.9 (7)
Commercial 112.2 97.0 16
Retail 18.9 37.9 (50)
Property 67.2 78.0 (14)
Group (central functions) (54.0) (45.3) 19
Adjusting items:
Provision in relation to motor finance commissions (165.0) - n/a
Complaints handling and other operational and legal costs incurred in relation (18.7) (6.9) 171
to motor finance commissions
Provision in relation to BiFD review - (17.2) (100)
Provision in relation to early settlements in Motor Finance (33.0) - n/a
Restructuring costs (2.3) (3.1) (26)
Amortisation of intangible assets on acquisition (0.2) (0.2) -
Operating loss from Close Brewery Rentals Limited(2) (4.1) (2.1) 95
Operating loss from Close Brothers Vehicle Hire(3) (43.4) (5.4) n/a
Operating (loss)/profit before tax (122.4) 132.7 (192)
Tax (4.7) (37.4) (87)
(Loss)/profit after tax from continuing operations (127.1) 95.3 (233)
Discontinued operations(4):
Close Brothers Asset Management 63.9 7.4 n/a
Winterflood (14.7) (2.3) n/a
(Loss)/profit after tax (continuing and discontinued operations) (77.9) 100.4 (178)
Attributable to
Shareholders (100.2) 89.3 (212)
Other equity owners 22.3 11.1 101
(Loss)/profit after tax attributable to shareholders and other equity owners (77.9) 100.4 (178)
Adjusted basic earnings per share (continuing operations)(5) 59.3 p 75.8 p
Basic (loss)/earnings per share (continuing operations)(5) (99.8) p 56.2 p
Basic (loss)/earnings per share (continuing and discontinued operations)(4,5) (66.9) p 59.7 p
Ordinary dividend per share - -
Return on opening equity(6) 6.2 % 7.9 %
Return on average tangible equity(6) 7.1 % 9.3 %
2024
£ million
Change
%
Adjusted operating income
681.2
698.4
(2)
Adjusted operating expenses
(445.1)
(433.5)
3
Adjusted impairment losses on financial assets
(91.8)
(97.3)
(6)
Adjusted operating profit
144.3
167.6
(14)
Banking
198.3
212.9
(7)
Commercial
112.2
97.0
16
Retail
18.9
37.9
(50)
Property
67.2
78.0
(14)
Group (central functions)
(54.0)
(45.3)
19
Adjusting items:
Provision in relation to motor finance commissions
(165.0)
-
n/a
Complaints handling and other operational and legal costs incurred in relation
to motor finance commissions
(18.7)
(6.9)
171
Provision in relation to BiFD review
-
(17.2)
(100)
Provision in relation to early settlements in Motor Finance
(33.0)
-
n/a
Restructuring costs
(2.3)
(3.1)
(26)
Amortisation of intangible assets on acquisition
(0.2)
(0.2)
-
Operating loss from Close Brewery Rentals Limited(2)
(4.1)
(2.1)
95
Operating loss from Close Brothers Vehicle Hire(3)
(43.4)
(5.4)
n/a
Operating (loss)/profit before tax
(122.4)
132.7
(192)
Tax
(4.7)
(37.4)
(87)
(Loss)/profit after tax from continuing operations
(127.1)
95.3
(233)
Discontinued operations(4):
Close Brothers Asset Management
63.9
7.4
n/a
Winterflood
(14.7)
(2.3)
n/a
(Loss)/profit after tax (continuing and discontinued operations)
(77.9)
100.4
(178)
Attributable to
Shareholders
(100.2)
89.3
(212)
Other equity owners
22.3
11.1
101
(Loss)/profit after tax attributable to shareholders and other equity owners
(77.9)
100.4
(178)
Adjusted basic earnings per share (continuing operations)(5)
59.3 p
75.8 p
Basic (loss)/earnings per share (continuing operations)(5)
(99.8) p
56.2 p
Basic (loss)/earnings per share (continuing and discontinued operations)(4,5)
(66.9) p
59.7 p
Ordinary dividend per share
-
-
Return on opening equity(6)
6.2 %
7.9 %
Return on average tangible equity(6)
7.1 %
9.3 %
1. 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.
2. Close Brewery Rentals Limited which is held for sale as at 31 July 2025.
Please refer to page 24 for more detail.
3. Close Brothers Vehicle Hire business is being exited. Please refer to page 24
for more detail.
4. 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.
5. Refer to Note 4 "Earnings per Share" for the calculation of basic and adjusted
earnings per share.
6. Return on opening equity and return on average tangible equity have been
restated for financial year 2024 to exclude discontinued operations.
Reconciliation from adjusted to statutory income statement
Adjusting items reconciling adjusted to statutory performance
Summary income statement for the year ended 31 July 2025 Adjusted Provision in relation to motor finance commissions Complaints handling and other operational and legal costs related to motor Provision in relation to the BiFD review Provision in relation to early settlements in Motor Finance Restructuring costs Amortisation of intangible assets on acquisition Close Brewery Rentals Limited loss (held for sale) Close Brothers Vehicle Hire loss (in wind down) Total adjusting items Statutory
£ million £ million finance commissions £ million £ million £ million £ million £ million £ million £ million £ million
£ million
Operating income 681.2 - - - - - - 5.9 (27.6) (21.7) 659.5
Operating expenses (445.1) (165.0) (18.7) - (33.0) (2.3) (0.2) (9.8) (15.0) (244.0) (689.1)
Impairment losses on financial assets (91.8) - - - - - - (0.2) (0.8) (1.0) (92.8)
Operating profit/(loss) before tax 144.3 (165.0) (18.7) - (33.0) (2.3) (0.2) (4.1) (43.4) (266.7) (122.4)
Provision in relation to motor finance commissions
£ million
Complaints handling and other operational and legal costs related to motor
finance commissions
£ million
Provision in relation to the BiFD review
£ million
Provision in relation to early settlements in Motor Finance
£ million
Restructuring costs
£ million
Amortisation of intangible assets on acquisition
£ million
Close Brewery Rentals Limited loss (held for sale)
£ million
Close Brothers Vehicle Hire loss (in wind down)
£ million
Total adjusting items
£ million
Statutory
£ million
Operating income
681.2
-
-
-
-
-
-
5.9
(27.6)
(21.7)
659.5
Operating expenses
(445.1)
(165.0)
(18.7)
-
(33.0)
(2.3)
(0.2)
(9.8)
(15.0)
(244.0)
(689.1)
Impairment losses on financial assets
(91.8)
-
-
-
-
-
-
(0.2)
(0.8)
(1.0)
(92.8)
Operating profit/(loss) before tax
144.3
(165.0)
(18.7)
-
(33.0)
(2.3)
(0.2)
(4.1)
(43.4)
(266.7)
(122.4)
Adjusting items reconciling adjusted to statutory performance
Summary income statement for the year ended 31 July 2024 Adjusted Provision in relation to motor finance commissions Complaints handling and other operational and legal costs related to motor Provision in relation to the BiFD review Provision in relation to early settlements in Motor Finance Restructuring costs Amortisation of intangible assets on acquisition Close Brewery Rentals Limited loss (held for sale) Close Brothers Vehicle Hire loss (in wind down) Total adjusting items Statutory
£ million £ million finance commissions £ million £ million £ million £ million £ million £ million £ million £ million
£ million
Operating income 698.4 - - - - - - 6.6 8.4 15.0 713.4
Operating expenses (433.5) - (6.9) (17.2) - (3.1) (0.2) (8.0) (12.9) (48.3) (481.9)
Impairment losses on financial assets (97.3) - - - - - - (0.7) (0.9) (1.6) (98.8)
Operating profit/(loss) before tax 167.6 - (6.9) (17.2) - (3.1) (0.2) (2.1) (5.4) (34.9) 132.7
Provision in relation to motor finance commissions
£ million
Complaints handling and other operational and legal costs related to motor
finance commissions
£ million
Provision in relation to the BiFD review
£ million
Provision in relation to early settlements in Motor Finance
£ million
Restructuring costs
£ million
Amortisation of intangible assets on acquisition
£ million
Close Brewery Rentals Limited loss (held for sale)
£ million
Close Brothers Vehicle Hire loss (in wind down)
£ million
Total adjusting items
£ million
Statutory
£ million
Operating income
698.4
-
-
-
-
-
-
6.6
8.4
15.0
713.4
Operating expenses
(433.5)
-
(6.9)
(17.2)
-
(3.1)
(0.2)
(8.0)
(12.9)
(48.3)
(481.9)
Impairment losses on financial assets
(97.3)
-
-
-
-
-
-
(0.7)
(0.9)
(1.6)
(98.8)
Operating profit/(loss) before tax
167.6
-
(6.9)
(17.2)
-
(3.1)
(0.2)
(2.1)
(5.4)
(34.9)
132.7
Statutory operating profit
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.
Adjusted operating profit
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.
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.
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.
Return on opening equity reduced to 6.2% (2024: 7.9%) and return on average
tangible equity decreased to 7.1% (2024: 9.3%).
Adjusted operating income
Adjusted operating income decreased 2% to £681.2 million (2024: £698.4
million), primarily reflecting lower income in Banking.
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.
Adjusted operating expenses
Adjusted operating expenses increased to £445.1 million (2024: £433.5
million), primarily reflecting higher Group (central functions) expenses.
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.
Overall, the group's expense/income ratio increased to 65% (2024: 62%), whilst
the compensation ratio remained flat at 34% (2024: 34%).
Impairment charges and IFRS 9 provisioning
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.
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.
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%.
Adjusting items
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.
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.
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.
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.
Discontinued operations
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:
• 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.
• 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.
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.
The profit from discontinued operations, net of tax was £49.2 million (2024:
£5.1 million).
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).
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.
For further information on the discontinued operations, refer to Note 23
"Discontinued operations and assets and liabilities classified as held for
sale".
Tax expense
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%.
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.
Earnings per share
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).
Basic earnings per share for continuing and discontinued operations reduced to
(66.9)p (2024: 59.7p).
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.
Dividend
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.
Summary group balance sheet
31 July 2025 31 July 2024
£ million £ million
Loans and advances to customers and operating lease assets(1) 9,625.7 10,098.7
Treasury assets(2) 2,770.4 2,300.9
Market-making assets(3) - 691.8
Assets classified as held for sale(4) 934.0 -
Other assets 741.8 989.4
Total assets 14,071.9 14,080.8
Deposits by customers 8,799.3 8,693.6
Borrowings(5) 2,188.3 2,339.2
Market-making liabilities(3) - 631.6
Liabilities classified as held for sale(4) 773.4 -
Other liabilities 575.4 573.9
Total liabilities 12,336.4 12,238.3
Equity(6) 1,735.5 1,842.5
Total liabilities and equity 14,071.9 14,080.8
31 July 2024
£ million
Loans and advances to customers and operating lease assets(1)
9,625.7
10,098.7
Treasury assets(2)
2,770.4
2,300.9
Market-making assets(3)
-
691.8
Assets classified as held for sale(4)
934.0
-
Other assets
741.8
989.4
Total assets
14,071.9
14,080.8
Deposits by customers
8,799.3
8,693.6
Borrowings(5)
2,188.3
2,339.2
Market-making liabilities(3)
-
631.6
Liabilities classified as held for sale(4)
773.4
-
Other liabilities
575.4
573.9
Total liabilities
12,336.4
12,238.3
Equity(6)
1,735.5
1,842.5
Total liabilities and equity
14,071.9
14,080.8
1. Includes operating lease assets of £166.3 million (31 July 2024: £267.9
million).
2. Treasury assets comprise cash and balances at central banks and debt
securities held to support the Banking division.
3. Market-making assets and liabilities comprise settlement balances, long and
short trading positions and loans to or from money brokers.
4. 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"
5. Borrowings comprise debt securities in issue, loans and overdrafts from banks
and subordinated loan capital
6. 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.
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.
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.
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.
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.
Assets and liabilities classified as held for sale relate to Close Brewery
Rentals Limited and Winterflood.
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).
The group's return on assets excluding discontinued operations decreased to
0.7% (2024: 0.9% excluding discontinued operations).
Group Capital
31 July 2025 31 July 2024
£ million £ million
Common Equity Tier 1 capital 1,348.1 1,374.8
Tier 1 capital 1,548.1 1,574.8
Total capital 1,748.1 1,774.8
Risk weighted assets 9,798.5 10,701.2
Common Equity Tier 1 capital ratio (transitional) 13.8 % 12.8 %
Tier 1 capital ratio (transitional) 15.8 % 14.7 %
Total capital ratio (transitional) 17.8 % 16.6 %
Leverage ratio(1) 12.9 % 12.7 %
31 July 2024
£ million
Common Equity Tier 1 capital
1,348.1
1,374.8
Tier 1 capital
1,548.1
1,574.8
Total capital
1,748.1
1,774.8
Risk weighted assets
9,798.5
10,701.2
Common Equity Tier 1 capital ratio (transitional)
13.8 %
12.8 %
Tier 1 capital ratio (transitional)
15.8 %
14.7 %
Total capital ratio (transitional)
17.8 %
16.6 %
Leverage ratio(1)
12.9 %
12.7 %
1. 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.
Movements in capital and other regulatory metrics
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).
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.
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.
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).
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).
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.
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.
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.
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.
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.
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%).
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.
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.
Capital outlook
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.
Group funding(1)
31 July 2025 31 July 2024
£ million £ million
Customer deposits 8,799.3 8,693.6
Secured funding 1,077.4 1,205.1
Unsecured funding(2) 1,109.4 1,219.1
Equity 1,735.5 1,842.5
Total available funding(3) 12,721.6 12,960.3
Total available funding as a percentage of loan book(4) 132 % 128 %
Average maturity of funding allocated to loan book(5) 18 months 20 months
31 July 2024
£ million
Customer deposits
8,799.3
8,693.6
Secured funding
1,077.4
1,205.1
Unsecured funding(2)
1,109.4
1,219.1
Equity
1,735.5
1,842.5
Total available funding(3)
12,721.6
12,960.3
Total available funding as a percentage of loan book(4)
132 %
128 %
Average maturity of funding allocated to loan book(5)
18 months
20 months
1. Numbers relate to core funding and exclude working capital facilities at the
business level.
2. 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.
3. 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.
4. 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.
5. 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.
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.
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.
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).
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.
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.
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.
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.
1. 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).
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.
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.
Group liquidity
31 July 2025 31 July 2024
£ million £ million
Cash and balances at central banks 1,917.0 1,584.0
Sovereign and central bank debt 601.6 383.7
Supranational, sub-sovereigns and agency ("SSA") bonds 146.2 145.5
Covered bonds 105.6 187.7
Treasury assets 2,770.4 2,300.9
31 July 2024
£ million
Cash and balances at central banks
1,917.0
1,584.0
Sovereign and central bank debt
601.6
383.7
Supranational, sub-sovereigns and agency ("SSA") bonds
146.2
145.5
Covered bonds
105.6
187.7
Treasury assets
2,770.4
2,300.9
The group continues to adopt a conservative stance on liquidity, ensuring it
is comfortably ahead of both internal risk appetite and regulatory
requirements.
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.
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.
Business Review
Banking
Key financials
2025 2024 Change
£ million £ million %
Adjusted operating income 692.9 709.9 (2)
Adjusted operating expenses (402.8) (399.7) 1
Adjusted impairment losses on financial assets (91.8) (97.3) (6)
Adjusted operating profit 198.3 212.9 (7)
Adjusted operating profit, pre provisions for impairment losses 290.1 310.2 (6)
Adjusting items:
Provision in relation to motor finance commissions (165.0) - n/a
Complaints handling and other operational and legal costs incurred in relation (18.7) (6.9) 171
to motor finance commissions
Provision in relation to BiFD review - (17.2) (100)
Provision in relation to early settlements in Motor Finance (33.0) - n/a
Restructuring costs (2.3) (3.1) (26)
Amortisation of intangible assets on acquisition (0.2) (0.2) -
Operating loss from Close Brewery Rentals Limited (4.1) (2.1) 95
Operating loss from Close Brothers Vehicle Hire (43.4) (5.4) n/a
Statutory operating (loss)/profit (68.4) 178.0 (138)
Net interest margin 7.2 % 7.4 %
Expense/income ratio 58 % 56 %
Bad debt ratio 1.0 % 1.0 %
Return on net loan book 2.1 % 2.2 %
Return on opening equity 8.6 % 11.0 %
Closing loan book and operating lease assets 9,460.7 9,831.8 (4)
2024
£ million
Change
%
Adjusted operating income
692.9
709.9
(2)
Adjusted operating expenses
(402.8)
(399.7)
1
Adjusted impairment losses on financial assets
(91.8)
(97.3)
(6)
Adjusted operating profit
198.3
212.9
(7)
Adjusted operating profit, pre provisions for impairment losses
290.1
310.2
(6)
Adjusting items:
Provision in relation to motor finance commissions
(165.0)
-
n/a
Complaints handling and other operational and legal costs incurred in relation
to motor finance commissions
(18.7)
(6.9)
171
Provision in relation to BiFD review
-
(17.2)
(100)
Provision in relation to early settlements in Motor Finance
(33.0)
-
n/a
Restructuring costs
(2.3)
(3.1)
(26)
Amortisation of intangible assets on acquisition
(0.2)
(0.2)
-
Operating loss from Close Brewery Rentals Limited
(4.1)
(2.1)
95
Operating loss from Close Brothers Vehicle Hire
(43.4)
(5.4)
n/a
Statutory operating (loss)/profit
(68.4)
178.0
(138)
Net interest margin
7.2 %
7.4 %
Expense/income ratio
58 %
56 %
Bad debt ratio
1.0 %
1.0 %
Return on net loan book
2.1 %
2.2 %
Return on opening equity
8.6 %
11.0 %
Closing loan book and operating lease assets
9,460.7
9,831.8
(4)
Solid underlying performance with attractive growth opportunities across our
businesses
Unless otherwise stated, all metrics exclude adjusting items.
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.
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.
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.
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.
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.
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.
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%).
Cost savings
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)
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.
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.
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.
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.
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.
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.
2. 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.
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.
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.
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.
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.
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%.
Resolution of Novitas legacy issue
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.
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.
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.
Loan Book Analysis
31 July 2025 31 July 2024 Change
£ million £ million %
Commercial 4,729.3 4,834.7 (2)
Asset Finance(1) 3,291.0 3,388.5 (3)
Invoice and Speciality Finance 1,438.3 1,446.2 (1)
Retail 2,878.9 3,041.9 (5)
Motor Finance(2) 1,993.5 2,016.0 (1)
Premium Finance 885.4 1,025.9 (14)
Property 1,852.5 1,955.2 (5)
Closing loan book and operating lease assets(3) 9,460.7 9,831.8 (4)
31 July 2024
£ million
Change
%
Commercial
4,729.3
4,834.7
(2)
Asset Finance(1)
3,291.0
3,388.5
(3)
Invoice and Speciality Finance
1,438.3
1,446.2
(1)
Retail
2,878.9
3,041.9
(5)
Motor Finance(2)
1,993.5
2,016.0
(1)
Premium Finance
885.4
1,025.9
(14)
Property
1,852.5
1,955.2
(5)
Closing loan book and operating lease assets(3)
9,460.7
9,831.8
(4)
1. 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.
2. 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.
3 Includes operating lease assets of £1.3 million (31 July 2024: £1.0
million).
Loan book growth impacted by moderation measures; attractive opportunities
across our businesses
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.
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%.
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.
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%).
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.
Loan book outlook
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.
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.
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.
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.
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.
Banking: Commercial
2025 2024 Change
£ million £ million %
Adjusted operating income 315.6 314.6 -
Adjusted operating expenses (185.6) (187.5) (1)
Adjusted impairment losses on financial assets (17.8) (30.1) (41)
Adjusted operating profit 112.2 97.0 16
Adjusted operating profit, pre provisions for impairment losses 130.0 127.1 2
Adjusting items:
Provision in relation to the BiFD review - (0.6) (100)
Restructuring costs (1.4) (2.2) (36)
Operating loss from Close Brewery Rentals Limited (4.1) (2.1) 95
Operating loss from Close Brothers Vehicle Hire (43.4) (5.4) n/a
Statutory operating profit 63.3 86.7 (27)
Net interest margin 6.6 % 6.7 %
Expense/income ratio 59 % 60 %
Bad debt ratio 0.4 % 0.6 %
Closing loan book and operating lease assets(1) 4,729.3 4,834.7 (2)
2024
£ million
Change
%
Adjusted operating income
315.6
314.6
-
Adjusted operating expenses
(185.6)
(187.5)
(1)
Adjusted impairment losses on financial assets
(17.8)
(30.1)
(41)
Adjusted operating profit
112.2
97.0
16
Adjusted operating profit, pre provisions for impairment losses
130.0
127.1
2
Adjusting items:
Provision in relation to the BiFD review
-
(0.6)
(100)
Restructuring costs
(1.4)
(2.2)
(36)
Operating loss from Close Brewery Rentals Limited
(4.1)
(2.1)
95
Operating loss from Close Brothers Vehicle Hire
(43.4)
(5.4)
n/a
Statutory operating profit
63.3
86.7
(27)
Net interest margin
6.6 %
6.7 %
Expense/income ratio
59 %
60 %
Bad debt ratio
0.4 %
0.6 %
Closing loan book and operating lease assets(1)
4,729.3
4,834.7
(2)
Commercial Key Metrics Excluding Novitas
2025 2024 Change
£ million £ million %
Adjusted operating income 302.3 303.6 -
Adjusted operating expenses (181.6) (182.7) (1)
Adjusted impairment losses on financial assets (24.6) (23.7) 4
Adjusted operating profit 96.1 97.2 (1)
Adjusted operating profit, pre provisions for impairment losses 120.7 120.9 -
Net interest margin 6.4 % 6.6 %
Expense/income ratio 60 % 60 %
Bad debt ratio 0.5 % 0.5 %
Closing loan book and operating lease assets(1) 4,729.3 4,772.3 (1)
2024
£ million
Change
%
Adjusted operating income
302.3
303.6
-
Adjusted operating expenses
(181.6)
(182.7)
(1)
Adjusted impairment losses on financial assets
(24.6)
(23.7)
4
Adjusted operating profit
96.1
97.2
(1)
Adjusted operating profit, pre provisions for impairment losses
120.7
120.9
-
Net interest margin
6.4 %
6.6 %
Expense/income ratio
60 %
60 %
Bad debt ratio
0.5 %
0.5 %
Closing loan book and operating lease assets(1)
4,729.3
4,772.3
(1)
1. Operating lease assets of £1.3 million (31 July 2024: £1.0 million).
Robust performance, benefitting from growth initiatives
Commercial lends to more than 28,000 small and medium-sized enterprises
through our in-house teams, where loans are originated via our direct sales
force or introduced by third-party distribution channels. Asset Finance
provides commercial asset financing, hire purchase and leasing solutions for a
diverse range of assets and sectors. Invoice Finance works with small
businesses to provide debt factoring, invoice discounting and asset based
lending.
Customer demand remained relatively robust in 2025 against the backdrop of a
competitive marketplace and challenging environment for SMEs. In Asset
Finance, the marketplace has remained competitive, with pressure on new
business margins. In the Invoice Finance market, we have seen some changes in
the competitive environment and our strong offering and service has enabled us
to win new clients.
Our growth initiatives continued to progress well, as the Materials Handling
team delivered healthy new business volumes. We broadened our product range
with a commercial mortgage offering, enhancing our overall proposition. Our
restructured Broker and Professional Solutions has led to increased activity
with its newly launched proposition for the broker market. In July 2025, we
agreed a transaction with the British Business Bank of up to £300 million
under the ENABLE Guarantees programme to unlock lending capacity for SMEs
within Asset Finance.
As part of our simplification agenda, on 15 July 2025 Close Brothers announced
the sale of Close Brewery Rentals Limited ("CBRL") to MML Keystone, a fund
managed by MML Capital. The transaction completed on 31 August 2025. CBRL
reported an operating loss before tax of £4.1 million, presented as an
adjusting item in the 2025 financial statements. Whilst the group will no
longer offer brewery container rental solutions, we will remain a key
specialist lender in the beverage finance market and will continue to provide
finance solutions for brewery and distillery equipment. The group sees
attractive growth opportunities in this sector and will continue to support it
through Close Brothers Beverage Finance, a lending business with a loan book
of £34.6 million at 31 July 2025.
In addition, we have decided to exit the group's Vehicle Hire business.
Performance in this business has been impacted by a challenging market
backdrop, particularly post-Covid, and there is limited opportunity to deliver
enhanced returns. To realise maximum value and ensure we continue to support
our customers in line with contractual terms, the exit will be phased over
time, with the business being managed down over the next three to five years.
As a result of this decision and the recent decline in asset values in this
sector, we recognised an impairment charge of £30.0 million. The Vehicle Hire
business reported an operating loss before tax of £43.4 million, presented as
an adjusting item in the 2025 financial statements. This includes the £30.0
million asset impairment charge, a £10.9 million underlying loss and £2.5
million impairment of intangible assets. 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.
Adjusted operating profit for Commercial increased to £112.2 million (2024:
£97.0 million), mainly driven by Novitas.
Excluding Novitas, adjusted operating profit decreased 1% to £96.1 million
(2024: £97.2 million), reflecting a stable income and modest reduction in
costs, offset by marginally higher impairment charges. Before impairment
charges, adjusted operating profit was broadly unchanged at £120.7 million
(2024: £120.9 million).
We saw an increase in adjusted operating profit in Novitas to £16.1 million
(2024: £0.2 million operating loss), following final settlements with the
insurers which led to an impairment credit.
On a statutory basis, operating profit decreased to £63.3 million (2024:
£86.7 million), reflecting £1.4 million of restructuring costs and the total
operating loss before tax of the rentals businesses of £47.5 million.
Adjusted operating income increased to £315.6 million (2024: £314.6 million)
supported by a 2% uplift in the average loan balance over 12 months. Higher
Novitas income was partially offset by a reduction in Asset Finance due to the
impact of higher funding costs and competitive dynamics on new business
margins, as well as changes in the lending mix, with larger, lower NIM, loans
accounting for a greater share of new business. The net interest margin was
slightly lower at 6.6% (2024: 6.7%). Excluding Novitas, the net interest
margin decreased to 6.4% (2024: 6.6%).
Adjusted operating expenses decreased to £185.6 million (2024: £187.5
million), mainly driven by the benefits of cost savings initiatives, including
workforce rationalisation in Asset Finance, partially offset by higher IT
spend and depreciation. The Commercial expense/income ratio decreased slightly
to 59% (2024: 60%).
We continue to realise the benefits of our investment in the Asset Finance
transformation programme, which concluded in the 2024 financial year. The
implementation of a single technology platform has enhanced visibility of
customer data across our specialist teams, leading to improved collaboration,
streamlined decision-making, and further improved our strong service
capabilities.
Adjusted impairment charges decreased to £17.8 million (2024: £30.1 million)
driven largely by a reduction in provisions against Novitas. Excluding
Novitas, impairment charges were marginally higher at £24.6 million (2024:
£23.7 million). This corresponded to a bad debt ratio of 0.5% (2024: 0.5%)
and a broadly stable coverage ratio (excluding Novitas) of 1.5% (31 July 2024:
1.4%).
Banking: Retail
2025 2024 Change
£ million £ million %
Operating income 246.7 262.4 (6)
Adjusted operating expenses (183.3) (177.3) 3
Impairment losses on financial assets (44.5) (47.2) (6)
Adjusted operating profit 18.9 37.9 (50)
Adjusted operating profit, pre provisions for impairment losses 63.4 85.1 (25)
Adjusting items:
Provision in relation to motor finance commissions (165.0) - n/a
Complaints handling and other operational and legal costs incurred in relation (18.7) (6.9) 171
to motor finance commissions
Provision in relation to BiFD review - (16.6) (100)
Provision in relation to early settlements in Motor Finance (33.0) - n/a
Restructuring costs (0.6) (0.6) -
Amortisation of intangible assets on acquisition (0.2) (0.2) -
Statutory operating (loss)/profit (198.6) 13.6 n/a
Net interest margin 8.3 % 8.7 %
Expense/income ratio 74 % 68 %
Bad debt ratio 1.5 % 1.6 %
Closing loan book(1) 2,878.9 3,041.9 (5)
2024
£ million
Change
%
Operating income
246.7
262.4
(6)
Adjusted operating expenses
(183.3)
(177.3)
3
Impairment losses on financial assets
(44.5)
(47.2)
(6)
Adjusted operating profit
18.9
37.9
(50)
Adjusted operating profit, pre provisions for impairment losses
63.4
85.1
(25)
Adjusting items:
Provision in relation to motor finance commissions
(165.0)
-
n/a
Complaints handling and other operational and legal costs incurred in relation
to motor finance commissions
(18.7)
(6.9)
171
Provision in relation to BiFD review
-
(16.6)
(100)
Provision in relation to early settlements in Motor Finance
(33.0)
-
n/a
Restructuring costs
(0.6)
(0.6)
-
Amortisation of intangible assets on acquisition
(0.2)
(0.2)
-
Statutory operating (loss)/profit
(198.6)
13.6
n/a
Net interest margin
8.3 %
8.7 %
Expense/income ratio
74 %
68 %
Bad debt ratio
1.5 %
1.6 %
Closing loan book(1)
2,878.9
3,041.9
(5)
1. The Motor Finance loan book includes £32.1 million (31 July 2024: £92.8
million) relating to the legacy 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.
Continued demand in Motor and a re-focused Premium business
Retail provides finance to individuals and businesses through a network of
intermediaries. Motor Finance provides several products at point of sale in a
dealership, or online via a broker, which allow consumers to buy vehicles from
over 4,250 retailers in the UK and 650 retailers in Ireland. Premium Finance
helps make insurance payments more manageable for people and businesses, by
allowing them to spread the cost over fixed instalments. It works with c.1,300
insurance brokers in the UK and Ireland.
The market backdrop continued to present challenges during the year, with
significant uncertainty in relation to the FCA's motor finance work, the Court
of Appeal's judgment in October 2024 and the subsequent Supreme Court judgment
in August 2025. Although the Motor Finance business was impacted by the pause
in lending in October 2024, we have remained focused on providing excellent
service to our customers and partners, with all of our lending channels live
from January 2025.
Our Motor Finance business has seen strong growth in new business flows in the
fourth quarter, alongside increased satisfaction metrics from dealer partners.
This comes against a backdrop of modest growth in the UK used car market. We
have also seen strong growth in Ireland, following the acquisition of
Bluestone Motor Finance DAC in October 2023. Throughout the year, there has
been a focus on cost saving initiatives, such as enhancements to our
complaints handling process, moving our contact centre offshore and increased
automation of processes. The Motor business has enhanced its UK product
offering, including the launch of PCP for electric vehicles and the
integration of our Decision in Principle (DiP) technology with Motor Finance
partners.
The Premium Finance business operates in a mature market where we have seen
some softening in demand and the impacts of insurance premium costs declining.
On 9 July 2025, we announced a strategic repositioning to focus the growth of
our Premium Finance business towards commercial lines insurance premium
finance where we see strongest risk-adjusted returns and long-term growth
potential, and to reduce our emphasis on personal lines insurance premium
finance. To support this strategic repositioning, we will optimise the cost
base across the whole Premium Finance business through modernisation of our
technology platforms, digitising more of the onboarding journey and
streamlining our operating model. We estimate a steady state cost reduction of
c.£20 million by the 2030 financial year on an underlying basis (excluding
the impact of inflation and business growth).
We integrated our Savings business, which provides simple and straightforward
savings products to businesses and individuals, into Retail in 2024. 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. Overall, our
customer deposits increased 1% to £8.8 billion (31 July 2024: £8.7 billion).
Adjusted operating profit for Retail reduced to £18.9 million (2024: £37.9
million) driven by lower income in both Motor and Premium Finance as well as
higher costs in Motor Finance. Before provisions for impairment losses,
adjusted operating profit decreased 25% to £63.4 million (2024: £85.1
million).
The provision charge in respect of motor commissions recognised 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. Please refer to Note 16 "Other Liabilities" for further
details on the group's provisioning assessment of this matter.
The Retail business also incurred £18.7 million of complaints handling and
other operational and legal costs in relation to motor finance commissions.
Following the identification of historical deficiencies in certain operational
processes related to early settlement of loans in the Motor Finance business,
we recognised a separate provision of £33.0 million in relation to a
proactive customer remediation programme to be implemented by the group. The
provision reflects our best estimate based on the information currently
available and remains subject to refinement as the scope and design of the
remediation programme are finalised. Since identification of the issue, we
have acted quickly to amend the relevant processes and implemented additional
controls to prevent recurrence. The group is fully committed to ensuring that
affected customers are appropriately compensated and expects to contact
customers in early 2026.
On a statutory basis, Retail delivered an operating loss of £198.6 million
(2024: £13.6 million operating profit) mainly reflecting the adjusting items
described above.
Operating income decreased 6% to £246.7 million (2024: £262.4 million),
driven by lower loan books in both Motor and Premium finance. The net interest
margin decreased to 8.3% (2024: 8.7%) driven by Motor Finance with reduced fee
income and a competitive rate environment.
Adjusted operating expenses increased 3% to £183.3 million (2024: £177.3
million), driven by Motor Finance due to higher Ireland trading costs and
inflationary pressures, partially offset by a modest reduction in Premium,
from lower property, technology and volume related costs. As a result, the
expense/income ratio increased to 74% (2024: 68%).
Impairment charges decreased to £44.5 million (2024: £47.2 million), driven
by the benefit of the improved macroeconomic outlook in both Motor and
Premium. The bad debt ratio reduced to 1.5% (2024: 1.6%), with the provision
coverage ratio increasing slightly to 3.2% (31 July 2025: 3.0%), driven by the
reduction in the overall loan book.
Banking: Property
2025 2024 Change
£ million £ million %
Operating income 130.6 132.9 (2)
Adjusted operating expenses (33.9) (34.9) (3)
Impairment losses on financial assets (29.5) (20.0) 48
Adjusted operating profit 67.2 78.0 (14)
Adjusted operating profit, pre provisions for impairment losses 96.7 98.0 (1)
Adjusting items:
Restructuring costs (0.3) (0.3) -
Statutory operating profit 66.9 77.7 (14)
Net interest margin 6.9 % 7.3 %
Expense/income ratio 26 % 26 %
Bad debt ratio 1.5 % 1.1 %
Closing loan book 1,852.5 1,955.2 (5)
2024
£ million
Change
%
Operating income
130.6
132.9
(2)
Adjusted operating expenses
(33.9)
(34.9)
(3)
Impairment losses on financial assets
(29.5)
(20.0)
48
Adjusted operating profit
67.2
78.0
(14)
Adjusted operating profit, pre provisions for impairment losses
96.7
98.0
(1)
Adjusting items:
Restructuring costs
(0.3)
(0.3)
-
Statutory operating profit
66.9
77.7
(14)
Net interest margin
6.9 %
7.3 %
Expense/income ratio
26 %
26 %
Bad debt ratio
1.5 %
1.1 %
Closing loan book
1,852.5
1,955.2
(5)
Stable performance in a challenging market, well positioned for growth
Property provides residential development finance, bridging finance and
commercial development loans to experienced property developers and investors
across mainland UK and Northern Ireland, through its two brands, Close
Brothers Property Finance and Commercial Acceptances. It lends to c.700
professional property developers with a focus on small to medium-sized
residential developments.
The Property loan book is conservatively underwritten. We work with
experienced, professional developers, predominantly SMEs with a focus on
delivering mid-priced family housing, and have minimal exposure to the prime
central London market, with our regional loan book making up 49% of the
Property Finance portfolio. Our long track record, expertise and quality of
service ensure the business remains resilient to competition and continues to
generate high levels of repeat business.
The Property business delivered a stable performance against the challenging
market conditions for SME developers, with a slow-down experienced in core
markets. Our strong customer relationships and targeting of new growth
opportunities maintained our competitive position in the market. We have
successfully expanded our offering into additional residential markets, such
as Build-to-Rent and student accommodation, and are actively targeting new
regional markets. We have also expanded our capability to offer larger
transaction sizes and a broader product range to further enhance our customer
proposition.
Adjusted operating profit declined 14% to £67.2 million (2024: £78.0
million), due to a decline in income and an increase in impairments. Before
provisions for impairment losses, adjusted operating profit reduced 1% to
£96.7 million (2024: £98.0 million).
On a statutory basis, operating profit decreased to £66.9 million (2024:
£77.7 million) and included £0.3 million of restructuring costs.
Operating income declined 2% to £130.6 million (2024: £132.9 million),
driven by a lower loan book, with the net interest margin down to 6.9% (2024:
7.3%). This primarily reflected lower interest yield, driven by the lower Bank
of England rate, lower fee yield due to increasing facility utilisation, and
changes in the lending mix, with larger loans accounting for a greater share
of new business.
Adjusted operating expenses decreased 3% to £33.9 million (2024: £34.9
million), reflecting lower staff costs. The expense/income ratio was stable at
26% (2024: 26%).
Impairment charges increased to £29.5 million (2024: £20.0 million),
corresponding to a higher bad debt ratio of 1.5% (2024: 1.1%). This was driven
primarily by increased individual provisions on a small number of
developments, driven by build cost inflation, slower unit sales and lower
realised values. The provision coverage ratio increased to 4.2% (31 July 2024:
3.0%), driven by elevated Stage 3 provisions.
Definitions
Additional Tier 1 ("AT1") capital: Additional regulatory capital that along
with CET1 capital makes up a bank's or banking group's Tier 1 regulatory
capital. Includes the group's perpetual subordinated contingent convertible
securities classified as other equity instruments under IAS 32
Adjusted: 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
Adjusted earnings per share ("AEPS"): Adjusted operating profit less tax and
AT1 coupons divided by basic weighted average number of ordinary shares in
issue
Applicable requirements: Applicable capital ratio requirements consist of the
Pillar 1 requirement as defined by the CRR, the Pillar 2a requirement set by
the PRA, and the capital conservation buffer and countercyclical buffer as
defined by the PRA Rulebook. Any applicable PRA buffer is excluded
Average maturity of funding allocated to the loan book: 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
Bad debt ratio: (Adjusted) impairment losses in the year as a percentage of
average net loans and advances to customers and operating lease assets
excluding Close Brothers Vehicle Hire, which is in wind-down, and Brewery
Rentals, which has been classified as held for sale on the group's balance
sheet
Basic earnings per share ("EPS"): Total profit attributable to ordinary
shareholders divided by basic weighted average number of ordinary shares in
issue
Basic earnings per share ("EPS") continuing operations: Operating profit from
continuing operations less tax and AT1 coupons, divided by basic weighted
average number of ordinary shares in issue
Capital Requirements Directive ("CRD"): European Union regulation implementing
the Basel III requirements in Europe, alongside CRR II
Capital Requirements Regulation ("CRR"): Regulation 575/2013/EU, as it forms
part of the assimilated law of the United Kingdom
CET1 capital ratio: Measure of the group's CET1 capital as a percentage of
risk weighted assets, as required by CRR
Common equity tier 1 ("CET1") capital: Measure of capital as defined by the
CRR. CET1 capital consists of the highest quality capital including ordinary
shares, related share premium account, retained earnings and other reserves,
less goodwill and certain intangible assets and other regulatory adjustments
Compensation ratio: Total staff costs as a percentage of adjusted operating
income
Consolidated gain on disposal: The profit or loss recognised on the sale of a
subsidiary or business, calculated as proceeds received less related costs and
the carrying amount of net assets and goodwill disposed
Contingent deferred consideration: A portion of the purchase price on an
acquisition that is payable at a future date and is dependent on the
occurrence of specified future events or conditions
Cost of funds: Interest expense incurred to support lending activities
excluding Vehicle Hire and Brewery Rentals divided by the average net loans
and advances to customers and operating lease assets excluding Vehicle Hire
and Brewery Rentals
Discounting: The process of determining the present value of future payments
Dividend per share ("DPS"): Comprises the final dividend proposed for the
respective year, together with the interim dividend declared and paid in the
year
Effective interest rate ("EIR"): The interest rate at which revenue is
recognised on loans and discounted to their carrying value over the life of
the financial asset
Effective tax rate ("ETR"): Tax on operating profit/(loss) as a percentage of
operating profit/(loss) on ordinary activities before tax
Expected credit loss ("ECL"): The unbiased probability-weighted average credit
loss determined by evaluating a range of possible outcomes and future economic
conditions
Expense/income ratio: (Adjusted) operating expenses divided by (adjusted)
operating income
Financial Conduct Authority ("FCA"): A financial regulatory body in the UK,
regulating financial firms and maintaining integrity of the UK's financial
market
Financial Ombudsman Service ("FOS"): The Financial Ombudsman Service settles
complaints between consumers and businesses that provide financial services
Forbearance: Forbearance occurs when a customer is experiencing financial
difficulty in meeting their financial commitments and a concession is granted,
by changing the terms of the financial arrangement, which would not otherwise
be considered
Gross carrying amount: Loan book before expected credit loss provision
Internal ratings based ("IRB") approach: A supervisor-approved method using
internal models, rather than standardised risk weightings, to calculate
regulatory capital requirements for credit risk
International Accounting Standards ("IAS"): Older set of standards issued by
the International Accounting Standards Council, setting up accounting
principles and rules for preparation of financial statements. IAS are being
superseded by IFRS
International Financial Reporting Standards ("IFRS"): Globally accepted
accounting standards issued by the IFRS Foundation and the International
Accounting Standards Board
Leverage ratio: Tier 1 capital as a percentage of total balance sheet assets,
adjusted for certain capital deductions, including intangible assets, and
off-balance sheet exposures
Liquidity coverage ratio ("LCR"): Measure of the group's HQLAs as a percentage
of expected net cash outflows over the next 30 days in a stressed scenario
Long-term bad debt ratio: Long-term bad debt ratio calculated using IAS 39
until the change to IFRS 9 in FY19. Long-term average bad debt ratio of 1.2%
based on the average bad debt ratio for FY08-FY25, excluding Novitas from FY21
onwards and Rentals businesses from FY24
Net asset value ("NAV") per share: Total assets less total liabilities and
AT1, divided by the number of ordinary shares in issue excluding own shares
Net interest margin ("NIM"): Banking (adjusted) operating income divided by
average net loans and advances to customers and operating lease assets
excluding Vehicle Hire and Brewery Rentals
Net stable funding ratio ("NSFR"): Regulatory measure of the group's weighted
funding as a percentage of weighted assets
Personal Contract Plan ("PCP"): PCP is a form of vehicle finance where the
customer defers a significant portion of credit to the final repayment at the
end of the agreement, thereby lowering the monthly repayments compared to a
standard hire-purchase arrangement. At the final repayment date, the customer
has the option to: (a) pay the final payment and take the ownership of the
vehicle; (b) return the vehicle and not pay the final repayment; or (c)
part-exchange the vehicle with any equity being put towards the cost of a new
vehicle
Probability of default ("PD"): Probability that a customer will default on
their loan
Prudential Regulation Authority ("PRA"): A financial regulatory body,
responsible for regulating and supervising banks and other financial
institutions in the UK
Return on assets: Adjusted operating profit less tax and AT1 coupons divided
by average total assets for continuing operations at the balance sheet date
and prior year
Return on average tangible equity ("RoTE"): Adjusted operating profit, less
tax and AT1 coupons, divided by average total shareholders' equity, excluding
intangible assets and AT1, for continuing operations
Return on net loan book ("RoNLB"): Banking adjusted operating profit divided
by average net loans and advances to customers and operating lease assets
excluding Vehicle Hire and Brewery Rentals
Return on opening equity ("RoE"): Adjusted operating profit less tax and AT1
coupons divided by opening equity for continuing operations, excluding AT1
Risk weighted assets ("RWAs"): A measure of the amount of a bank's exposures,
adjusted for risk in line with the CRR. It is used in determining the capital
requirement for a financial institution
Significant increase in credit risk ("SICR"): An assessment of whether credit
risk has increased significantly since initial recognition of a loan using a
range of triggers. Accounts which have experienced a significant increase in
credit risk will be allocated to Stage 2
Standardised approach: Generic term for regulator-defined approaches for
calculating credit, operational and market risk capital requirements as set
out in the CRR
Subordinated debt: Represents debt that ranks below, and is repaid after
claims of, other secured or senior debt owed by the issuer
Tangible net asset value ("TNAV") per share: Total assets less total
liabilities, AT1 and intangible assets, divided by the number of ordinary
shares in issue excluding own shares
Term funding: Funding with a remaining maturity greater than 12 months
Term Funding Scheme for Small and Medium-sized Enterprises ("TFSME"): The Bank
of England's Term Funding Scheme with additional incentives for SMEs
Tier 2 capital: Additional regulatory capital that along with Tier 1 capital
makes up a bank's total regulatory capital. Includes qualifying subordinated
debt
Total funding as percentage of loan book: Total funding divided by net loans
and advances to customers and operating lease assets
Consolidated income statement
For the year ended 31 July 2025
Note 2025 2024(1)
£ million £ million
Interest income 1,111.7 1,133.2
Interest expense (542.9) (552.5)
Net interest income 568.8 580.7
Fee and commission income 103.5 104.2
Fee and commission expense (16.7) (19.8)
Other income 118.5 129.7
Depreciation of operating lease assets and other direct costs 10 (84.6) (81.4)
Impairment of operating lease assets 10 (30.0) -
Non-interest income 90.7 132.7
Operating income 659.5 713.4
Provision in relation to motor finance commissions 16 (165.0) -
Complaints handling and other operational and legal costs incurred in relation 16 (18.7) (6.9)
to motor finance commissions
Provision in relation to early settlements in Motor Finance 16 (33.0) -
Provision in relation to the Borrowers in Financial Difficulty ("BiFD") review - (17.2)
Other administrative expenses (472.4) (457.7)
Total administrative expenses (689.1) (481.8)
Impairment losses on financial assets 6 (92.8) (98.9)
Total operating expenses (781.9) (580.7)
Operating (loss)/profit before tax (122.4) 132.7
Tax 3 (4.7) (37.4)
(Loss)/profit after tax from continuing operations (127.1) 95.3
Profit from discontinued operations, net of tax 23 49.2 5.1
(Loss)/profit after tax (77.9) 100.4
Attributable to
Shareholders (100.2) 89.3
Other equity owners 13 22.3 11.1
(77.9) 100.4
From continuing operations
Basic earnings per share 4 (99.8p) 56.2p
Diluted earnings per share 4 (99.8p) 56.1p
From continuing and discontinued operations
Basic earnings per share 4 (66.9p) 59.7p
Diluted earnings per share 4 (66.9p) 59.5p
Interim dividend per share 5 - -
Final dividend per share 5 - -
2024(1)
£ million
Interest income
1,111.7
1,133.2
Interest expense
(542.9)
(552.5)
Net interest income
568.8
580.7
Fee and commission income
103.5
104.2
Fee and commission expense
(16.7)
(19.8)
Other income
118.5
129.7
Depreciation of operating lease assets and other direct costs
10
(84.6)
(81.4)
Impairment of operating lease assets
10
(30.0)
-
Non-interest income
90.7
132.7
Operating income
659.5
713.4
Provision in relation to motor finance commissions
16
(165.0)
-
Complaints handling and other operational and legal costs incurred in relation
to motor finance commissions
16
(18.7)
(6.9)
Provision in relation to early settlements in Motor Finance
16
(33.0)
-
Provision in relation to the Borrowers in Financial Difficulty ("BiFD") review
-
(17.2)
Other administrative expenses
(472.4)
(457.7)
Total administrative expenses
(689.1)
(481.8)
Impairment losses on financial assets
6
(92.8)
(98.9)
Total operating expenses
(781.9)
(580.7)
Operating (loss)/profit before tax
(122.4)
132.7
Tax
3
(4.7)
(37.4)
(Loss)/profit after tax from continuing operations
(127.1)
95.3
Profit from discontinued operations, net of tax
23
49.2
5.1
(Loss)/profit after tax
(77.9)
100.4
Attributable to
Shareholders
(100.2)
89.3
Other equity owners
13
22.3
11.1
(77.9)
100.4
From continuing operations
Basic earnings per share
4
(99.8p)
56.2p
Diluted earnings per share
4
(99.8p)
56.1p
From continuing and discontinued operations
Basic earnings per share
4
(66.9p)
59.7p
Diluted earnings per share
4
(66.9p)
59.5p
Interim dividend per share
5
-
-
Final dividend per share
5
-
-
1. Comparative information restated following the classification of Close
Brothers Asset Management and Winterflood Securities as discontinued
operations. See Notes 2 and 23.
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2025
2025 2024
£ million £ million
(Loss)/profit after tax (77.9) 100.4
Items that may be reclassified to income statement
Currency translation gains/(losses) 0.5 (0.5)
Losses on cash flow hedging (12.7) (29.8)
Losses on financial instruments classified at fair value through other (4.2) (3.6)
comprehensive income
Tax relating to items that may be reclassified 4.3 9.8
(12.1) (24.1)
Items that will not be reclassified to income statement
Defined benefit pension scheme losses (0.1) -
Other comprehensive expense, net of tax (12.2) (24.1)
Total comprehensive (loss)/income (90.1) 76.3
Attributable to
Shareholders (112.4) 65.2
Other equity owners 13 22.3 11.1
(90.1) 76.3
2024
£ million
(Loss)/profit after tax
(77.9)
100.4
Items that may be reclassified to income statement
Currency translation gains/(losses)
0.5
(0.5)
Losses on cash flow hedging
(12.7)
(29.8)
Losses on financial instruments classified at fair value through other
comprehensive income
(4.2)
(3.6)
Tax relating to items that may be reclassified
4.3
9.8
(12.1)
(24.1)
Items that will not be reclassified to income statement
Defined benefit pension scheme losses
(0.1)
-
Other comprehensive expense, net of tax
(12.2)
(24.1)
Total comprehensive (loss)/income
(90.1)
76.3
Attributable to
Shareholders
(112.4)
65.2
Other equity owners
13
22.3
11.1
(90.1)
76.3
Consolidated Balance Sheet
At 31 July 2025
Note 31 July 2025 31 July 2024
£ million £ million
Assets
Cash and balances at central banks 1,917.0 1,584.0
Settlement balances - 627.5
Loans and advances to banks 161.7 293.7
Loans and advances to customers 6 9,459.4 9,830.8
Debt securities 7 859.2 740.5
Equity shares 8 - 27.4
Loans to money brokers against stock advanced - 22.5
Derivative financial instruments 103.1 101.4
Intangible assets 9 166.3 266.0
Property, plant and equipment 10 209.4 349.6
Current tax assets 44.2 36.4
Deferred tax assets 3 31.0 14.3
Prepayments, accrued income and other assets 186.6 186.7
Assets classified as held for sale 23 934.0 -
Total assets 14,071.9 14,080.8
Liabilities
Settlement balances and short positions 11 - 614.9
Deposits by banks 12 88.1 138.4
Deposits by customers 12 8,799.3 8,693.6
Loans and overdrafts from banks 12 1.5 165.6
Debt securities in issue 12 1,991.3 1,986.4
Loans from money brokers against stock advanced - 16.7
Derivative financial instruments 104.7 129.0
Provisions 16 210.3 32.3
Accruals, deferred income and other liabilities 172.3 274.2
Subordinated loan capital 19 195.5 187.2
Liabilities directly associated with assets classified as held for sale 23 773.4 -
Total liabilities 12,336.4 12,238.3
Equity
Called up share capital 38.0 38.0
Retained earnings 1,532.3 1,634.4
Other equity instrument 13 197.6 197.6
Other reserves (32.4) (27.5)
Total shareholders' and other equity owners' equity 1,735.5 1,842.5
Total equity 1,735.5 1,842.5
Total equity and liabilities 14,071.9 14,080.8
31 July 2024
£ million
Assets
Cash and balances at central banks
1,917.0
1,584.0
Settlement balances
-
627.5
Loans and advances to banks
161.7
293.7
Loans and advances to customers
6
9,459.4
9,830.8
Debt securities
7
859.2
740.5
Equity shares
8
-
27.4
Loans to money brokers against stock advanced
-
22.5
Derivative financial instruments
103.1
101.4
Intangible assets
9
166.3
266.0
Property, plant and equipment
10
209.4
349.6
Current tax assets
44.2
36.4
Deferred tax assets
3
31.0
14.3
Prepayments, accrued income and other assets
186.6
186.7
Assets classified as held for sale
23
934.0
-
Total assets
14,071.9
14,080.8
Liabilities
Settlement balances and short positions
11
-
614.9
Deposits by banks
12
88.1
138.4
Deposits by customers
12
8,799.3
8,693.6
Loans and overdrafts from banks
12
1.5
165.6
Debt securities in issue
12
1,991.3
1,986.4
Loans from money brokers against stock advanced
-
16.7
Derivative financial instruments
104.7
129.0
Provisions
16
210.3
32.3
Accruals, deferred income and other liabilities
172.3
274.2
Subordinated loan capital
19
195.5
187.2
Liabilities directly associated with assets classified as held for sale
23
773.4
-
Total liabilities
12,336.4
12,238.3
Equity
Called up share capital
38.0
38.0
Retained earnings
1,532.3
1,634.4
Other equity instrument
13
197.6
197.6
Other reserves
(32.4)
(27.5)
Total shareholders' and other equity owners' equity
1,735.5
1,842.5
Total equity
1,735.5
1,842.5
Total equity and liabilities
14,071.9
14,080.8
The consolidated financial statements were approved and authorised for issue
by the board of directors on 30 September 2025 and signed on its behalf by:
Michael B. Morgan Fiona McCarthy Registered number: 520241
Chief Executive Group Chief Finance Officer
Fiona McCarthy
Group Chief Finance Officer
Registered number: 520241
Consolidated Statement of Changes in Equity
For the year ended 31 July 2025
Other reserves Total attributable to shareholders and other equity owners
£ million
Called up share capital Retained earnings Other equity instrument FVOCI reserve Share-based payments reserve Exchange movements reserve Cash flow hedging reserve Total equity
£ million £ million £ million £ million £ million £ million £ million £ million
At 1 August 2023 38.0 1,608.5 - (2.7) (32.0) (1.3) 34.4 1,644.9 1,644.9
Profit for the year - 100.4 - - - - - 100.4 100.4
Other comprehensive expense - - - (2.6) - (0.1) (21.4) (24.1) (24.1)
Total comprehensive income for the year - 100.4 - (2.6) - (0.1) (21.4) 76.3 76.3
Dividends paid (Note 5) - (67.1) - - - - - (67.1) (67.1)
Shares purchased - - - - (3.5) - - (3.5) (3.5)
Shares released - - - - 4.6 - - 4.6 4.6
Other equity instrument issued (Note 13) - - 197.6 - - - - 197.6 197.6
Coupon paid on other equity instrument (Note 13) - (11.1) - - - - - (11.1) (11.1)
Other movements - 3.7 - - (2.9) - - 0.8 0.8
At 31 July 2024 38.0 1,634.4 197.6 (5.3) (33.8) (1.4) 13.0 1,842.5 1,842.5
Loss for the year - (77.9) - - - - - (77.9) (77.9)
Other comprehensive (expense)/income - (0.1) - (3.0) - 0.1 (9.2) (12.2) (12.2)
Total comprehensive (expense)/income for the year - (78.0) - (3.0) - 0.1 (9.2) (90.1) (90.1)
Shares purchased - - - - (1.6) - - (1.6) (1.6)
Shares released - - - - 9.2 - - 9.2 9.2
Coupon paid on other equity instrument (Note 13) - (22.3) - - - - - (22.3) (22.3)
Other movements - (1.8) - - (0.4) - - (2.2) (2.2)
At 31 July 2025 38.0 1,532.3 197.6 (8.3) (26.6) (1.3) 3.8 1,735.5 1,735.5
Called up share capital
£ million
Retained earnings
£ million
Other equity instrument
£ million
FVOCI reserve
£ million
Share-based payments reserve
£ million
Exchange movements reserve
£ million
Cash flow hedging reserve
£ million
Total equity
£ million
At 1 August 2023
38.0
1,608.5
-
(2.7)
(32.0)
(1.3)
34.4
1,644.9
1,644.9
Profit for the year
-
100.4
-
-
-
-
-
100.4
100.4
Other comprehensive expense
-
-
-
(2.6)
-
(0.1)
(21.4)
(24.1)
(24.1)
Total comprehensive income for the year
-
100.4
-
(2.6)
-
(0.1)
(21.4)
76.3
76.3
Dividends paid (Note 5)
-
(67.1)
-
-
-
-
-
(67.1)
(67.1)
Shares purchased
-
-
-
-
(3.5)
-
-
(3.5)
(3.5)
Shares released
-
-
-
-
4.6
-
-
4.6
4.6
Other equity instrument issued (Note 13)
-
-
197.6
-
-
-
-
197.6
197.6
Coupon paid on other equity instrument (Note 13)
-
(11.1)
-
-
-
-
-
(11.1)
(11.1)
Other movements
-
3.7
-
-
(2.9)
-
-
0.8
0.8
At 31 July 2024
38.0
1,634.4
197.6
(5.3)
(33.8)
(1.4)
13.0
1,842.5
1,842.5
Loss for the year
-
(77.9)
-
-
-
-
-
(77.9)
(77.9)
Other comprehensive (expense)/income
-
(0.1)
-
(3.0)
-
0.1
(9.2)
(12.2)
(12.2)
Total comprehensive (expense)/income for the year
-
(78.0)
-
(3.0)
-
0.1
(9.2)
(90.1)
(90.1)
Shares purchased
-
-
-
-
(1.6)
-
-
(1.6)
(1.6)
Shares released
-
-
-
-
9.2
-
-
9.2
9.2
Coupon paid on other equity instrument (Note 13)
-
(22.3)
-
-
-
-
-
(22.3)
(22.3)
Other movements
-
(1.8)
-
-
(0.4)
-
-
(2.2)
(2.2)
At 31 July 2025
38.0
1,532.3
197.6
(8.3)
(26.6)
(1.3)
3.8
1,735.5
1,735.5
Consolidated Cash Flow Statement
For the year ended 31 July 2025
Note 2025 2024
£ million £ million
Net cash inflow/(outflow) from operating activities 18(a) 241.2 (382.0)
Net cash (outflow)/inflow from investing activities
Purchase of:
Property, plant and equipment (5.3) (14.2)
Intangible assets - software (24.5) (30.3)
Subsidiaries, net of cash acquired 18(b) (0.5) (15.4)
Sale of:
Equity shares held for investment 1.8 0.2
Subsidiaries, net of cash disposed 18(c) 104.0 0.9
75.5 (58.8)
Net cash inflow/(outflow) before financing activities 316.7 (440.8)
Financing activities
Purchase of own shares for employee share award schemes (1.6) (3.5)
Equity dividends paid - (67.1)
Interest paid on subordinated loan capital and debt financing (23.4) (23.4)
Payment of lease liabilities (12.1) (16.5)
Issuance of Additional Tier 1 ("AT1") capital securities - 200.0
Costs arising on issue of AT1 - (2.4)
AT1 coupon payment (22.3) (11.1)
Net increase/(decrease) in cash 257.3 (364.8)
Cash and cash equivalents at beginning of year 1,844.5 2,209.3
Cash and cash equivalents at end of year 18(d) 2,101.8 1,844.5
Cash and cash equivalents per the balance sheet 2,046.8 1,844.5
Cash and cash equivalents within the assets of the disposal group classified 23 55.0 -
as held for sale
2,101.8 1,844.5
2024
£ million
Net cash inflow/(outflow) from operating activities
18(a)
241.2
(382.0)
Net cash (outflow)/inflow from investing activities
Purchase of:
Property, plant and equipment
(5.3)
(14.2)
Intangible assets - software
(24.5)
(30.3)
Subsidiaries, net of cash acquired
18(b)
(0.5)
(15.4)
Sale of:
Equity shares held for investment
1.8
0.2
Subsidiaries, net of cash disposed
18(c)
104.0
0.9
75.5
(58.8)
Net cash inflow/(outflow) before financing activities
316.7
(440.8)
Financing activities
Purchase of own shares for employee share award schemes
(1.6)
(3.5)
Equity dividends paid
-
(67.1)
Interest paid on subordinated loan capital and debt financing
(23.4)
(23.4)
Payment of lease liabilities
(12.1)
(16.5)
Issuance of Additional Tier 1 ("AT1") capital securities
-
200.0
Costs arising on issue of AT1
-
(2.4)
AT1 coupon payment
(22.3)
(11.1)
Net increase/(decrease) in cash
257.3
(364.8)
Cash and cash equivalents at beginning of year
1,844.5
2,209.3
Cash and cash equivalents at end of year
18(d)
2,101.8
1,844.5
Cash and cash equivalents per the balance sheet
2,046.8
1,844.5
Cash and cash equivalents within the assets of the disposal group classified
as held for sale
23
55.0
-
2,101.8
1,844.5
The Notes
1. Basis of Preparation and Accounting Policies
The financial information contained in this unaudited announcement does not
constitute the statutory accounts for the years ended 31 July 2025 or 31 July
2024 within the meaning of section 435 of the Companies Act 2006, but is
derived from those accounts. The accounting policies used are consistent with
those set out in the Annual Report 2024 with the exception of an additional
policy on discontinued operations.
The results of discontinued operations are shown as: a single amount on the
face of the consolidated income statement comprising the post-tax profit or
loss of discontinued operations; and post-tax gain or loss recognised either
on measurement to fair value less costs to sell or on the disposal of the
discontinued operation.
A discontinued operation is a cash generating unit ("CGU") or a group of CGUs
that either has been disposed of, or is classified as held for sale, and
represents a separate major line of business or geographical area of
operations, is part of a single coordinated plan to dispose of a separate
major line of business or geographical area of operations or is a subsidiary
acquired exclusively with a view to resale.
Intercompany transactions between continuing and discontinued operations have
been eliminated on consolidation in the consolidated income statement.
Disposal groups are classified as held for sale when their carrying amounts
will be recovered principally through a sale rather than continuing use, and
the sale is highly probable within 12 months. They are measured at the lower
of carrying amount and fair value less costs to sell, with impairment losses,
as needed, recognised in the income statement on initial classification and
subsequent remeasurement. Financial assets and liabilities within a disposal
group continue to be measured under IFRS 9.
The financial statements are prepared on a going concern basis. Whilst the
financial information has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards ("IFRS"),
this announcement does not itself contain sufficient information to comply
with IFRS.
The financial information for the year ended 31 July 2025 has been derived
from the financial statements of Close Brothers Group plc for that year.
Statutory accounts for 2024 have been delivered to the Registrar of Companies
and those for 2025 will be delivered following the company's Annual General
Meeting. The group's auditor, PricewaterhouseCoopers LLP, will report on the
2025 accounts: their report is expected to be unqualified, and is not expected
to draw attention to any matters by way of emphasis or contain statements
under Section 498(2) or (3) of the Companies Act 2006.
Items relevant to understanding financial performance are presented on the
consolidated income statement under IAS 1. Adjusting items and administrative
expenses before adjusting items are not presented on the consolidated income
statement this year to provide more clarity in relation to the statutory
figures. Prior year comparatives have been re-presented on the same basis.
Critical accounting judgements and estimates
The reported results of the group are sensitive to the judgements, estimates
and assumptions that underlie the application of its accounting policies and
preparation of its financial statements. UK company law and IFRS require the
directors, in preparing the group's financial statements, to select suitable
accounting policies, apply them consistently and make judgements, estimates
and assumptions that are reasonable.
The group's estimates and assumptions are based on historical experience and
reasonable expectations of future events and are reviewed on an ongoing basis.
Actual results in the future may differ from the amounts estimated due to the
inherent uncertainty.
The group's critical accounting judgements, made in applying its accounting
policies, and the key sources of estimation uncertainty that may have a
significant risk of causing a material adjustment within the next financial
year are set out below.
The impact of climate change on the group's judgements, estimates and
assumptions has been considered in preparing these financial statements. While
no material impact has been identified, climate risk continues to be monitored
on an ongoing basis.
Critical accounting judgements
The critical accounting judgements of the group, which relate to expected
credit loss provisions under IFRS 9 and motor finance commissions, are as
follows:
• Establishing the criteria for a significant increase in credit risk;
• Determining the appropriate definition of default;
• Determining the impact of the FCA's motor commissions review on the group's
goodwill impairment assessment; and
• Determining the affected customers in the motor finance commissions
provisioning assessment, with further judgement and estimation then applied on
the level of compensation and appropriate scenarios.
Information on the first two accounting judgements can be found below, while
further information on the third and fourth judgements can be found in Note
16.
Significant increase in credit risk
Assets are transferred from Stage 1 to Stage 2 when there has been a
significant increase in credit risk since initial recognition. Typically, the
group assesses whether a significant increase in credit risk has occurred
based on a quantitative and qualitative assessment, with a "30 days past due"
backstop.
Due to the diverse nature of the group's lending businesses, the specific
indicators of a significant increase in credit risk vary by business and may
include some or all of the following factors:
• quantitative assessment: the lifetime probability of default ("PD") has
increased by more than an agreed threshold relative to the equivalent at
origination. Thresholds are based on a fixed number of risk grade movements
which are bespoke to each business to ensure that the increased risk since
origination is appropriately captured;
• qualitative assessment: events or observed behaviour indicate credit
deterioration. This includes a wide range of information that is reasonably
available including individual credit assessments of the financial performance
of borrowers as appropriate during routine reviews, plus forbearance and watch
list information; or
• backstop criteria: the "30 days past due" backstop is met.
Definition of default
The definition of default is an important building block for expected credit
loss models and is considered a key judgement. A default is considered to have
occurred if any unlikeliness to pay criterion is met or when a financial asset
meets a "90 days past due" backstop. While some criteria are factual (e.g.
administration, insolvency or bankruptcy), others require a judgemental
assessment of whether the borrower has financial difficulties which are
expected to have a detrimental impact on their ability to meet contractual
obligations. A change in the definition of default may have a material impact
on the expected credit loss provision.
Key sources of estimation uncertainty
The key sources of estimation uncertainty of the group, which relate to
expected credit loss provisions, value in use calculations, and motor finance
commissions, are as follows:
• Forward-looking macroeconomic information incorporated into expected credit
loss models. This was also a key estimate in the prior year;
• Adjustments by management to model calculated expected credit losses due to
limitations in the group's expected credit loss models or input data, which
may be identified through ongoing model monitoring and validation of models.
This was also a key estimate in the prior year;
• Estimate of future cash flow forecasts in the calculation of value in use for
the testing of goodwill for impairment in relation to the Banking division
cash generating units, in particular Motor Finance, due to lower cash flow
forecasts. This was also a key estimate in the prior year; and
• Estimate of the expected future rental incomes and disposal values in the
calculation of value in use for the operating lease assets of Close Brothers
Vehicle Hire; and
• Estimates and assumptions applied in the calculation of the provision relating
to motor finance commissions. These assumptions are the total cost of credit
thresholds ("TCC"), which is a key factor in determining affected customers,
claim rates and scenario weightings. Claim rate is defined as the estimated
cost of customer remediation (based on customer engagement with redress
invitation) as a percentage of the estimated cost of the eligible in scope
population.
Novitas loans
Novitas provided funding to individuals who wished to pursue legal cases. 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
the group's long-term strategy and risk appetite.
To protect customers in the event that their case failed, it was a condition
of the Novitas loan agreements that an individual purchased an After the Event
("ATE") insurance policy which covered the loan. As previously announced, the
group accelerated its efforts to resolve the issues surrounding Novitas and
actively sought recovery from the customers' ATE insurers.
During the year, the group entered into settlement with two insurers. This
resulted in the derecognition of net loans and advances to customers of £76.1
million from the consolidated balance sheet, comprising gross loans and
advances to customers of £318.1 million and expected credit loss ("ECL")
provisions of £242.0 million, resulting in a £6.7 million impairment credit,
which has been recorded within impairment losses on financial assets in the
consolidated income statement.
At 31 July 2025, net loans and advances to customers relating to Novitas of
£nil, comprising gross loans and advances to customers of £2.8 million and
ECL provisions of £2.8 million, remained on the consolidated balance sheet.
These loans are expected to be closed during the next financial period.
An insurance receivable has been recognised within lending receivables,
representing the amounts due from the insurers at 31 July 2025. £48.5 million
was subsequently settled and received in August 2025. The insurance receivable
is classified as a Stage 1 financial asset held at amortised cost under IFRS 9
with an immaterial ECL provision.
Further detail on the impairment provision is included in Note 6.
Forward-looking information
Determining expected credit losses under IFRS 9 requires the incorporation of
forward-looking macroeconomic information that is reasonable, supportable and
includes assumptions linked to economic variables that impact losses in each
portfolio. The introduction of macroeconomic information introduces additional
volatility to provisions.
In order to calculate forward-looking provisions, economic scenarios are
sourced from Moody's Analytics. These cover a range of plausible economic
paths that are used in conjunction with PD, EAD and LGD parameters for each
portfolio to assess expected credit loss provisions across a range of
conditions. An overview of these scenarios using key macroeconomic indicators
is provided on pages 39 to 41. Ongoing benchmarking of the scenarios to other
economic providers is carried out monthly to provide management with comfort
on Moody's Analytics scenario paths.
Five different projected economic scenarios are currently considered to cover
a range of possible outcomes. These include a baseline scenario, which
reflects the best view of future economic events. In addition, one upside
scenario and three downside scenario paths are defined relative to the
baseline. Management assigns the scenarios a probability weighting to reflect
the likelihood of specific scenarios, and therefore loss outcomes,
materialising, using a combination of quantitative analysis and expert
judgement.
The impact of forward-looking information varies across the group's lending
businesses because of the differing sensitivity of each portfolio to specific
macroeconomic variables.
This is reflected through the development of bespoke macroeconomic models that
recognise the specific response of each business to the macroeconomic
environment.
The modelled impact of macroeconomic scenarios and their respective weightings
is reviewed by business experts in relation to stage allocation and coverage
ratios at the individual and portfolio level, incorporating management's
experience and knowledge of customers, the sectors in which they operate, and
the assets financed.
This includes assessment of the reaction of the ECL in the context of the
prevailing and forecast economic conditions, for example where currently
higher interest rates and inflationary conditions exist compared to recent
periods.
Economic forecasts have evolved over the course of 2025 and reflect the mixed
external backdrop observed in the year. Forecasts deployed in IFRS 9
macroeconomic models are updated on a monthly basis. At 31 July 2025, the
latest baseline scenario forecasts gross domestic product ("GDP") growth of
1.1% in calendar year 2025 and an average base rate of 4.2% across the same
period. Consumer Price Index ("CPI") inflation is forecast to be 3.1% in
calendar year 2025 in the baseline scenario, with 1.3% forecast in the
protracted downside scenario over the same period.
At 31 July 2025, the scenario weightings were: 30% strong upside, 32.5%
baseline, 20% mild downside, 10.5% moderate downside and 7% protracted
downside. As economic forecasts are considered to recognise developments in
the macroeconomic environment appropriately, no change has been made to the
weightings ascribed to the scenarios since 31 July 2024.
Given the current economic uncertainty, further analysis has been undertaken
to assess the appropriateness of the five scenarios used. This included
benchmarking the baseline scenario to consensus economic views, as well as
consideration of an additional forecast related to stagflation, which could be
considered as an alternative downside scenario.
Compared to the scenarios in use in the expected credit losses calculation,
the stagflation scenario includes a longer period of higher interest rates
coupled with a shallower but extended impact on GDP. Due to the relatively
short tenor of the portfolios, the stagflation scenario is considered to be of
less relevance than those deployed. This is supported by the fact that, due to
the higher severity of recessionary factors in the existing scenarios, using
the stagflation scenario instead of the moderate or protracted downside
scenario would result in lower expected credit losses.
The final scenarios deployed reflect modest improvement in the UK economic
outlook relative to 31 July 2024. Under the baseline scenario, UK headline CPI
inflation is expected to moderate from current levels and meet the Bank of
England's 2% target during the second half of 2026. Aligned to the overall
downward trend in inflation from its 2022 peak, the Bank of England base rate
is forecast to continue to reduce in all scenarios. House price outlook has
improved across all scenarios, recognising more resilient housing market
performance than previously anticipated. Unemployment rate forecasts have
marginally deteriorated compared to 31 July 2024.
The tables below show economic assumptions within each scenario, and the
weighting applied to each at 31 July 2025. The metrics shown are key UK
economic indicators, chosen to describe the economic scenarios. These are the
main metrics used to set scenario paths, which then influence a wide range of
additional metrics that are used in expected credit loss models. The first
tables show the forecasts of the key metrics for the scenarios utilised for
calendar years 2025 and 2026. The subsequent tables show averages and
peak-to-trough ranges for the same key metrics over the five-year period from
2025 to 2029.
Scenario Forecasts and Weights
Baseline Upside Downside Downside (moderate) Downside (protracted)
(strong) (mild)
2025 2026 2025 2026 2025 2026 2025 2026 2025 2026
At 31 July 2025
UK GDP growth 1.1 % 1.0 % 1.9 % 3.7 % 0.4 % (1.9) % 0.2 % (3.4) % 0.1 % (4.3) %
UK unemployment 4.7 % 4.7 % 4.5 % 4.1 % 4.8 % 5.2 % 5.0 % 6.8 % 5.1 % 8.0 %
UK HPI growth 3.3 % 3.2 % 9.9 % 13.4 % 0.2 % (2.6) % (1.6) % (9.2) % (3.6) % (16.4) %
BoE base rate 4.2 % 3.2 % 4.3 % 3.5 % 4.1 % 2.4 % 4.1 % 1.8 % 3.9 % 1.3 %
Consumer Price Index 3.1 % 2.0 % 3.2 % 2.1 % 2.1 % 0.3 % 1.7 % (0.6) % 1.3 % (1.1) %
Weighting 32.5% 30% 20% 10.5% 7%
Downside
(mild)
Downside (moderate)
Downside (protracted)
2025
2026
2025
2026
2025
2026
2025
2026
2025
2026
At 31 July 2025
UK GDP growth
1.1 %
1.0 %
1.9 %
3.7 %
0.4 %
(1.9) %
0.2 %
(3.4) %
0.1 %
(4.3) %
UK unemployment
4.7 %
4.7 %
4.5 %
4.1 %
4.8 %
5.2 %
5.0 %
6.8 %
5.1 %
8.0 %
UK HPI growth
3.3 %
3.2 %
9.9 %
13.4 %
0.2 %
(2.6) %
(1.6) %
(9.2) %
(3.6) %
(16.4) %
BoE base rate
4.2 %
3.2 %
4.3 %
3.5 %
4.1 %
2.4 %
4.1 %
1.8 %
3.9 %
1.3 %
Consumer Price Index
3.1 %
2.0 %
3.2 %
2.1 %
2.1 %
0.3 %
1.7 %
(0.6) %
1.3 %
(1.1) %
Weighting
32.5%
30%
20%
10.5%
7%
Baseline Upside Downside Downside (moderate) Downside (protracted)
(strong) (mild)
2024 2025 2024 2025 2024 2025 2024 2025 2024 2025
At 31 July 2024
UK GDP growth 1.0% 1.2% 1.8% 3.9% 0.3% (1.4)% (0.1)% (3.9)% (0.3)% (5.4)%
UK unemployment 4.4% 4.5% 4.2% 4.0% 4.5% 4.9% 4.7% 6.6% 4.8% 7.8%
UK HPI growth 0.7% 3.2% 7.1% 13.3% (2.3)% (2.6)% (4.1)% (9.2)% (6.0)% (16.4)%
BoE base rate 5.1% 4.2% 5.2% 4.4% 5.0% 3.5% 5.0% 2.9% 4.8% 2.3%
Consumer Price Index 2.5% 2.1% 2.6% 2.2% 1.6% 0.4% 1.1% (0.5)% 0.7% (1.0)%
Weighting 32.5% 30% 20% 10.5% 7%
Downside
(mild)
Downside (moderate)
Downside (protracted)
2024
2025
2024
2025
2024
2025
2024
2025
2024
2025
At 31 July 2024
UK GDP growth
1.0%
1.2%
1.8%
3.9%
0.3%
(1.4)%
(0.1)%
(3.9)%
(0.3)%
(5.4)%
UK unemployment
4.4%
4.5%
4.2%
4.0%
4.5%
4.9%
4.7%
6.6%
4.8%
7.8%
UK HPI growth
0.7%
3.2%
7.1%
13.3%
(2.3)%
(2.6)%
(4.1)%
(9.2)%
(6.0)%
(16.4)%
BoE base rate
5.1%
4.2%
5.2%
4.4%
5.0%
3.5%
5.0%
2.9%
4.8%
2.3%
Consumer Price Index
2.5%
2.1%
2.6%
2.2%
1.6%
0.4%
1.1%
(0.5)%
0.7%
(1.0)%
Weighting
32.5%
30%
20%
10.5%
7%
Notes:
UK GDP growth: National Accounts Annual Real Gross Domestic Product,
Seasonally Adjusted - year-on-year change (%).
UK unemployment: ONS Labour Force Survey, Seasonally Adjusted - Average (%).
UK HPI growth: Average nominal house prices, Land Registry, Seasonally
Adjusted - Q4-to-Q4 change (%).
BoE base rate: Bank of England base rate - Average (%).
Consumer Price Index: ONS, All items, annual inflation - Q4-to-Q4 change (%).
Five-year average (calendar years 2025 to 2029)
Baseline Upside (strong) Downside (mild) Downside (moderate) Downside (protracted)
At 31 July 2025
UK GDP growth 1.6% 2.3% 1.1% 0.8% 0.7%
UK unemployment 4.7% 4.1% 4.9% 6.7% 7.6%
UK HPI growth 2.5% 4.2% 0.8% (1.0)% (3.5)%
BoE base rate 3.0% 3.1% 2.7% 2.0% 1.5%
Consumer Price Index 2.2% 2.3% 1.6% 1.2% 0.9%
Weighting 32.5% 30% 20% 10.5% 7%
Five-year average (calendar years 2024 to 2028)
Baseline Upside (strong) Downside (mild) Downside (moderate) Downside (protracted)
At 31 July 2024
UK GDP growth 1.5% 2.3% 1.1% 0.6% 0.4%
UK unemployment 4.6% 4.0% 4.8% 6.6% 7.4%
UK HPI growth 2.5% 4.2% 0.9% (1.0)% (3.5)%
BoE base rate 3.5% 3.6% 3.2% 2.5% 2.0%
Consumer Price Index 2.1% 2.2% 1.5% 1.2% 0.8%
Weighting 32.5% 30% 20% 10.5% 7%
Notes:
UK GDP growth: National Accounts Annual Real Gross Domestic Product,
Seasonally Adjusted - CAGR (%)
UK unemployment: ONS Labour Force Survey, Seasonally Adjusted - Average (%)
UK HPI growth: Average nominal house prices, Land Registry, Seasonally
Adjusted - CAGR (%)
BoE base rate: Bank of England base rate - Average (%)
Consumer Price Index: ONS, All items, annual inflation - CAGR (%)
The forecasts represent an economic view at 31 July 2025, after which there
have been further economic developments, including the latest base rate
reduction to 4.0% at the August Monetary Policy Committee meeting. These
developments, and their impact on scenarios and weightings, are subject to
ongoing monitoring by management.
These periods have been included as they demonstrate the short, medium and
long-term outlooks for the key macroeconomic indicators which form the basis
of the scenario forecasts. The portfolio has an average residual maturity of
15 months, with 99% of loan value having a maturity of five years or less.
The tables below provide a summary for the five-year period (calendar years
2025 to 2029) of the peak-to-trough range of values of the key UK economic
variables used within the economic scenarios at 31 July 2025 and 31 July 2024.
Five-year period (calendar year 2025 to 2029)
Baseline Upside (strong) Downside (mild) Downside (moderate) Downside (protracted)
Peak Trough Peak Trough Peak Trough Peak Trough Peak Trough
At 31 July 2025
UK GDP growth 8.2 % 0.7 % 12.3 % 0.7 % 5.7 % (2.1) % 4.0 % (3.8) % 3.6 % (5.0) %
UK unemployment 4.8 % 4.5 % 4.7 % 3.8 % 5.2 % 4.5 % 7.5 % 4.5 % 8.8 % 4.5 %
UK HPI growth 13.2 % 1.5 % 27.8 % 1.5 % 4.3 % (3.1) % 2.2 % (12.6) % 2.2 % (22.0) %
BoE base rate 4.6 % 2.5 % 4.6 % 2.5 % 4.6 % 1.8 % 4.6 % 1.0 % 4.6 % 0.6 %
Consumer Price Index 3.4 % 1.9 % 3.4 % 2.0 % 3.4 % (0.5) % 3.4 % (1.2) % 3.4 % (2.1) %
Weighting 32.5% 30% 20% 10.5% 7%
0.7 %
12.3 %
0.7 %
5.7 %
(2.1) %
4.0 %
(3.8) %
3.6 %
(5.0) %
UK unemployment
4.8 %
4.5 %
4.7 %
3.8 %
5.2 %
4.5 %
7.5 %
4.5 %
8.8 %
4.5 %
UK HPI growth
13.2 %
1.5 %
27.8 %
1.5 %
4.3 %
(3.1) %
2.2 %
(12.6) %
2.2 %
(22.0) %
BoE base rate
4.6 %
2.5 %
4.6 %
2.5 %
4.6 %
1.8 %
4.6 %
1.0 %
4.6 %
0.6 %
Consumer Price Index
3.4 %
1.9 %
3.4 %
2.0 %
3.4 %
(0.5) %
3.4 %
(1.2) %
3.4 %
(2.1) %
Weighting
32.5%
30%
20%
10.5%
7%
Five-year period (calendar year 2024 to 2028)
Baseline Upside (strong) Downside (mild) Downside (moderate) Downside (protracted)
Peak Trough Peak Trough Peak Trough Peak Trough Peak Trough
At 31 July 2024
UK GDP growth 7.7% 0.7% 11.8% 0.7% 5.5% (1.4)% 2.8% (4.2)% 2.2% (6.3)%
UK unemployment 4.8% 4.3% 4.3% 3.7% 4.9% 4.3% 7.4% 4.3% 8.6% 4.3%
UK HPI growth 13.3% 0.7% 27.2% 0.7% 4.4% (5.7)% 0.9% (14.2)% 0.9% (23.4)%
BoE base rate 5.3% 2.5% 5.3% 2.5% 5.3% 2.1% 5.3% 1.1% 5.3% 0.6%
Consumer Price Index 3.6% 2.0% 3.6% 2.0% 3.6% (0.4)% 3.6% (1.1)% 3.6% (2.0)%
Weighting 32.5% 30% 20% 10.5% 7%
Notes:
UK GDP growth: Maximum and minimum quarterly GDP as a percentage change from
start of period (%)
UK unemployment: Maximum and minimum unemployment rate (%)
UK HPI growth: Maximum and minimum average nominal house price as a percentage
change from start of period (%)
BoE base rate: Maximum and minimum Bank of England base rate (%)
Consumer Price Index: Maximum and minimum inflation rate over the five-year
period (%)
The following charts below represent the quarterly forecast data included in
the above tables incorporating actual metrics up to 31 July 2025. The dark
blue line shows the baseline scenario, while the other lines represent the
various upside and downside scenarios.
Real gross domestic product (annual % change)
Unemployment rate (%)
Consumer price index (annual % change)
House price index - current prices (annual % change)
Bank of England base rate (%)
Scenario sensitivity analysis
The expected credit loss provision is sensitive to judgements and estimations
made with regard to the selection and weighting of multiple economic
scenarios. As a result, management has assessed and considered the sensitivity
of the provision as follows:
• For the majority of the portfolios, the modelled expected credit loss
provision has been recalculated under the upside strong and downside
protracted scenarios described above, applying a 100% weighting to each
scenario in turn. The change in provision requirement is driven by the
movement in risk metrics under each scenario and resulting impact on stage
allocation.
• Expected credit losses based on a simplified approach, which do not utilise a
macroeconomic model and require expert judgement, are excluded from the
sensitivity analysis.
• In addition to the above, key considerations for the sensitivity analysis are
set out below, by segment:
- In Commercial, the sensitivity analysis excludes Novitas, given the low
materiality of remaining provisions.
- In Retail, the sensitivity analysis does not apply further stress to the
expected credit loss provision on loans and advances to customers in Stage 3,
because the measurement of expected credit losses is considered more sensitive
to credit factors specific to the borrower than macroeconomic scenarios.
- In Property, the sensitivity analysis excludes individually assessed
provisions, and certain sub-portfolios which are deemed more sensitive to
credit factors than the macroeconomic scenarios.
Based on the above analysis, at 31 July 2025, application of 100% weighting to
the upside strong scenario would decrease the expected credit loss by £17.4
million whilst application of 100% weighting to the downside protracted
scenario would increase the expected credit loss by £32.4 million, driven by
the aforementioned changes in risk metrics and stage allocation of the
portfolios.
When performing sensitivity analysis there is a high degree of estimation
uncertainty. On this basis, 100% weighted expected credit loss provisions
presented for the upside and downside scenarios should not be taken to
represent the lower or upper range of possible and actual expected credit loss
outcomes. The recalculated expected credit loss provision for each of the
scenarios should be read in the context of the sensitivity analysis as a whole
and in conjunction with the disclosures provided in note 6. The modelled
impact presented is based on gross loans and advances to customers at 31 July
2025; it does not incorporate future changes relating to performance, growth
or credit risk. In addition, given the change in the macroeconomic conditions,
underlying modelled provisions and methodology, and refined approach to
adjustments, comparison between the sensitivity results at 31 July 2025 and 31
July 2024 is not appropriate.
The economic environment remains uncertain and future impairment charges may
be subject to further volatility, including from updates to macroeconomic
variable forecasts impacted by sustained cost-of-living pressures, changes in
fiscal policy, trade-related uncertainty (including the impact of tariffs),
and ongoing geopolitical conflicts.
Use of adjustments
Limitations in the group's expected credit loss models or input data may be
identified through ongoing model monitoring and validation of models. In
certain circumstances, management make appropriate adjustments to
model-calculated expected credit losses. These adjustments are based on
management judgements or quantitative back-testing to ensure expected credit
loss provisions adequately reflect all known information. These adjustments
are generally determined by considering the attributes or risks of a financial
asset which are not captured by existing expected credit loss model outputs.
Management adjustments are actively monitored, reviewed and incorporated into
future model developments where applicable.
Macroeconomic forecasts continue to react to a range of external factors
including changes in the UK's Budget, inflationary pressures, the ongoing
conflict in Ukraine, and uncertainty from tariffs. In response, our use of
adjustments has evolved.
In particular, adjustments were applied in the previous financial year in
response to improvements in macroeconomic forecasts that resulted in releases
in modelled provisions. A number of these releases were considered premature
or counterintuitive by management and adjustments were made as a result.
Portfolio performance has been closely monitored during the financial year
under review, over which modelled provisions have increased and external
forecasts have remained broadly stable. As a result, macroeconomic adjustments
have gradually reduced in recognition of the portfolio and models
appropriately reacting to changes in the external environment.
While macroeconomic adjustment values have decreased, the overall value of
adjustments has increased since 31 July 2024 as a result of changes in the
application of adjustments relating to individual customers where, in
management's judgement, modelled provisions do not adequately reflect expected
credit losses.
The approach to adjustments continues to reflect the use of expert management
judgement which incorporates management's experience and knowledge of
customers, the areas in which they operate, and the underlying assets
financed.
The need for adjustments will continue to be monitored as new information
emerges which might not be recognised in existing models.
At 31 July 2025, £4.0 million (31 July 2024: £(1.5) million) of the expected
credit loss provision was attributable to adjustments, which reflects a
combination of positive and negative adjustments depending on the adjustment
purpose or model requirement. Adjustments include £2.1 million held to
reflect ongoing economic uncertainty (31 July 2024: £2.4 million).
2. Segmental Analysis
The directors manage the group by class of business and present the segmental
analysis on that basis. The group's activities are presented in three (2024:
five) operating segments: Commercial, Retail, and Property.
In the segmental reporting information that follows, Group consists of central
functions as well as various non-trading head office companies and
consolidation adjustments and is set out in order that the information
presented reconciles to the consolidated income statement. The Group balance
sheet primarily includes treasury assets and liabilities comprising cash and
balances at central banks, debt securities, customer deposits and other
borrowings.
Divisions continue to charge market prices for the limited services rendered
to other parts of the group. Funding charges between segments take into
account commercial demands. More than 90% of the group's activities, revenue
and assets are located in the UK.
Banking
Commercial Retail Property Group Continuing operations Discontinued operations(1) Total
£ million £ million £ million £ million £ million £ million £ million
Summary income statement for the year ended 31 July 2025
Net interest income/(expense) 228.1 224.5 128.3 (12.1) 568.8 - 568.8
Impairment of operating lease assets (30.0) - - - (30.0) - (30.0)
Other non-interest income 95.8 22.2 2.3 0.4 120.7 - 120.7
Operating income/(expense) 293.9 246.7 130.6 (11.7) 659.5 - 659.5
Provision in relation to motor finance commissions - (165.0) - - (165.0) - (165.0)
Complaints handling and other operational and legal costs incurred in relation - (18.7) - - (18.7) - (18.7)
to motor finance commissions
Provision in relation to early settlements in Motor Finance - (33.0) - - (33.0) - (33.0)
Depreciation and amortisation (26.8) (20.0) (4.5) (2.8) (54.1) - (54.1)
Other administrative expenses (185.0) (164.1) (29.7) (39.5) (418.3) - (418.3)
Impairment losses on financial assets (18.8) (44.5) (29.5) - (92.8) - (92.8)
Total operating expenses (230.6) (445.3) (63.7) (42.3) (781.9) - (781.9)
Operating profit/(loss) from continuing operations 63.3 (198.6) 66.9 (54.0) (122.4) - (122.4)
Operating profit before tax from discontinued operations - - - 46.3 46.3 4.9 51.2
External operating income/(expense) 491.4 364.3 215.1 (411.3) 659.5 - 659.5
Inter segment operating (expense)/income (197.5) (117.6) (84.5) 399.6 - - -
Segment operating income/(expense) 293.9 246.7 130.6 (11.7) 659.5 - 659.5
Retail
£ million
Property
£ million
Group
£ million
Continuing operations
£ million
Discontinued operations(1)
£ million
Total
£ million
Summary income statement for the year ended 31 July 2025
Net interest income/(expense)
228.1
224.5
128.3
(12.1)
568.8
-
568.8
Impairment of operating lease assets
(30.0)
-
-
-
(30.0)
-
(30.0)
Other non-interest income
95.8
22.2
2.3
0.4
120.7
-
120.7
Operating income/(expense)
293.9
246.7
130.6
(11.7)
659.5
-
659.5
Provision in relation to motor finance commissions
-
(165.0)
-
-
(165.0)
-
(165.0)
Complaints handling and other operational and legal costs incurred in relation
to motor finance commissions
-
(18.7)
-
-
(18.7)
-
(18.7)
Provision in relation to early settlements in Motor Finance
-
(33.0)
-
-
(33.0)
-
(33.0)
Depreciation and amortisation
(26.8)
(20.0)
(4.5)
(2.8)
(54.1)
-
(54.1)
Other administrative expenses
(185.0)
(164.1)
(29.7)
(39.5)
(418.3)
-
(418.3)
Impairment losses on financial assets
(18.8)
(44.5)
(29.5)
-
(92.8)
-
(92.8)
Total operating expenses
(230.6)
(445.3)
(63.7)
(42.3)
(781.9)
-
(781.9)
Operating profit/(loss) from continuing operations
63.3
(198.6)
66.9
(54.0)
(122.4)
-
(122.4)
Operating profit before tax from discontinued operations
-
-
-
46.3
46.3
4.9
51.2
External operating income/(expense)
491.4
364.3
215.1
(411.3)
659.5
-
659.5
Inter segment operating (expense)/income
(197.5)
(117.6)
(84.5)
399.6
-
-
-
Segment operating income/(expense)
293.9
246.7
130.6
(11.7)
659.5
-
659.5
1. Discontinued operations represent the Asset Management division sold on 28
February 2025 and Winterflood shown as held for sale - see Note 23.
The Commercial operating segment above includes Novitas, which ceased lending
to new customers in July 2021 following a strategic review. Novitas recorded
an operating profit of £16.1 million (2024: loss of £0.1 million), including
an impairment credit of £6.8 million (2024: £6.4 million impairment losses).
Novitas' income was £13.3 million (2024: £11.0 million) and expenses were
£4.0 million (2024: £4.8 million). In line with IFRS 9's requirement to
recognise interest income on Stage 3 loans on a net basis, income includes the
partial unwinding over time of the expected credit loss recognised. Further
information on Novitas can be found in the Credit Risk section of the Risk
Report.
As set out in Note 23 "Discontinued operations and assets and liabilities
classified as held for sale", the group announced it entered into an agreement
to sell Close Brothers Asset Management ("CBAM"), one of the group's operating
segments, to Oaktree Capital Management, L.P on 19 September 2024 following a
comprehensive strategic review, and completed the sale on 28 February 2025.
CBAM's financial results are presented within this note as discontinued
operations. On 25 July 2025, the group also announced the sale of Winterflood
Securities, an execution services and securities business, to Marex Group plc.
The sale is expected to complete in early 2026 and its financial results are
also presented within this note as discontinued operations.
Banking
Commercial Retail Property Group(2) Continuing operations Discontinued operations(3) Total
£ million £ million £ million £ million £ million £ million £ million
Summary balance sheet information at the 31 July 2025
Total assets¹ 4,894.3 2,878.9 1,852.5 3,567.3 13,193.0 878.9 14,071.9
Total liabilities - - - 11,548.1 11,548.1 788.3 12,336.4
Retail
£ million
Property
£ million
Group(2)
£ million
Continuing operations
£ million
Discontinued operations(3)
£ million
Total
£ million
Summary balance sheet information at the 31 July 2025
Total assets¹
4,894.3
2,878.9
1,852.5
3,567.3
13,193.0
878.9
14,071.9
Total liabilities
-
-
-
11,548.1
11,548.1
788.3
12,336.4
1. Total assets for the Banking operating segments comprise the loan book and
operating lease assets only. The Commercial operating segment includes the net
loan book of Novitas of £nil.
2. Balance sheet includes £3,117.6 million assets and £11,353.5 million
liabilities attributable to the Banking division primarily comprising the
treasury balances described in the second paragraph of this note.
3. Discontinued operations on the balance sheet comprise Winterflood Securities.
See Note 23. The assets and liabilities of Winterflood Securities presented in
this table include intercompany balances for the purposes of segmental
reporting.
Equity is allocated across the group as set out below. Banking division
equity, which is managed as a whole rather than on a segmental basis, reflects
loan book and operating lease assets of £9,625.7 million, in addition to
assets and liabilities of £3,521.9 million and £11,556.2 million
respectively primarily comprising treasury balances which are included within
the Group column above.
Equity at 31 July 2025 Banking Group Continuing operations Discontinued operations Total
£ million £ million £ million £ million £ million
Equity 1,591.4 53.5 1,644.9 90.6 1,735.5
Group
£ million
Continuing operations
£ million
Discontinued operations
£ million
Total
£ million
Equity
1,591.4
53.5
1,644.9
90.6
1,735.5
Banking
Commercial Retail Property Group Continuing operations Discontinued operations Total
Other segment information for the year ended 31 July 2025
Employees (average number)¹ 1,417 1,154 172 88 2,831 765 3,596
1,154
172
88
2,831
765
3,596
1. Banking segments include a central function headcount allocation. The
company's average number of employees is equivalent to the Group number.
Banking
Commercial Retail Property Group Continuing operations Discontinued operations(1) Total
£ million £ million £ million £ million £ million £ million £ million
Summary income statement for the year ended 31 July 2024
Net interest income/(expense) 228.8 234.4 129.0 (11.5) 580.7 - 580.7
Impairment of operating lease assets - - - - - - -
Other non-interest income 100.8 28.0 3.9 - 132.7 - 132.7
Operating income/(expense) 329.6 262.4 132.9 (11.5) 713.4 - 713.4
Provision in relation to the Borrowers in Financial Difficulty ("BiFD) review (0.6) (16.6) - - (17.2) - (17.2)
Complaints handling and other operational and legal costs incurred in relation - (6.9) - - (6.9) - (6.9)
to motor finance commissions
Depreciation and amortisation (26.1) (20.8) (4.9) (2.3) (54.1) - (54.1)
Other administrative expenses (184.5) (157.3) (30.3) (31.5) (403.6) - (403.6)
Impairment losses on financial assets (31.7) (47.2) (20.0) - (98.9) - (98.9)
Total operating expenses (242.9) (248.8) (55.2) (33.8) (580.7) - (580.7)
Operating profit/(loss) from continuing operations 86.7 13.6 77.7 (45.3) 132.7 - 132.7
Operating profit before tax from discontinued operations(1) - - - - 9.3 9.3
External operating income/(expense) 517.0 376.7 224.7 (404.1) 714.3 - 714.3
Inter segment operating (expense)/income (187.4) (114.3) (91.8) 392.6 (0.9) - (0.9)
Segment operating income/(expense) 329.6 262.4 132.9 (11.5) 713.4 - 713.4
Retail
£ million
Property
£ million
Group
£ million
Continuing operations
£ million
Discontinued operations(1)
£ million
Total
£ million
Summary income statement for the year ended 31 July 2024
Net interest income/(expense)
228.8
234.4
129.0
(11.5)
580.7
-
580.7
Impairment of operating lease assets
-
-
-
-
-
-
-
Other non-interest income
100.8
28.0
3.9
-
132.7
-
132.7
Operating income/(expense)
329.6
262.4
132.9
(11.5)
713.4
-
713.4
Provision in relation to the Borrowers in Financial Difficulty ("BiFD) review
(0.6)
(16.6)
-
-
(17.2)
-
(17.2)
Complaints handling and other operational and legal costs incurred in relation
to motor finance commissions
-
(6.9)
-
-
(6.9)
-
(6.9)
Depreciation and amortisation
(26.1)
(20.8)
(4.9)
(2.3)
(54.1)
-
(54.1)
Other administrative expenses
(184.5)
(157.3)
(30.3)
(31.5)
(403.6)
-
(403.6)
Impairment losses on financial assets
(31.7)
(47.2)
(20.0)
-
(98.9)
-
(98.9)
Total operating expenses
(242.9)
(248.8)
(55.2)
(33.8)
(580.7)
-
(580.7)
Operating profit/(loss) from continuing operations
86.7
13.6
77.7
(45.3)
132.7
-
132.7
Operating profit before tax from discontinued operations(1)
-
-
-
-
9.3
9.3
External operating income/(expense)
517.0
376.7
224.7
(404.1)
714.3
-
714.3
Inter segment operating (expense)/income
(187.4)
(114.3)
(91.8)
392.6
(0.9)
-
(0.9)
Segment operating income/(expense)
329.6
262.4
132.9
(11.5)
713.4
-
713.4
1. Discontinued operations represent the Asset Management division sold on 28
February 2025 and Winterflood shown as held for sale - see Note 23
Banking
Commercial Retail Property Group(²) Continuing operations Discontinued operations Total
£ million £ million £ million £ million £ million £ million £ million
Summary balance sheet information at 31 July 2024
Total assets¹ 5,101.6 3,041.9 1,955.2 2,965.1 13,063.8 1,017.0 14,080.8
Total liabilities - - - 11,433.5 11,433.5 804.8 12,238.3
Retail
£ million
Property
£ million
Group(²)
£ million
Continuing operations
£ million
Discontinued operations
£ million
Total
£ million
Summary balance sheet information at 31 July 2024
Total assets¹
5,101.6
3,041.9
1,955.2
2,965.1
13,063.8
1,017.0
14,080.8
Total liabilities
-
-
-
11,433.5
11,433.5
804.8
12,238.3
1. Total assets for the Banking operating segments comprise the loan book and
operating lease assets only. The Commercial operating segment includes the net
loan book of Novitas of £62.4 million.
2. Balance sheet includes £2,970.1 million assets and £11,358.1 million
liabilities attributable to the Banking division primarily comprising the
treasury balances described in the second paragraph of this note.
3. Discontinued operations on the balance sheet comprise Winterflood Securities.
See Note 23. The assets and liabilities of Winterflood Securities presented in
this table include intercompany balances for the purposes of segmental
reporting.
Equity is allocated across the group as set out below. Banking division
equity, which is managed as a whole rather than on a segmental basis, reflects
loan book and operating lease assets of £10,098.7 million, in addition to
assets and liabilities of £2,970.1 million and £11,358.1 million
respectively primarily comprising treasury balances which are included within
the Group column above.
Equity at 31 July 2024 Banking Group Continuing operations Discontinued operations Total
£ million £ million £ million £ million £ million
Equity 1,710.7 (80.4) 1,630.3 212.2 1,842.5
Group
£ million
Continuing operations
£ million
Discontinued operations
£ million
Total
£ million
Equity
1,710.7
(80.4)
1,630.3
212.2
1,842.5
Banking
Commercial Retail Property Group Continuing operations Discontinued operations Total
£ million £ million
Other segmental information for the year ended 31 July 2024
Employees (average number)¹ 1,461 1,195 199 87 2,942 1,183 4,125
Retail
Property
Group
Continuing operations
£ million
Discontinued operations
£ million
Total
Other segmental information for the year ended 31 July 2024
Employees (average number)¹
1,461
1,195
199
87
2,942
1,183
4,125
1. Banking segments include a central function headcount allocation. The
company's average number of employees is equivalent to the Group number.
3. Taxation
2025 2024(1)
£ million £ million
Tax charged/(credited) to the income statement
Current tax:
UK corporation tax 15.0 38.8
Foreign tax 1.0 0.9
Adjustments in respect of previous years (1.3) (4.9)
14.7 34.8
Deferred tax:
Deferred tax credit for the current year (11.6) (2.5)
Adjustments in respect of previous years 1.6 5.1
4.7 37.4
Tax on items not (credited)/charged to the income statement
Current tax relating to:
Acquisitions and disposals 3.7 (0.4)
Deferred tax relating to:
Cash flow hedging (3.5) (8.4)
Financial instruments classified as fair value through other comprehensive (1.2) (1.0)
income
Currency translation gains/(losses) 0.4 (0.4)
Acquisitions and disposals 1.7 (0.3)
1.1 (10.5)
Reconciliation to tax expense
UK corporation tax for the period at 25% (2024: 25%) on operating (30.6) 33.2
(loss)/profit
Disallowable items and other permanent differences(2) 40.6 6.8
Banking surcharge - -
Tax relief on coupon on other equity instruments (5.6) (2.8)
Prior period tax provision 0.3 0.2
-
4.7 37.4
2024(1)
£ million
Tax charged/(credited) to the income statement
Current tax:
UK corporation tax
15.0
38.8
Foreign tax
1.0
0.9
Adjustments in respect of previous years
(1.3)
(4.9)
14.7
34.8
Deferred tax:
Deferred tax credit for the current year
(11.6)
(2.5)
Adjustments in respect of previous years
1.6
5.1
4.7
37.4
Tax on items not (credited)/charged to the income statement
Current tax relating to:
Acquisitions and disposals
3.7
(0.4)
Deferred tax relating to:
Cash flow hedging
(3.5)
(8.4)
Financial instruments classified as fair value through other comprehensive
income
(1.2)
(1.0)
Currency translation gains/(losses)
0.4
(0.4)
Acquisitions and disposals
1.7
(0.3)
1.1
(10.5)
Reconciliation to tax expense
UK corporation tax for the period at 25% (2024: 25%) on operating
(loss)/profit
(30.6)
33.2
Disallowable items and other permanent differences(2)
40.6
6.8
Banking surcharge
-
-
Tax relief on coupon on other equity instruments
(5.6)
(2.8)
Prior period tax provision
0.3
0.2
-
4.7
37.4
1. Comparative information restated following the classification of Close
Brothers Asset Management and Winterflood as discontinued operations. See
Notes 2 and 23.
2. Disallowable items and other permanent differences largely relate to the
non-deductible provision in relation to motor finance commissions.
The standard UK corporation tax rate for the financial year is 25.0% (2024:
25.0%). An additional 3.0% (2024: 3.0%) surcharge applies to banking company
profits as defined in legislation, but only above a threshold amount which is
not exceeded by the current year banking company profits. The effective tax
rate of (3.8)% (2024: 28.2%), which relates to a £4.7 million charge on an
operating loss before tax of £122.4 million, differs to the UK corporation
tax rate primarily due to disallowable expenditure, which more than offsets
the tax relief on coupons on the group's AT1 instrument.
The UK government has implemented the Pillar Two global minimum tax rate of
15% and a UK domestic minimum top-up tax with effect from the group's
financial year commencing 1 August 2024. The jurisdictions in relation to
which Pillar Two tax liabilities are expected to potentially arise for the
group are the Republic of Ireland, Jersey and Guernsey. The current tax charge
for the period includes £nil in respect of Pillar Two income taxes. The group
has adopted the IAS 12 exemption from recognition and disclosure regarding the
impact on deferred tax assets and liabilities arising from this legislation.
Movements in deferred tax assets and liabilities were as follows:
Capital allowances Pension scheme Share-based payments and deferred compensation Impairment losses Cash flow hedging Intangible assets Other Total
£ million £ million £ million £ million £ million £ million £ million £ million
Group
At 1 August 2023 12.9 (0.3) 8.7 5.9 (13.4) (0.9) (2.1) 10.8
(Charge)/credit to the income statement (8.2) 0.1 (1.5) 0.1 - 0.3 3.5 (5.7)
Credit to other comprehensive income 0.4 - - - 8.4 - 1.0 9.8
Charge to equity - - - - - - - -
Acquisitions - - - - - (1.5) 0.9 (0.6)
At 31 July 2024 5.1 (0.2) 7.2 6.0 (5.0) (2.1) 3.3 14.3
Credit/(charge) to the income statement 8.3 0.1 (1.0) (0.6) - - 1.6 8.4
(Charge)/credit to other comprehensive income (0.4) - - - 3.5 - 1.2 4.3
Charge to equity - - - - - - - -
Disposals (0.1) - (3.2) - - 1.6 - (1.7)
Reclassification to assets held for sale 6.2 - (0.8) - - - 0.3 5.7
At 31 July 2025 19.1 (0.1) 2.2 5.4 (1.5) (0.5) 6.4 31.0
Pension scheme
£ million
Share-based payments and deferred compensation
£ million
Impairment losses
£ million
Cash flow hedging
£ million
Intangible assets
£ million
Other
£ million
Total
£ million
Group
At 1 August 2023
12.9
(0.3)
8.7
5.9
(13.4)
(0.9)
(2.1)
10.8
(Charge)/credit to the income statement
(8.2)
0.1
(1.5)
0.1
-
0.3
3.5
(5.7)
Credit to other comprehensive income
0.4
-
-
-
8.4
-
1.0
9.8
Charge to equity
-
-
-
-
-
-
-
-
Acquisitions
-
-
-
-
-
(1.5)
0.9
(0.6)
At 31 July 2024
5.1
(0.2)
7.2
6.0
(5.0)
(2.1)
3.3
14.3
Credit/(charge) to the income statement
8.3
0.1
(1.0)
(0.6)
-
-
1.6
8.4
(Charge)/credit to other comprehensive income
(0.4)
-
-
-
3.5
-
1.2
4.3
Charge to equity
-
-
-
-
-
-
-
-
Disposals
(0.1)
-
(3.2)
-
-
1.6
-
(1.7)
Reclassification to assets held for sale
6.2
-
(0.8)
-
-
-
0.3
5.7
At 31 July 2025
19.1
(0.1)
2.2
5.4
(1.5)
(0.5)
6.4
31.0
The group's deferred tax asset comprises £5.7 million (31 July 2024: £4.8
million) due within one year and £25.3 million (31 July 2024: £9.5 million)
due after more than one year.
As the group has been and is expected to continue to be consistently
taxpaying, the full deferred tax assets have been recognised. However,
deferred tax assets of £0.5 million (31 July 2024: £0.5 million) have not
been recognised in respect of certain carried forward tax losses. It is
currently uncertain whether the group will be able to utilise these losses.
4. Earnings per share
The calculation of basic earnings per share is based on the profit
attributable to shareholders and the number of basic weighted average shares.
When calculating the diluted earnings per share, the weighted average number
of shares in issue is adjusted for the effects of all dilutive share options
and awards.
Continuing operations 2025 2024(1)
Basic (99.8) p 56.2p
Diluted (99.8) p 56.1p
Adjusted basic(2) 59.3p 75.8p
Adjusted diluted(2) 59.3p 75.6p
56.2p
Diluted
(99.8) p
56.1p
Adjusted basic(2)
59.3p
75.8p
Adjusted diluted(2)
59.3p
75.6p
Discontinued operations
Basic 32.9p 3.5p
Diluted 32.9p 3.4p
3.5p
Diluted
32.9p
3.4p
Continuing and discontinued operations
Basic (66.9) p 59.7p
Diluted (66.9) p 59.5p
59.7p
Diluted
(66.9) p
59.5p
1. Comparative information restated following the classification of Close
Brothers Asset Management and Winterflood as discontinued operations. See
Notes 2 and 23.
2. Excludes the adjusting items set out in the table below and the associated tax
effect.
2025 2024(1)
£ million £ million
(Loss)/profit attributable to shareholders (100.2) 89.3
Less profit from discontinued operations, net of tax (49.2) (5.1)
(Loss)/profit attributable to shareholders on continuing operations (149.4) 84.2
Adjustments:
Provision in relation to motor finance commissions 165.0 -
Complaints handling and other operational and legal costs incurred in relation 18.7 6.9
to motor finance commissions
Provision in relation to early settlements in Motor Finance 33.0 -
Provision in relation to the Borrowers in Financial Difficulty ("BiFD") review - 17.2
Restructuring costs 2.3 3.1
Amortisation of intangible assets on acquisition 0.2 0.2
Operating loss before tax of Close Brewery Rentals 4.1 2.1
Operating loss before tax of Close Brothers Vehicle Hire 43.4 5.4
Tax effect of adjustments (28.6) (5.7)
Adjusted profit attributable to shareholders on continuing operations 88.7 113.4
2024(1)
£ million
(Loss)/profit attributable to shareholders
(100.2)
89.3
Less profit from discontinued operations, net of tax
(49.2)
(5.1)
(Loss)/profit attributable to shareholders on continuing operations
(149.4)
84.2
Adjustments:
Provision in relation to motor finance commissions
165.0
-
Complaints handling and other operational and legal costs incurred in relation
to motor finance commissions
18.7
6.9
Provision in relation to early settlements in Motor Finance
33.0
-
Provision in relation to the Borrowers in Financial Difficulty ("BiFD") review
-
17.2
Restructuring costs
2.3
3.1
Amortisation of intangible assets on acquisition
0.2
0.2
Operating loss before tax of Close Brewery Rentals
4.1
2.1
Operating loss before tax of Close Brothers Vehicle Hire
43.4
5.4
Tax effect of adjustments
(28.6)
(5.7)
Adjusted profit attributable to shareholders on continuing operations
88.7
113.4
1. Comparative information restated following the classification of Close
Brothers Asset Management and Winterflood as discontinued operations. See
Notes 2 and 23.
2025 2024
£ million £ million
Average number of shares
Basic weighted 149.7 149.7
Effect of dilutive share options and awards 0.2 0.3
Diluted weighted 149.9 150.0
2024
£ million
Average number of shares
Basic weighted
149.7
149.7
Effect of dilutive share options and awards
0.2
0.3
Diluted weighted
149.9
150.0
5. Dividends
2025 2024
£ million £ million
For each ordinary share
Final dividend for previous financial year paid in November 2024: nil - 67.1
(November 2023: 45.0p)
Interim dividend for current financial year paid in April 2025: nil (April - -
2024: nil)
- 67.1
2024
£ million
For each ordinary share
Final dividend for previous financial year paid in November 2024: nil
(November 2023: 45.0p)
-
67.1
Interim dividend for current financial year paid in April 2025: nil (April
2024: nil)
-
-
-
67.1
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.
6. Loans and advances to customers
(a) Maturity and classification analysis of loans and advances to customers
The following tables set out the maturity and IFRS 9 classification analysis
of loans and advances to customers. At 31 July 2025 loans and advances to
customers with a maturity of two years or less was £7,346.3 million (31 July
2024: £7,733.6 million) representing 75.7% (31 July 2024: 75.3%) of total
gross loans and advances to customers:
On demand Within three months Between three months and one year Between one and two years Between two and five years After more than five years Total gross loans and advances to customers Impairment provisions Total net loans and advances to customers
£ million £ million £ million £ million £ million £ million £ million £ million £ million
At 31 July 2025 85.1 2,984.1 2,512.4 1,764.7 2,220.7 142.1 9,709.1 (249.7) 9,459.4
At 31 July 2024 88.5 2,888.2 2,654.9 2,102.0 2,399.1 143.9 10,276.6 (445.8) 9,830.8
Within three months
£ million
Between three months and one year
£ million
Between one and two years
£ million
Between two and five years
£ million
After more than five years
£ million
Total gross loans and advances to customers
£ million
Impairment provisions
£ million
Total net loans and advances to customers
£ million
At 31 July 2025
85.1
2,984.1
2,512.4
1,764.7
2,220.7
142.1
9,709.1
(249.7)
9,459.4
At 31 July 2024
88.5
2,888.2
2,654.9
2,102.0
2,399.1
143.9
10,276.6
(445.8)
9,830.8
31 July 2025 31 July 2024
£ million £ million
Gross loans and advances to customers
Held at amortised cost 9,697.3 10,264.8
Held at fair value through profit or loss 11.8 11.8
9,709.1 10,276.6
31 July 2024
£ million
Gross loans and advances to customers
Held at amortised cost
9,697.3
10,264.8
Held at fair value through profit or loss
11.8
11.8
9,709.1
10,276.6
(b) Loans and advances to customers held at amortised cost and impairment
provisions by stage
Gross loans and advances to customers held at amortised cost by stage and the
corresponding impairment provisions and provision coverage ratios are set out
below:
Stage 2
Stage 1 Less than 30 days past due Greater than or equal to 30 days past due Total Stage 3 Total
£ million £ million £ million £ million £ million £ million
At 31 July 2025
Gross loans and advances to customers held at amortised cost
Commercial 3,717.5 925.1 39.0 964.1 108.1 4,789.7
Of which: Commercial excluding Novitas 3,717.5 924.6 39.0 963.6 105.8 4,786.9
Of which: Novitas - 0.5 - 0.5 2.3 2.8
Retail 2,611.1 252.6 15.1 267.7 95.2 2,974.0
Property 1,585.6 15.7 43.5 59.2 288.8 1,933.6
7,914.2 1,193.4 97.6 1,291.0 492.1 9,697.3
Impairment provisions
Commercial 21.7 10.8 5.2 16.0 35.8 73.5
Of which: Commercial excluding Novitas 21.7 10.3 5.2 15.5 33.5 70.7
Of which: Novitas - 0.5 - 0.5 2.3 2.8
Retail 25.3 13.9 2.7 16.6 53.2 95.1
Property 3.6 1.0 - 1.0 76.5 81.1
50.6 25.7 7.9 33.6 165.5 249.7
Provision coverage ratio
Commercial 0.6 % 1.2 % 13.3 % 1.7 % 33.1 % 1.5 %
Within which: Commercial excluding Novitas 0.6 % 1.1 % 13.3 % 1.6 % 31.7 % 1.5 %
Within which: Novitas - 100.0 % - 100.0 % 100.0 % 100.0 %
Retail 1.0 % 5.5 % 17.9 % 6.2 % 55.9 % 3.2 %
Property 0.2 % 6.4 % - % 1.7 % 26.5 % 4.2 %
0.6 % 2.2 % 8.1 % 2.6 % 33.6 % 2.6 %
Less than 30 days past due
£ million
Greater than or equal to 30 days past due
£ million
Total
£ million
Stage 3
£ million
Total
£ million
At 31 July 2025
Gross loans and advances to customers held at amortised cost
Commercial
3,717.5
925.1
39.0
964.1
108.1
4,789.7
Of which: Commercial excluding Novitas
3,717.5
924.6
39.0
963.6
105.8
4,786.9
Of which: Novitas
-
0.5
-
0.5
2.3
2.8
Retail
2,611.1
252.6
15.1
267.7
95.2
2,974.0
Property
1,585.6
15.7
43.5
59.2
288.8
1,933.6
7,914.2
1,193.4
97.6
1,291.0
492.1
9,697.3
Impairment provisions
Commercial
21.7
10.8
5.2
16.0
35.8
73.5
Of which: Commercial excluding Novitas
21.7
10.3
5.2
15.5
33.5
70.7
Of which: Novitas
-
0.5
-
0.5
2.3
2.8
Retail
25.3
13.9
2.7
16.6
53.2
95.1
Property
3.6
1.0
-
1.0
76.5
81.1
50.6
25.7
7.9
33.6
165.5
249.7
Provision coverage ratio
Commercial
0.6 %
1.2 %
13.3 %
1.7 %
33.1 %
1.5 %
Within which: Commercial excluding Novitas
0.6 %
1.1 %
13.3 %
1.6 %
31.7 %
1.5 %
Within which: Novitas
-
100.0 %
-
100.0 %
100.0 %
100.0 %
Retail
1.0 %
5.5 %
17.9 %
6.2 %
55.9 %
3.2 %
Property
0.2 %
6.4 %
- %
1.7 %
26.5 %
4.2 %
0.6 %
2.2 %
8.1 %
2.6 %
33.6 %
2.6 %
Stage 2
Stage 1 Less than 30 days past due Greater than or equal to 30 days past due Total Stage 3 Total
£ million £ million £ million £ million £ million £ million
At 31 July 2024
Gross loans and advances to customers held at amortised cost
Commercial 3,877.8 801.5 33.1 834.6 400.2 5,112.6
Of which: Commercial excluding Novitas 3,877.8 800.5 33.1 833.6 118.1 4,829.5
Of which: Novitas - 1.0 - 1.0 282.1 283.1
Retail 2,815.7 221.2 9.9 231.1 90.0 3,136.8
Property 1,717.0 9.8 53.3 63.1 235.3 2,015.4
8,410.5 1,032.5 96.3 1,128.8 725.5 10,264.8
Impairment provisions
Commercial 20.9 9.6 4.2 13.8 256.0 290.7
Of which: Commercial excluding Novitas 20.9 8.6 4.2 12.8 36.3 70.0
Of which: Novitas - 1.0 - 1.0 219.7 220.7
Retail 27.7 14.8 2.2 17.0 50.2 94.9
Property 3.6 0.2 0.3 0.5 56.1 60.2
52.2 24.6 6.7 31.3 362.3 445.8
Provision coverage ratio
Commercial 0.5 % 1.2 % 12.7 % 1.7 % 64.0 % 5.7 %
Within which: Commercial excluding Novitas 0.5 % 1.1 % 12.7 % 1.5 % 30.7 % 1.4 %
Within which: Novitas - % 100.0 % - 100.0 % 77.9 % 78.0 %
Retail 1.0 % 6.7 % 22.2 % 7.4 % 55.8 % 3.0 %
Property 0.2 % 2.0 % 0.6 % 0.8 % 23.8 % 3.0 %
0.6 % 2.4 % 7.0 % 2.8 % 49.9 % 4.3 %
Less than 30 days past due
£ million
Greater than or equal to 30 days past due
£ million
Total
£ million
Stage 3
£ million
Total
£ million
At 31 July 2024
Gross loans and advances to customers held at amortised cost
Commercial
3,877.8
801.5
33.1
834.6
400.2
5,112.6
Of which: Commercial excluding Novitas
3,877.8
800.5
33.1
833.6
118.1
4,829.5
Of which: Novitas
-
1.0
-
1.0
282.1
283.1
Retail
2,815.7
221.2
9.9
231.1
90.0
3,136.8
Property
1,717.0
9.8
53.3
63.1
235.3
2,015.4
8,410.5
1,032.5
96.3
1,128.8
725.5
10,264.8
Impairment provisions
Commercial
20.9
9.6
4.2
13.8
256.0
290.7
Of which: Commercial excluding Novitas
20.9
8.6
4.2
12.8
36.3
70.0
Of which: Novitas
-
1.0
-
1.0
219.7
220.7
Retail
27.7
14.8
2.2
17.0
50.2
94.9
Property
3.6
0.2
0.3
0.5
56.1
60.2
52.2
24.6
6.7
31.3
362.3
445.8
Provision coverage ratio
Commercial
0.5 %
1.2 %
12.7 %
1.7 %
64.0 %
5.7 %
Within which: Commercial excluding Novitas
0.5 %
1.1 %
12.7 %
1.5 %
30.7 %
1.4 %
Within which: Novitas
- %
100.0 %
-
100.0 %
77.9 %
78.0 %
Retail
1.0 %
6.7 %
22.2 %
7.4 %
55.8 %
3.0 %
Property
0.2 %
2.0 %
0.6 %
0.8 %
23.8 %
3.0 %
0.6 %
2.4 %
7.0 %
2.8 %
49.9 %
4.3 %
In Commercial, the impairment coverage ratio decreased to 1.5% (31 July 2024:
5.7%), reflecting the impacts of the derecognition of net loans and advances
in Novitas.
Excluding Novitas, the Commercial provision coverage ratio increased to 1.5%
(31 July 2024: 1.4%) as migrations into Stages 2 and 3 offset lower new
business levels during the financial year.
In Retail, the provision coverage ratio increased to 3.2% (31 July 2024:
3.0%), reflecting a continuation of macroeconomic pressures from the previous
financial year which has seen higher but stable levels of arrears and
forbearance in the Motor Finance business as a result of persistent
cost-of-living pressures on customers.
In Property, the provision coverage ratio increased to 4.2% (31 July 2024:
3.0%), primarily as a result of migrations into Stage 3 and increased
provisions for some existing impaired accounts during the financial year.
(c) Adjustments
By their nature, limitations in the group's expected credit loss models or
input data may be identified through ongoing model monitoring and validation
of models. In certain circumstances, management make appropriate adjustments
to model-calculated expected credit losses. Adjustments have been identified
as a key source of estimation uncertainty as set out in Note 1.
(d) Reconciliation of loans and advances to customers held at amortised cost
and impairment provisions
Reconciliation of gross loans and advances to customers and associated
impairment provisions are set out below.
New financial assets originate in Stage 1 only, and the amount presented
represents the value at origination.
Subsequently, a loan may transfer between stages, and the presentation of such
transfers is based on a comparison of the loan at the beginning of the year
(or at origination if this occurred during the year) and the end of the year
(or just prior to final repayment or write off).
Repayments relating to loans which transferred between stages during the year
are presented within the transfers between stages lines. Such transfers do not
represent overnight reclassification from one stage to another. All other
repayments are presented in a separate line.
ECL model methodologies may be updated or enhanced from time to time and the
impacts of such changes are presented on a separate line.
Enhancements to our model suite are a contributory factor to ECL movements and
such factors have been taken into consideration when assessing any required
adjustments to modelled output and ensuring appropriate provision coverage
levels.
A loan is written off when there is no reasonable expectation of further
recovery following realisation of all associated collateral and available
recovery actions against the customer.
Stage 1 Stage 2 Stage 3 Total
£ million £ million £ million £ million
Gross loans and advances to customers held at amortised cost
At 1 August 2024 8,410.5 1,128.8 725.5 10,264.8
New financial assets originated 5,766.1 - - 5,766.1
Transfers to Stage 1 200.4 (289.4) (5.2) (94.2)
Transfers to Stage 2 (1,381.4) 1,112.6 (4.5) (273.3)
Transfers to Stage 3 (274.4) (146.1) 321.9 (98.6)
Net transfer between stages and repayments¹ (1,455.4) 677.1 312.2 (466.1)
Repayments while stage remained unchanged and final repayments (4,852.2) (464.3) (223.7) (5,540.2)
Changes to model methodologies 48.3 (48.3) - -
Write offs (3.1) (2.3) (321.9) (327.3)
At 31 July 2025 7,914.2 1,291.0 492.1 9,697.3
Stage 2
£ million
Stage 3
£ million
Total
£ million
Gross loans and advances to customers held at amortised cost
At 1 August 2024
8,410.5
1,128.8
725.5
10,264.8
New financial assets originated
5,766.1
-
-
5,766.1
Transfers to Stage 1
200.4
(289.4)
(5.2)
(94.2)
Transfers to Stage 2
(1,381.4)
1,112.6
(4.5)
(273.3)
Transfers to Stage 3
(274.4)
(146.1)
321.9
(98.6)
Net transfer between stages and repayments¹
(1,455.4)
677.1
312.2
(466.1)
Repayments while stage remained unchanged and final repayments
(4,852.2)
(464.3)
(223.7)
(5,540.2)
Changes to model methodologies
48.3
(48.3)
-
-
Write offs
(3.1)
(2.3)
(321.9)
(327.3)
At 31 July 2025
7,914.2
1,291.0
492.1
9,697.3
1. Repayments relate only to financial assets which transferred between stages
during the year. Other repayments are shown in the line below.
Stage 1 Stage 2 Stage 3 Total
£ million £ million £ million £ million
Gross loans and advances to customers held at amortised cost
At 1 August 2023 7,990.2 1,062.0 583.4 9,635.6
New financial assets originated 6,695.5 - - 6,695.5
Transfers to Stage 1 138.2 (205.2) (7.6) (74.6)
Transfers to Stage 2 (1,165.5) 904.8 (8.4) (269.1)
Transfers to Stage 3 (310.2) (130.8) 329.1 (111.9)
Net transfer between stages and repayments(1) (1,337.5) 568.8 313.1 (455.6)
Repayments while stage remained unchanged and final repayments (4,936.3) (501.2) (114.4) (5,551.9)
Write offs (1.4) (0.8) (56.6) (58.8)
At 31 July 2024 8,410.5 1,128.8 725.5 10,264.8
Stage 2
£ million
Stage 3
£ million
Total
£ million
Gross loans and advances to customers held at amortised cost
At 1 August 2023
7,990.2
1,062.0
583.4
9,635.6
New financial assets originated
6,695.5
-
-
6,695.5
Transfers to Stage 1
138.2
(205.2)
(7.6)
(74.6)
Transfers to Stage 2
(1,165.5)
904.8
(8.4)
(269.1)
Transfers to Stage 3
(310.2)
(130.8)
329.1
(111.9)
Net transfer between stages and repayments(1)
(1,337.5)
568.8
313.1
(455.6)
Repayments while stage remained unchanged and final repayments
(4,936.3)
(501.2)
(114.4)
(5,551.9)
Write offs
(1.4)
(0.8)
(56.6)
(58.8)
At 31 July 2024
8,410.5
1,128.8
725.5
10,264.8
1. Repayments relate only to financial assets which transferred between stages
during the year. Other repayments are shown in the line below.
The gross carrying amount before modification of loans and advances to
customers which were modified during the year while in Stage 2 or 3 was
£259.5 million (2024: £283.1 million). £0.1 million loss (2024: £nil) was
recognised as a result of these modifications. The gross carrying amount at
31 July 2025 of modified loans and advances to customers which transferred
from Stage 2 or 3 to Stage 1 during the year was £20.9 million (31 July
2024: £38.7 million).
Stage 1 Stage 2 Stage 3 Total
£ million £ million £ million £ million
Impairment provisions on loans and advances to customers held at amortised
cost
At 1 August 2024 52.2 31.3 362.3 445.8
New financial assets originated 46.0 - - 46.0
Transfers to Stage 1 1.1 (4.3) (1.0) (4.2)
Transfers to Stage 2 (13.4) 30.6 (1.4) 15.8
Transfers to Stage 3 (4.3) (11.4) 88.0 72.3
Net remeasurement of expected credit losses arising from transfer of stages (16.6) 14.9 85.6 83.9
and repayments(1)
Repayments and ECL movements while stage remained unchanged and final (29.5) (10.9) 27.0 (13.4)
repayments
Changes to model methodologies 1.4 0.5 (0.4) 1.5
Charge to the income statement 1.3 4.5 112.2 118.0
Write offs (2.9) (2.2) (309.0) (314.1)
At 31 July 2025 50.6 33.6 165.5 249.7
Stage 2
£ million
Stage 3
£ million
Total
£ million
Impairment provisions on loans and advances to customers held at amortised
cost
At 1 August 2024
52.2
31.3
362.3
445.8
New financial assets originated
46.0
-
-
46.0
Transfers to Stage 1
1.1
(4.3)
(1.0)
(4.2)
Transfers to Stage 2
(13.4)
30.6
(1.4)
15.8
Transfers to Stage 3
(4.3)
(11.4)
88.0
72.3
Net remeasurement of expected credit losses arising from transfer of stages
and repayments(1)
(16.6)
14.9
85.6
83.9
Repayments and ECL movements while stage remained unchanged and final
repayments
(29.5)
(10.9)
27.0
(13.4)
Changes to model methodologies
1.4
0.5
(0.4)
1.5
Charge to the income statement
1.3
4.5
112.2
118.0
Write offs
(2.9)
(2.2)
(309.0)
(314.1)
At 31 July 2025
50.6
33.6
165.5
249.7
1. Repayments relate only to financial assets which transferred between stages
during the year. Other repayments are shown in the line below.
Stage 1 Stage 2 Stage 3 Total
£ million £ million £ million £ million
Impairment provisions on loans and advances to customers held at amortised
cost
At 1 August 2023 58.1 32.2 290.3 380.6
New financial assets originated 51.7 - - 51.7
Transfers to Stage 1 0.6 (3.9) (0.7) (4.0)
Transfers to Stage 2 (13.4) 31.4 (1.1) 16.9
Transfers to Stage 3 (5.9) (12.0) 98.7 80.8
Stage 2
£ million
Stage 3
£ million
Total
£ million
Impairment provisions on loans and advances to customers held at amortised
cost
At 1 August 2023
58.1
32.2
290.3
380.6
New financial assets originated
51.7
-
-
51.7
Transfers to Stage 1
0.6
(3.9)
(0.7)
(4.0)
Transfers to Stage 2
(13.4)
31.4
(1.1)
16.9
Transfers to Stage 3
(5.9)
(12.0)
98.7
80.8
Net remeasurement of expected credit losses arising from transfer of stages (18.7) 15.5 96.9 93.7
and repayments(1)
Repayments and ECL movements while stage remained unchanged and final (37.7) (15.6) 26.6 (26.7)
repayments
Changes to model methodologies - - - -
Charge to the income statement (4.7) (0.1) 123.5 118.7
Write offs (1.2) (0.8) (51.5) (53.5)
At 31 July 2024 52.2 31.3 362.3 445.8
15.5
96.9
93.7
Repayments and ECL movements while stage remained unchanged and final
repayments
(37.7)
(15.6)
26.6
(26.7)
Changes to model methodologies
-
-
-
-
Charge to the income statement
(4.7)
(0.1)
123.5
118.7
Write offs
(1.2)
(0.8)
(51.5)
(53.5)
At 31 July 2024
52.2
31.3
362.3
445.8
1. Repayments relate only to financial assets which transferred between stages
during the year. Other repayments are shown in the line below.
2025 2024
£ million £ million
Impairment losses relating to loans and advances to customers held at
amortised cost:
Charge to income statement arising from movement in impairment provisions 118.0 118.7
Amounts written off directly to income statement and other costs, net of (29.9) (21.7)
discount unwind on Stage 3 loans to interest income, and recoveries
88.1 97.0
Impairment losses relating to other financial assets 4.7 1.8
Impairment losses on financial assets recognised in income statement 92.8 98.8
2024
£ million
Impairment losses relating to loans and advances to customers held at
amortised cost:
Charge to income statement arising from movement in impairment provisions
118.0
118.7
Amounts written off directly to income statement and other costs, net of
discount unwind on Stage 3 loans to interest income, and recoveries
(29.9)
(21.7)
88.1
97.0
Impairment losses relating to other financial assets
4.7
1.8
Impairment losses on financial assets recognised in income statement
92.8
98.8
Impairment losses on financial assets of £92.8 million (2024: £98.8 million)
include an impairment credit of £6.8 million in relation to Novitas (2024:
impairment charge of £6.4 million).
The contractual amount outstanding at 31 July 2025 on financial assets that
were written off during the period and are still subject to recovery activity
is £27.1 million (31 July 2024: £22.1 million).
(e) Finance lease and hire purchase agreement receivables
31 July 2025 31 July 2024
£ million £ million
Net loans and advances to customers comprise
Hire purchase agreement receivables 3,613.4 3,749.8
Finance lease receivables 945.6 896.7
Other loans and advances 4,900.4 5,184.3
At 31 July 9,459.4 9,830.8
31 July 2024
£ million
Net loans and advances to customers comprise
Hire purchase agreement receivables
3,613.4
3,749.8
Finance lease receivables
945.6
896.7
Other loans and advances
4,900.4
5,184.3
At 31 July
9,459.4
9,830.8
The following table shows a reconciliation between gross investment in finance
lease and hire purchase agreement receivables included in the net loans and
advances to customers table above to present value of minimum lease and hire
purchase payments.
31 July 2025 31 July 2024
£ million £ million
Gross investment in finance leases and hire purchase agreement receivables
due:
One year or within one year 1,983.2 1,987.6
>One to two years 1,535.1 1,573.2
>Two to three years 1,155.3 1,168.2
>Three to four years 647.7 692.0
>Four to five years 225.0 222.6
More than five years 41.2 46.4
5,587.5 5,690.0
Unearned finance income (884.5) (904.5)
Present value of minimum lease and hire purchase agreement payments 4,703.0 4,785.5
Of which due:
One year or within one year 1,661.0 1,671.1
>One to two years 1,292.2 1,326.6
>Two to three years 974.2 982.6
>Three to four years 547.9 579.4
>Four to five years 191.9 185.9
More than five years 35.8 39.9
4,703.0 4,785.5
31 July 2024
£ million
Gross investment in finance leases and hire purchase agreement receivables
due:
One year or within one year
1,983.2
1,987.6
>One to two years
1,535.1
1,573.2
>Two to three years
1,155.3
1,168.2
>Three to four years
647.7
692.0
>Four to five years
225.0
222.6
More than five years
41.2
46.4
5,587.5
5,690.0
Unearned finance income
(884.5)
(904.5)
Present value of minimum lease and hire purchase agreement payments
4,703.0
4,785.5
Of which due:
One year or within one year
1,661.0
1,671.1
>One to two years
1,292.2
1,326.6
>Two to three years
974.2
982.6
>Three to four years
547.9
579.4
>Four to five years
191.9
185.9
More than five years
35.8
39.9
4,703.0
4,785.5
The aggregate cost of assets acquired for the purpose of letting under finance
leases and hire purchase agreements was £7,848.3 million (2024: £7,898.6
million). The average effective interest rate on finance leases approximates
to 12.4% (2024: 12.2%). The present value of minimum lease and hire purchase
agreement payments reflects the fair value of finance lease and hire purchase
agreement receivables before deduction of impairment provisions.
7. Debt securities
Fair value through profit or loss Fair value through other comprehensive income Amortised cost Total
£ million
£ million £ million
£ million
Sovereign and central bank debt - 601.6 - 601.6
Supranational, sub-sovereigns and agency ("SSA") bonds - 146.2 - 146.2
Covered bonds - 105.6 - 105.6
Long trading positions in debt securities - - - -
Other debt securities 1.1 - 4.7 5.8
At 31 July 2025 1.1 853.4 4.7 859.2
Fair value through other comprehensive income
£ million
Amortised cost
£ million
Total
£ million
Sovereign and central bank debt
-
601.6
-
601.6
Supranational, sub-sovereigns and agency ("SSA") bonds
-
146.2
-
146.2
Covered bonds
-
105.6
-
105.6
Long trading positions in debt securities
-
-
-
-
Other debt securities
1.1
-
4.7
5.8
At 31 July 2025
1.1
853.4
4.7
859.2
Fair value through profit or loss Fair value through other comprehensive income Amortised cost Total
£ million £ million £ million £ million
Sovereign and central bank debt - 383.7 - 383.7
Supranational, sub-sovereigns and agency ("SSA") bonds - 145.5 - 145.5
Covered bonds - 187.7 - 187.7
Long trading positions in debt securities 16.0 - - 16.0
Other debt securities 0.8 - 6.8 7.6
At 31 July 2024 16.8 716.9 6.8 740.5
Fair value through other comprehensive income
£ million
Amortised cost
£ million
Total
£ million
Sovereign and central bank debt
-
383.7
-
383.7
Supranational, sub-sovereigns and agency ("SSA") bonds
-
145.5
-
145.5
Covered bonds
-
187.7
-
187.7
Long trading positions in debt securities
16.0
-
-
16.0
Other debt securities
0.8
-
6.8
7.6
At 31 July 2024
16.8
716.9
6.8
740.5
Movements on the book value of sovereign and central bank debt comprise:
2025 2024
£ million £ million
Sovereign and central bank debt at 1 August 383.7 186.1
Additions 512.4 194.2
Redemptions (299.1) -
Currency translation differences 2.2 (1.5)
Movement in value 2.4 4.9
Sovereign and central bank debt at 31 July 601.6 383.7
2024
£ million
Sovereign and central bank debt at 1 August
383.7
186.1
Additions
512.4
194.2
Redemptions
(299.1)
-
Currency translation differences
2.2
(1.5)
Movement in value
2.4
4.9
Sovereign and central bank debt at 31 July
601.6
383.7
Movements on the book value of SSA bonds comprise:
2025 2024
£ million £ million
SSA bonds at 1 August 145.5 -
Additions - 155.4
Redemptions - (15.2)
Currency translation differences 0.4 (0.3)
Movement in value 0.3 5.6
SSA bonds at 31 July 146.2 145.5
2024
£ million
SSA bonds at 1 August
145.5
-
Additions
-
155.4
Redemptions
-
(15.2)
Currency translation differences
0.4
(0.3)
Movement in value
0.3
5.6
SSA bonds at 31 July
146.2
145.5
Movements on the book value of covered bonds comprise:
2025 2024
£ million £ million
Covered bonds 1 August 187.7 106.3
Additions 15.5 139.7
Redemptions/disposals (97.4) (59.0)
Currency translation differences 0.5 (0.3)
Movement in value (0.7) 1.0
Covered bonds at 31 July 105.6 187.7
2024
£ million
Covered bonds 1 August
187.7
106.3
Additions
15.5
139.7
Redemptions/disposals
(97.4)
(59.0)
Currency translation differences
0.5
(0.3)
Movement in value
(0.7)
1.0
Covered bonds at 31 July
105.6
187.7
8. Equity shares
31 July 2025 31 July 2024
£ million £ million
Long trading positions - 25.8
Other equity shares - 1.6
- 27.4
31 July 2024
£ million
Long trading positions
-
25.8
Other equity shares
-
1.6
-
27.4
Equity shares at 31 July 2024 related to Winterflood Securities. At 31 July
2025, the assets and liabilities of Winterflood Securities have been
classified as held for sale. See Note 23 for more detail.
9. Intangible Assets
Goodwill Software Intangible assets on acquisition Group total
£ million £ million £ million £ million
Cost
At 1 August 2023 142.5 333.2 50.4 526.1
Additions 8.3 28.1 7.3 43.7
Disposals - (12.6) (0.3) (12.9)
At 31 July 2024 150.8 348.7 57.4 556.9
Additions - 25.6 - 25.6
Disposals - (6.1) - (6.1)
Disposal of subsidiaries(1) (46.9) (16.6) (51.7) (115.2)
Reclassification to assets held for sale(2) (67.7) (20.4) - (88.1)
At 31 July 2025 36.2 331.2 5.7 373.1
Accumulated amortisation and impairments
At 1 August 2023 47.9 167.8 46.7 262.4
Amortisation charge for the year - 38.9 1.4 40.3
Disposals - (11.4) (0.4) (11.8)
At 1 August 2024 47.9 195.3 47.7 290.9
Amortisation charge for the year - 38.3 0.8 39.1
Impairment charge for the year 16.6 2.0 - 18.6
Disposals - (5.3) - (5.3)
Disposal of subsidiaries(1) (3.5) (9.2) (46.0) (58.7)
Reclassification to assets held for sale(2) (58.9) (18.9) - (77.8)
At 31 July 2025 2.1 202.2 2.5 206.8
Net book value at 31 July 2025 34.1 129.0 3.2 166.3
Net book value at 31 July 2024 102.9 153.4 9.7 266.0
Net book value at 1 August 2023 94.6 165.4 3.7 263.7
Software
£ million
Intangible assets on acquisition
£ million
Group total
£ million
Cost
At 1 August 2023
142.5
333.2
50.4
526.1
Additions
8.3
28.1
7.3
43.7
Disposals
-
(12.6)
(0.3)
(12.9)
At 31 July 2024
150.8
348.7
57.4
556.9
Additions
-
25.6
-
25.6
Disposals
-
(6.1)
-
(6.1)
Disposal of subsidiaries(1)
(46.9)
(16.6)
(51.7)
(115.2)
Reclassification to assets held for sale(2)
(67.7)
(20.4)
-
(88.1)
At 31 July 2025
36.2
331.2
5.7
373.1
Accumulated amortisation and impairments
At 1 August 2023
47.9
167.8
46.7
262.4
Amortisation charge for the year
-
38.9
1.4
40.3
Disposals
-
(11.4)
(0.4)
(11.8)
At 1 August 2024
47.9
195.3
47.7
290.9
Amortisation charge for the year
-
38.3
0.8
39.1
Impairment charge for the year
16.6
2.0
-
18.6
Disposals
-
(5.3)
-
(5.3)
Disposal of subsidiaries(1)
(3.5)
(9.2)
(46.0)
(58.7)
Reclassification to assets held for sale(2)
(58.9)
(18.9)
-
(77.8)
At 31 July 2025
2.1
202.2
2.5
206.8
Net book value at 31 July 2025
34.1
129.0
3.2
166.3
Net book value at 31 July 2024
102.9
153.4
9.7
266.0
Net book value at 1 August 2023
94.6
165.4
3.7
263.7
1. Close Brothers Asset Management was sold to Oaktree Capital Management, L.P.
on 28 February 2025 - see Note 23.
2. Intangible assets relating to Winterflood Securities and Close Brewery Rentals
have been reclassified to assets held for sale - see Note 23.
Goodwill additions of £8.3 million and intangible assets on acquisition
additions of £7.3 million in the prior year ended 31 July 2024 relate to the
group's acquisition of the 100% shareholdings of Close Brothers Finance
Designated Activity Company (goodwill of £4.7 million and intangible assets
on acquisition of £3.6 million) and Bottriell Adams LLP ("Bottriell Adams")
(goodwill of £3.6 million and intangible assets on acquisition of £3.7
million). Software includes assets under development of £30.6 million
(31 July 2024: £35.4 million).
Intangible assets on acquisition relate to broker and customer relationships
and are amortised over a period of eight to 20 years.
In the 2025 financial year, £0.2 million (2024: £0.2 million) of the
amortisation charge is included in amortisation of intangible assets on
acquisition and £37.2 million (2024: £36.6 million) of the amortisation
charge is included in administrative expenses shown in the consolidated income
statement.
Impairment tests for goodwill and other intangible assets
Overview
At 31 July 2025, goodwill has been allocated to 8 (31 July 2024: 9) individual
cash generating units ("CGUs"). 7 (July 2024: 7) are within the Banking
division and one is the Winterflood Securities division ("Winterflood"). At 31
July 2024, the Asset Management division was also a CGU. However, as disclosed
in Note 23, the group completed the sale of Asset Management on 28 February
2025 and therefore the CGU and associated goodwill have been derecognised from
the balance sheet.
Also as disclosed in Note 23, the group announced on 25 July 2025 its
agreement to sell Winterflood to Marex Group plc with the transaction expected
to complete in early 2026. As a result, Winterflood was classified as held for
sale on the balance sheet in line with IFRS 5. A goodwill impairment of £14.5
million was recognised, reflecting the requirement to hold the business at the
lower of carrying value and fair value less costs to sell. At 31 July 2025,
the goodwill classified as held for sale in relation to Winterflood is £8.8
million (31 July 2024: £23.3 million).
As disclosed at half year 2025, two additional CGUs, namely the group's
Vehicle Hire and Brewery Rentals businesses, were separated out from an
existing Banking CGU. This allowed a more accurate position of the CGUs to be
presented. The intangible assets of these two new CGUs totalled £4.1 million,
comprising £2.1 million of goodwill and £2.0 million of software. Following
a review at half year, a full impairment of these intangible assets was
subsequently recognised. Brewery Rentals met the held for sale criteria under
IFRS 5 in the second half of the year.
Goodwill is allocated to the CGU in which the historical acquisition occurred
and hence the goodwill originated. Further information on the performance of
each division can be found in Note 2 "Segmental Analysis". Goodwill impairment
reviews are carried out at least annually by assessing the recoverable amount
of the group's CGUs, which is the higher of fair value less costs to sell and
value in use. Goodwill impairment reviews have been performed for 31 July 2025
in light of the current trading and regulatory environment
Methodology
The recoverable amounts for all CGUs except Winterflood are measured based on
value in use. A value in use calculation uses discounted cash flow forecasts
based on the most recent three-year strategy plans. The value in use
calculations are sensitive primarily to changes in the assumptions for future
cash flows, which include consideration for future capital requirements and
appropriate allocation of overhead costs, as well as discount rates.
The most relevant assumptions underlying management's strategy plans for the
Banking CGUs, which are based on past experience and forecast market
conditions, are expected loan book growth rates, net return on loan book,
future costs and future capital requirements. While these assumptions are
relevant to management's plans, they may not all be key assumptions in the
goodwill impairment test.
In addition, while Banking CGUs are not individually regulated, for the
purposes of an impairment assessment, theoretical capital requirements have
been taken into consideration in calculating a CGU's value in use and carrying
value to ensure that capital constraints on free cash flows are appropriately
reflected and the carrying value is on a comparable basis.
Beyond the group's three-year planning horizon, estimates of future cash flows
in the fourth and fifth years, and longer where appropriate, are made by
management with due consideration given to the relevant assumptions set out
above. After the final year, a terminal value is calculated using an annual
growth rate of 2%, which is consistent with the UK government's long-term
inflation target.
The cash flows are discounted using a pre-tax estimated weighted average cost
of capital. The methodology used to derive the discount rates is fundamentally
consistent with the prior year and the discount rates used are also consistent
with the prior year. However, they differ across the CGUs, reflecting the
nature of the CGUs' business and the current market returns appropriate to the
CGU that investors would require for a similar asset.
Assessment overview
At 31 July 2025, the results of the review indicate there is no goodwill
impairment except in relation to the Winterflood, Vehicle Hire and Brewery
Rentals CGUs as noted above. Having performed stress test value in use
calculations, the group believes that any reasonably possible change in the
key assumptions which have been used would not lead to the carrying value of
any remaining CGU to exceed its recoverable amount except Motor Finance.
Assessment of CGUs
The Motor Finance CGU, which includes goodwill of £3.0 million and other
intangible assets of £10.7 million, relates to the group's UK motor finance
business. Cash flows for this CGU have been estimated for seven years to
ensure an appropriate value in use is calculated given a period of strategic
change in the shorter term. Consistent with the prior year, the value in use
calculation for this CGU has been identified as a key source of estimation
uncertainty. The value in use of Motor Finance excludes the £163.9 million
balance sheet provision in relation to motor finance commissions and £33.0
million provision in relation to early settlements, both as described in Note
16, in line with the requirements of IAS 36.
The key source of estimation uncertainty within the Motor Finance value in use
calculation relates to the expected future cash flows, which include
consideration for the CGU's strategic growth plans, as well as forecast costs
and capital charge. While, as noted previously, the cash flows exclude the
provision in relation to motor finance commissions, the cash flows may
nevertheless be impacted by the uncertainty surrounding, and outcome of, the
FCA's review and the group's strategic and capital actions response. As
described in Note 2, determining the impact on goodwill of this matter is a
critical accounting judgement. It also represents a key assumption for the
Motor goodwill impairment assessment.
The value in use of Motor is calculated to be 133% (31 July 2024: 121%) of
carrying value, which represents a headroom of £53 million (31 July 2024:
£35 million). Management's future growth expectations are in part dependent
on assumptions relating to funding, capital and customer demand. To
demonstrate the sensitivity to lower cash flows or a delay in future growth, a
33% reduction in the annual cash flows to perpetuity would result in the full
reduction of the available headroom. However, this outcome reflects the CGU's
sensitivity and does not include all possible management actions which may
affect capital and cash flow forecasts for each CGU of the Banking division if
any further response were required in respect of the FCA review. Separately,
the pre-tax discount rate used is 14.9% (31 July 2024: 15.2%) and an absolute
increase of 2.5% in the discount rate would result in the full reduction of
the available headroom.
The Asset Finance and Leasing ("AF&L") CGU includes goodwill of £9.7
million, which is significant in comparison to total goodwill following the
disposal of Asset Management and classification of Winterflood as held for
sale. The value in use of AF&L is calculated to be 122% (31 July 2024:
135%) of carrying value. The value in use calculation is also dependent on
management's assumptions for future cash flows. To demonstrate the sensitivity
to cash flows, a 10% reduction in the annual cash flows to perpetuity would
result in a 46% reduction in the available headroom.
These scenarios for Motor Finance and AF&L are a demonstration of
sensitivity only and do not represent management's base case scenarios where,
as stated, value in use remains above carrying value.
10. Property, Plant and Equipment
Leasehold property Fixtures, fittings and equipment Assets held under operating leases Motor vehicles Right of use assets¹ Total
£ million £ million £ million £ million £ million £ million
Group
Cost
At 1 August 2023 21.5 65.5 449.1 0.4 94.0 630.5
Additions 1.3 12.9 64.7 - 10.0 88.9
Disposals (0.4) (13.3) (71.9) - (11.1) (96.7)
At 31 July 2024 22.4 65.1 441.9 0.4 92.9 622.7
Additions 3.2 2.7 40.3 - 10.3 56.5
Disposals (13.3) (4.2) (75.9) - (26.5) (119.9)
Disposal of subsidiaries(2) (5.1) (6.8) - - (7.5) (19.4)
Reclassification to assets held for sale(3) (0.7) (21.9) (80.1) (0.1) (19.1) (121.9)
At 31 July 2025 6.5 34.9 326.2 0.3 50.1 418.0
Accumulated depreciation and impairments
At 1 August 2023 15.0 40.9 177.9 0.2 39.4 273.4
Depreciation and impairment charges for the year 2.3 9.1 44.4 0.1 15.5 71.4
Disposals (0.3) (13.4) (48.3) - (9.7) (71.7)
At 31 July 2024 17.0 36.6 174.0 0.3 45.2 273.1
Depreciation and impairment charges for the year 1.3 8.2 78.3 - 13.3 101.1
Disposals (13.0) (4.1) (53.3) - (25.1) (95.5)
Disposal of subsidiaries(2) (3.2) (4.7) - - (3.4) (11.3)
Reclassification to assets held for sale(3) (0.6) (13.8) (39.1) (0.1) (5.2) (58.8)
At 31 July 2025 1.5 22.2 159.9 0.2 24.8 208.6
Net book value at 31 July 2025 5.0 12.7 166.3 0.1 25.3 209.4
Net book value at 31 July 2024 5.4 28.5 267.9 0.1 47.7 349.6
Net book value at 1 August 2023 6.5 24.6 271.2 0.2 54.6 357.1
Fixtures, fittings and equipment
£ million
Assets held under operating leases
£ million
Motor vehicles
£ million
Right of use assets¹
£ million
Total
£ million
Group
Cost
At 1 August 2023
21.5
65.5
449.1
0.4
94.0
630.5
Additions
1.3
12.9
64.7
-
10.0
88.9
Disposals
(0.4)
(13.3)
(71.9)
-
(11.1)
(96.7)
At 31 July 2024
22.4
65.1
441.9
0.4
92.9
622.7
Additions
3.2
2.7
40.3
-
10.3
56.5
Disposals
(13.3)
(4.2)
(75.9)
-
(26.5)
(119.9)
Disposal of subsidiaries(2)
(5.1)
(6.8)
-
-
(7.5)
(19.4)
Reclassification to assets held for sale(3)
(0.7)
(21.9)
(80.1)
(0.1)
(19.1)
(121.9)
At 31 July 2025
6.5
34.9
326.2
0.3
50.1
418.0
Accumulated depreciation and impairments
At 1 August 2023
15.0
40.9
177.9
0.2
39.4
273.4
Depreciation and impairment charges for the year
2.3
9.1
44.4
0.1
15.5
71.4
Disposals
(0.3)
(13.4)
(48.3)
-
(9.7)
(71.7)
At 31 July 2024
17.0
36.6
174.0
0.3
45.2
273.1
Depreciation and impairment charges for the year
1.3
8.2
78.3
-
13.3
101.1
Disposals
(13.0)
(4.1)
(53.3)
-
(25.1)
(95.5)
Disposal of subsidiaries(2)
(3.2)
(4.7)
-
-
(3.4)
(11.3)
Reclassification to assets held for sale(3)
(0.6)
(13.8)
(39.1)
(0.1)
(5.2)
(58.8)
At 31 July 2025
1.5
22.2
159.9
0.2
24.8
208.6
Net book value at 31 July 2025
5.0
12.7
166.3
0.1
25.3
209.4
Net book value at 31 July 2024
5.4
28.5
267.9
0.1
47.7
349.6
Net book value at 1 August 2023
6.5
24.6
271.2
0.2
54.6
357.1
1. Right of use assets primarily relate to the group's leasehold properties.
2. Close Brothers Asset Management was sold to Oaktree Management, LP on 28
February 2025 - see Note 23.
3. Property, plant and equipment relating to Winterflood Securities and Close
Brewery Rentals have been reclassified to assets held for sale - see Note 23.
The net book value of assets held under operating leases includes £0.1
million (31 July 2024: £0.6 million) relating to vehicles held in
inventories. There was a loss of £2.0 million from the sale of assets held
under operating leases for the year ended 31 July 2025 (2024: gain of £0.4
million).
Assets held under operating leases primarily relate to vehicles owned by the
group's Vehicle Hire business, which is part of the Commercial operating
segment. At 31 July 2025, the carrying value of the operating lease assets in
relation to this business was £165.0 million (31 July 2024: £222.4 million).
The group has decided to exit this business with performance impacted by a
challenging market backdrop, particularly post-Covid, and there is limited
opportunity to deliver enhanced returns. To realise maximum value and ensure
we continue to support our customers in line with contractual terms, the exit
will be phased over time, with the business being managed down over the next
three to five years.
As a result of this decision and the recent decline in asset values in this
sector, an impairment charge of £30.0 million in relation to the operating
lease assets has been recognised within operating income in the consolidated
income statement. The impairment follows a value in use ("VIU") assessment
under IAS 36 "Impairment of Assets" based on management's exit plan. The key
sources of estimation uncertainty in the VIU calculation relates to the
expected rental incomes and disposal values of the vehicles. At 31 July 2025,
a 7.5% absolute increase or decrease in expected rental incomes would decrease
or increase the impairment charge by £10.2 million or £10.3 million
respectively. Separately, a 15% absolute increase or decrease in the disposal
values would decrease or increase the impairment charge by £12.7 million or
£13.2 million respectively. The discount rate is not a key assumption in the
VIU calculation.
Vehicle Hire's operating loss before tax of £43.4 million is presented as an
adjusting item. This includes the £30.0 million asset impairment charge, a
£10.9 million underlying loss and £2.5 million impairment of intangible
assets, of which £1.5 million relates to the full impairment of the goodwill
associated with the business.
At 31 July 2024, assets held under operating leases of £267.9 million largely
comprised vehicles owned by the Vehicle Hire business of £222.4 million, and
brewery containers owned by Close Brewery Rentals Limited ("CBRL") of £44.5
million. During the current year, CBRL met the relevant IFRS 5 criteria and
the business' assets held under operating leases totalling £41.0 million have
been reclassified to assets held for sale on the balance sheet. See Note 23
for further detail.
11. Settlement balances and short positions
31 July 2025 31 July 2024
£ million £ million
Settlement balances - 600.1
Short positions in:
Debt securities - 5.5
Equity shares - 9.3
- 14.8
- 614.9
31 July 2024
£ million
Settlement balances
-
600.1
Short positions in:
Debt securities
-
5.5
Equity shares
-
9.3
-
14.8
-
614.9
Settlement balances and short positions at 31 July 2024 related to Winterflood
Securities. At 31 July 2025, the assets and liabilities of Winterflood
Securities have been classified as held for sale. See Note 23 for more detail.
12. Financial liabilities
On demand Within three months Between three months and one year Between one and two years Between two and five years After more than five years Total
£ million £ million £ million £ million £ million £ million £ million
Deposits by banks 9.3 78.8 - - - - 88.1
Deposits by customers 1,161.4 2,640.3 3,533.7 852.9 611.0 - 8,799.3
Loans and overdrafts from banks 1.5 - - - - - 1.5
Debt securities in issue - 56.5 124.1 974.2 503.2 333.3 1,991.3
At 31 July 2025 1,172.2 2,775.6 3,657.8 1,827.1 1,114.2 333.3 10,880.2
Within three months
£ million
Between three months and one year
£ million
Between one and two years
£ million
Between two and five years
£ million
After more than five years
£ million
Total
£ million
Deposits by banks
9.3
78.8
-
-
-
-
88.1
Deposits by customers
1,161.4
2,640.3
3,533.7
852.9
611.0
-
8,799.3
Loans and overdrafts from banks
1.5
-
-
-
-
-
1.5
Debt securities in issue
-
56.5
124.1
974.2
503.2
333.3
1,991.3
At 31 July 2025
1,172.2
2,775.6
3,657.8
1,827.1
1,114.2
333.3
10,880.2
On demand Within three months Between three months and one year Between one and two years Between two and five years After more than five years Total
£ million £ million £ million £ million £ million £ million £ million
Deposits by banks 0.9 53.0 84.5 - - - 138.4
Deposits by customers 706.6 2,320.7 3,397.9 1,685.2 583.2 - 8,693.6
Loans and overdrafts from banks 46.6 9.0 - 110.0 - - 165.6
Debt securities in issue - 21.9 246.6 799.0 595.3 323.6 1,986.4
At 31 July 2024 754.1 2,404.6 3,729.0 2,594.2 1,178.5 323.6 10,984.0
Within three months
£ million
Between three months and one year
£ million
Between one and two years
£ million
Between two and five years
£ million
After more than five years
£ million
Total
£ million
Deposits by banks
0.9
53.0
84.5
-
-
-
138.4
Deposits by customers
706.6
2,320.7
3,397.9
1,685.2
583.2
-
8,693.6
Loans and overdrafts from banks
46.6
9.0
-
110.0
-
-
165.6
Debt securities in issue
-
21.9
246.6
799.0
595.3
323.6
1,986.4
At 31 July 2024
754.1
2,404.6
3,729.0
2,594.2
1,178.5
323.6
10,984.0
As outlined below, at 31 July 2025 the group accessed £nil (31 July 2024:
£110.0 million) and £nil (31 July 2024: £nil) cash under the Bank of
England's Term Funding Scheme with Additional Incentives for SMEs ("TFSME")
and Indexed Long-Term Repo ("ILTR") respectively. During the year, the group
made an early repayment of £110.0 million (31 July 2024: £490.0 million)
against the TFSME. Cash from these schemes is included within loans and
overdrafts from banks. Residual maturities of the schemes, which include
accrued interest, are as follows:
On demand Within three months Between three months and one year Between one and two years Between two and five years After more than five years Total
£ million £ million £ million £ million £ million £ million £ million
At 31 July 2025 - - - - - - -
At 31 July 2024 - 0.5 - 110.0 - - 110.5
Within three months
£ million
Between three months and one year
£ million
Between one and two years
£ million
Between two and five years
£ million
After more than five years
£ million
Total
£ million
At 31 July 2025
-
-
-
-
-
-
-
At 31 July 2024
-
0.5
-
110.0
-
-
110.5
Assets pledged and received as collateral
The group pledges assets for repurchase agreements and securities borrowing
agreements which are generally conducted under terms that are customary to
standard borrowing contracts.
The group is a participant of the Bank of England's Term Funding Scheme with
Additional Incentives for SMEs ("TFSME"), Short-Term Repo ("STR"), Indexed
Long Term Repo ("ILTR") and Discount Window Facility ("DWF").
Under these schemes, asset finance loan receivables of £nil (31 July 2024:
£404.8 million) and retained notes relating to motor finance loan receivables
of £nil (31 July 2024: £34.4 million) were positioned as collateral with
the Bank of England, against which £nil (31 July 2024: £110.0 million) of
cash was drawn from the TFSME. During the year, the group early repaid £110.0
million (31 July 2024: £490.0 million) against the TFSME.
The group has securitised without recourse and restrictions £1,544.8 million
(31 July 2024: £1,657.0 million) of its insurance premium and motor loan
receivables in return for cash and asset-backed securities in issue of
£1,323.4 million (31 July 2024: £1,453.7 million), of which £245.9 million
(31 July 2024: £359.1 million) is retained by the group. This includes the
£nil (31 July 2024: £34.4 million) retained notes positioned as collateral
with the Bank of England.
As the group has retained exposure to substantially all the risk and rewards
of the above receivables, it continues to recognise these assets in loans and
advances to customers on its consolidated balance sheet.
The majority of loans and advances to customers are secured against specific
assets. Consistent and prudent lending criteria are applied across the whole
loan book with emphasis on the quality of the security provided.
At 31 July 2025, Winterflood had pledged equity and debt securities of £nil
(31 July 2024: £18.3 million) in the normal course of business.
13. Other equity instrument
Other equity instrument comprises the group's £200.0 million Fixed Rate Reset
Perpetual Subordinated Contingent Convertible Securities, or Additional Tier 1
capital ("AT1"), issued on 29 November 2023. These AT1 securities are
classified as an equity instrument under IAS 32 "Financial Instruments:
Presentation" with the proceeds recognised in equity net of transaction costs
of £2.4 million.
These securities carry a coupon of 11.125%, payable semi-annually on 29 May
and 29 November of each year, and have a first reset date on 29 May 2029. Two
coupon payments totalling £22.3 million were made in the year. The securities
include, among other things, a conversion trigger of 7.0% Common Equity Tier 1
capital ratio and are callable any time in the six-month period prior to and
including the first reset date or on each reset date occurring every five
years thereafter.
14. Capital
31 July 2025 31 July 2024
£ million £ million
CET1 capital
Shareholders' equity per balance sheet 1,735.5 1,842.5
Regulatory adjustments to CET1 capital
Contingent convertible securities recognised as AT1 capital(1) (197.6) (197.6)
Intangible assets, net of associated deferred tax liabilities (176.1) (264.0)
Foreseeable AT1 coupon charges(2) (3.8) (3.8)
Cash flow hedging reserve (3.8) (13.0)
Pension asset, net of associated deferred tax liabilities (0.1) (0.6)
Prudent valuation adjustment (1.0) (0.8)
Securitisation positions which can alternatively be subject to a 1,250% risk (11.3) -
weight(3)
IFRS 9 transitional arrangements(4) 6.3 12.1
CET1 capital(5) 1,348.1 1,374.8
Additional tier 1 capital 200.0 200.0
Total tier 1 capital(5) 1,548.1 1,574.8
Tier 2 capital - subordinated debt 200.0 200.0
Total regulatory capital(5) 1,748.1 1,774.8
RWAs
Credit and counterparty credit risk 8,864.4 9,548.4
Operational risk(4) 820.1 1,044.5
Market risk(4) 114.0 108.3
9,798.5 10,701.2
CET1 capital ratio(5) 13.8 % 12.8 %
Tier 1 capital ratio(5) 15.8 % 14.7 %
Total capital ratio(5) 17.8 % 16.6 %
1,842.5
Regulatory adjustments to CET1 capital
Contingent convertible securities recognised as AT1 capital(1)
(197.6)
(197.6)
Intangible assets, net of associated deferred tax liabilities
(176.1)
(264.0)
Foreseeable AT1 coupon charges(2)
(3.8)
(3.8)
Cash flow hedging reserve
(3.8)
(13.0)
Pension asset, net of associated deferred tax liabilities
(0.1)
(0.6)
Prudent valuation adjustment
(1.0)
(0.8)
Securitisation positions which can alternatively be subject to a 1,250% risk
weight(3)
(11.3)
-
IFRS 9 transitional arrangements(4)
6.3
12.1
CET1 capital(5)
1,348.1
1,374.8
Additional tier 1 capital
200.0
200.0
Total tier 1 capital(5)
1,548.1
1,574.8
Tier 2 capital - subordinated debt
200.0
200.0
Total regulatory capital(5)
1,748.1
1,774.8
RWAs
Credit and counterparty credit risk
8,864.4
9,548.4
Operational risk(4)
820.1
1,044.5
Market risk(4)
114.0
108.3
9,798.5
10,701.2
CET1 capital ratio(5)
13.8 %
12.8 %
Tier 1 capital ratio(5)
15.8 %
14.7 %
Total capital ratio(5)
17.8 %
16.6 %
1. The contingent convertible securities are classified as an equity instrument
for accounting but treated as AT1 for regulatory capital purposes, see note
13.
2. Under CRR Article 26, a deduction for foreseeable charges has been recognised
at 31 July 2025 and 31 July 2024. The deduction at 31 July 2025 reflects
charges for the coupon on the group's contingent convertible securities.
3. Under CRR Article 36, a deduction for securitisations positions, which are
subject to a 1,250% risk weight, but alternatively are allowed to be deducted
from CET1 has been recognised at 31 July 2025. For more information on this
securitisation with the British Business Bank, refer to the Group Capital
section of the Financial Overview. The deduction is applicable from 31 July
2025 (31 July 2024: £nil).
4. The group has elected to apply IFRS 9 transitional arrangements for 31 July
2025, which allow the capital impact of expected credit losses to be phased in
over the transitional period.
5. Shown after applying IFRS 9 transitional arrangements and the CRR transitional
and qualifying own funds arrangements in force at the time. Without their
application, at 31 July 2025 the CET1 capital ratio would be 13.7%, tier 1
capital ratio 15.7% and total capital ratio 17.8% (31 July 2024: CET1 capital
ratio 12.7%, tier 1 capital ratio 14.6% and total capital ratio 16.5%).
The following table shows the movement in CET1 capital during the year:
2025 2024
£ million £ million
CET1 capital at 1 August 1,374.8 1,310.8
(Loss)/profit in the year attributable to shareholders (77.9) 100.4
AT1 coupon charges (22.3) (15.0)
IFRS 9 transitional arrangements (5.8) (19.7)
Decrease/(increase) in intangible assets, net of associated deferred tax 87.8 (1.2)
liabilities
Other movements in reserves recognised for CET1 capital 2.4 (0.8)
Other movements in adjustments from CET1 capital (10.9) 0.3
CET1 capital at 31 July 1,348.1 1,374.8
2024
£ million
CET1 capital at 1 August
1,374.8
1,310.8
(Loss)/profit in the year attributable to shareholders
(77.9)
100.4
AT1 coupon charges
(22.3)
(15.0)
IFRS 9 transitional arrangements
(5.8)
(19.7)
Decrease/(increase) in intangible assets, net of associated deferred tax
liabilities
87.8
(1.2)
Other movements in reserves recognised for CET1 capital
2.4
(0.8)
Other movements in adjustments from CET1 capital
(10.9)
0.3
CET1 capital at 31 July
1,348.1
1,374.8
15. Defined benefit pension scheme
During the 2023 financial year, the scheme entered into a buy-in transaction
with an insurance company covering all members of the scheme. A buy-in is a
bulk annuity policy that matches the scheme's assets and liabilities. It
represents a significant de-risking of the investment portfolio and hence a
significant reduction in the group's long-term exposure to pension funding
risk.The pension surplus on the group's balance sheet is £0.2 million
(31 July 2024: £0.8 million) relating to the cash held by the scheme, with
the fair value of the insurance policy matched to the fair value of the
scheme's liabilities, which remains subject to changes in actuarial
valuations.
16. Other liabilities
Provisions are made for claims and other items which arise in the normal
course of business. Claims may arise in respect of legal and regulatory
matters, while other items largely relate to property dilapidations and
employee benefits. A provision is recognised where it is determined that there
is a present obligation arising from a past event, payment is probable, and
the amount can be estimated reliably. The timing and/or outcome of these
claims and other items are uncertain. Provisions recognised on the balance
sheet of £210.3 million (31 July 2024: £32.3 million) primarily relate to
the following matters.
Provision in relation to motor commissions
An overview of developments in relation to motor finance commissions including
the Supreme Court's judgment, the FCA's review, related updates and other
claims and complaints is set out in the 'FCA's review of historical motor
finance commission arrangements' section of the Strategic Report. In the
previous financial year, it was concluded that this matter was a contingent
liability under IAS 37 "Provisions, Contingent Liabilities and Contingent
Assets". At half year 2025, a further detailed assessment against IAS 37 was
performed, which determined that the criteria for a provision had been met and
a provision of £165.0 million was recognised. During the second half of the
financial year, the provision decreased slightly to £163.9 million,
reflecting some utilisation in relation to costs, partly offset by an
unwinding of the discount relating to the time value of money.
Taking into account all available information, and recognising there have been
significant developments since the half year, including the Supreme Court's
judgment and the FCA's subsequent market statements, the provision on the
balance sheet has been reassessed and remains unchanged at £163.9 million.
This includes estimates of the potential redress for affected customers, as
well as relevant directly attributable operational and legal costs. The
estimated provision is based on probability weighted scenarios using various
assumptions, which may differ across the scenarios, relating to potential
outcomes of the FCA review and any redress scheme proposed. All scenarios
selected assume a certain level of compensation based on management's
assessment of affected customers in light of the Supreme Court judgment and
are considered to represent an appropriate range of potential outcomes. Other
assumptions include, for example, claim rates, time periods in scope of any
remediation scheme and the costs to deliver any remediation.
The Supreme Court in the Johnson v FirstRand Bank Limited case noted that the
test for customer unfairness is highly fact sensitive and takes into account a
broad range of factors. These factors include, for example, commission size
relative to the charge for credit, nature of the commission, characteristics
of the customer, compliance with regulations and disclosures made to the
customer. In management's provisioning assessment, significant judgement has
been applied in determining the affected customers, the level of compensation
and the appropriate scenarios. These represent areas of critical accounting
judgement for the group.
In addition, a number of assumptions have been applied in the calculation of
the provision, with certain assumptions representing key sources of estimation
uncertainty. These relate to the total cost of credit ("TCC") thresholds used
in determining the affected population of customers, claim rates and the
weightings applied to the scenarios. A 10% relative increase or decrease in
the TCC thresholds would result in a decrease of £25 million or increase of
£31 million respectively in the estimated provision. Separately, a 10%
relative increase or decrease in the assumed claim rates would result in a
£14.7 million increase or decrease in the estimated provision. Changes in
other assumptions, including scenario weightings, may also result in material
changes to the estimated provision.
The estimated provision is the outcome of a thorough assessment, representing
the group's current evaluation based on available information and recent
developments. There remains significant uncertainty over the FCA's proposals
in relation to a redress scheme which will be subject to public consultation,
and therefore the ultimate cost to the group could be materially higher or
lower than the provision taken. During the year, the group incurred £18.7
million (2024: £6.9 million) of complaints handling expenses and other
operational and legal costs in relation to motor commissions. This included
increased resourcing to manage complaints and legal expenses, notably those
related to the Supreme Court appeal, as well as the subsequent discount unwind
of the original £165 million provision described above. These costs, as well
as £165.0 million recognised in the income statement relating to the initial
provision, do not reflect underlying trading performance and therefore have
been presented as separate adjusting items and excluded from adjusted
operating profit by management.
Provision in relation to early settlements in Motor Finance
Following the identification of historical deficiencies in certain operational
processes related to early settlement of loans in the Motor Finance business,
the group recognised a separate provision of £33.0 million at 31 July 2025 in
relation to a proactive customer remediation programme to be implemented by
the group. The provision reflects management's best estimate of the cost of
remediation in relation to impacted customers, including compensatory interest
and associated administrative costs, based on the information currently
available and will be refined as the scope and design of the remediation
programme are finalised. Since identification of the issue, the group has
acted quickly to amend the relevant processes and implemented additional
controls to prevent recurrence. The group is fully committed to ensuring that
affected customers are appropriately compensated and expects to contact
customers in early 2026.
17. Contingent liabilities
In the normal course of the group's business, there may be other contingent
liabilities relating to complaints, legal proceedings or regulatory reviews.
These cases are not currently expected to have a material impact on the group.
18. Consolidated Cash Flow Statement Reconciliation
2025 2024
£ million £ million
(a) Reconciliation of operating (loss)/profit before tax to net cash inflow
from operating activities
Operating (loss)/profit before tax from continuing operations (122.4) 132.7
Operating profit before tax from discontinued operations 51.2 9.3
Tax paid (28.1) (29.6)
Depreciation, amortisation and impairment 159.4 111.7
Impairment losses on financial assets 92.7 98.8
Provision in relation to motor finance commissions excluding cash paid 161.4 -
Complaints handling and other operational and legal costs incurred excluding 5.6 -
cash paid in relation to motor finance commissions
Provision in relation to early settlements in Motor Finance 33.0 -
Gain on disposal of CBAM excluding cash paid in relation to transaction costs (67.6) -
Amortisation of de-designated cash flow hedges (11.4) (27.9)
Decrease/(increase) in:
Interest receivable and prepaid expenses 4.8 5.5
Net settlement balances and trading positions 3.8 (0.3)
Net money broker loans against stock advanced (7.7) 27.0
Decrease in interest payable and accrued expenses (0.8) (12.7)
Net cash (outflow)/inflow from trading activities 273.9 314.5
Cash (outflow)/inflow arising from changes in:
Loans and advances to banks not repayable on demand 1.4 24.0
Loans and advances to customers 196.8 (699.4)
Assets let under operating leases (20.3) (41.1)
Sovereign and central bank debt (213.3) (194.2)
SSA bonds - (140.2)
Covered bonds 81.9 (80.7)
Deposits by banks (52.1) (1.3)
Deposits by customers 100.1 975.1
Loans and overdrafts from banks (148.8) (492.2)
Debt securities in issue (net) (18.4) (67.6)
Derivative financial instruments (net) 1.0 -
Other assets less other liabilities 39.0 21.1
Net cash inflow/(outflow) from operating activities 241.2 (382.0)
(b) Analysis of net cash outflow in respect of the purchase of subsidiaries
Purchase of subsidiaries, net of cash acquired (0.5) (15.4)
(c) Analysis of net cash inflow in respect of the sale of subsidiaries
Cash consideration received 146.4 0.9
Cash and cash equivalents disposed of (42.4) -
104.0 0.9
(d) Analysis of cash and cash equivalents(1)
Cash and balances at central banks 1,917.2 1,584.2
Loans and advances to banks 184.6 260.3
2,101.8 1,844.5
2024
£ million
(a) Reconciliation of operating (loss)/profit before tax to net cash inflow
from operating activities
Operating (loss)/profit before tax from continuing operations
(122.4)
132.7
Operating profit before tax from discontinued operations
51.2
9.3
Tax paid
(28.1)
(29.6)
Depreciation, amortisation and impairment
159.4
111.7
Impairment losses on financial assets
92.7
98.8
Provision in relation to motor finance commissions excluding cash paid
161.4
-
Complaints handling and other operational and legal costs incurred excluding
cash paid in relation to motor finance commissions
5.6
-
Provision in relation to early settlements in Motor Finance
33.0
-
Gain on disposal of CBAM excluding cash paid in relation to transaction costs
(67.6)
-
Amortisation of de-designated cash flow hedges
(11.4)
(27.9)
Decrease/(increase) in:
Interest receivable and prepaid expenses
4.8
5.5
Net settlement balances and trading positions
3.8
(0.3)
Net money broker loans against stock advanced
(7.7)
27.0
Decrease in interest payable and accrued expenses
(0.8)
(12.7)
Net cash (outflow)/inflow from trading activities
273.9
314.5
Cash (outflow)/inflow arising from changes in:
Loans and advances to banks not repayable on demand
1.4
24.0
Loans and advances to customers
196.8
(699.4)
Assets let under operating leases
(20.3)
(41.1)
Sovereign and central bank debt
(213.3)
(194.2)
SSA bonds
-
(140.2)
Covered bonds
81.9
(80.7)
Deposits by banks
(52.1)
(1.3)
Deposits by customers
100.1
975.1
Loans and overdrafts from banks
(148.8)
(492.2)
Debt securities in issue (net)
(18.4)
(67.6)
Derivative financial instruments (net)
1.0
-
Other assets less other liabilities
39.0
21.1
Net cash inflow/(outflow) from operating activities
241.2
(382.0)
(b) Analysis of net cash outflow in respect of the purchase of subsidiaries
Purchase of subsidiaries, net of cash acquired
(0.5)
(15.4)
(c) Analysis of net cash inflow in respect of the sale of subsidiaries
Cash consideration received
146.4
0.9
Cash and cash equivalents disposed of
(42.4)
-
104.0
0.9
(d) Analysis of cash and cash equivalents(1)
Cash and balances at central banks
1,917.2
1,584.2
Loans and advances to banks
184.6
260.3
2,101.8
1,844.5
1. Excludes £31.9 million (2024: £33.2 million) of cash reserve accounts and
cash held in trust.
During the year ended 31 July 2025, the non-cash changes on debt financing
amounted to £32.2 million (31 July 2024: £35.9 million) arising largely
from interest accretion and fair value hedging movements.
19. Fair value of financial assets and liabilities
The fair values of the group's subordinated loan capital and debt securities
in issue are set out below.
31 July 2025 31 July 2024
Fair value Carrying value Fair value Carrying value
£ million £ million £ million £ million
Subordinated loan capital 193.5 195.5 179.4 187.2
Debt securities in issue 2,013.2 1,991.3 1,998.5 1,986.4
Carrying value
£ million
Fair value
£ million
Carrying value
£ million
Subordinated loan capital
193.5
195.5
179.4
187.2
Debt securities in issue
2,013.2
1,991.3
1,998.5
1,986.4
The fair value of gross loans and advances to customers at 31 July 2025 is
estimated to be £9,543.4 million (31 July 2024: £9,806.4 million), with a
carrying value of £9,459.4 million (31 July 2024: £9,830.8 million). The
fair value of deposits by customers is estimated to be £8,798.2 million
(31 July 2024: £8,691.8 million), with a carrying value of £8,799.3 million
(31 July 2024 : £8,693.6 million). These estimates are based on highly
simplified assumptions and inputs and may differ to actual amounts received or
paid. The differences between fair value and carrying value are not considered
to be significant, and are consistent with management's expectations given the
nature of the Banking business and the short average tenor of the instruments.
However, the differences have increased in comparison to the prior year in
line with market interest rates.
The group holds financial instruments that are measured at fair value
subsequent to initial recognition. Each instrument has been categorised within
one of three levels using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. These levels are
based on the degree to which the fair value is observable.
The instruments included within the three levels, the valuation methodologies
and the most significant inputs are consistent with those described in Note 26
of the 2024 Annual Report. The group believes that there is no reasonably
possible change to the inputs used in the valuation of these positions which
would have a material effect on the group's consolidated income statement.
The tables below show the classification of financial instruments held at fair
value into the valuation hierarchy.
Level 1 Level 2 Level 3 Total
£ million £ million £ million £ million
At 31 July 2025
Assets
Loans and advances to customers held at FVTPL - - 11.8 11.8
Debt securities:
Sovereign and central bank debt 601.6 - - 601.6
SSA bonds 146.2 - - 146.2
Covered bonds 105.6 - - 105.6
Derivative financial instruments - 99.1 4.0 103.1
Contingent consideration - - 21.1 21.1
Other assets - - 1.1 1.1
853.4 99.1 38.0 990.5
Liabilities
Short positions:
Derivative financial instruments - 100.5 4.2 104.7
- 100.5 4.2 104.7
Level 2
£ million
Level 3
£ million
Total
£ million
At 31 July 2025
Assets
Loans and advances to customers held at FVTPL
-
-
11.8
11.8
Debt securities:
Sovereign and central bank debt
601.6
-
-
601.6
SSA bonds
146.2
-
-
146.2
Covered bonds
105.6
-
-
105.6
Derivative financial instruments
-
99.1
4.0
103.1
Contingent consideration
-
-
21.1
21.1
Other assets
-
-
1.1
1.1
853.4
99.1
38.0
990.5
Liabilities
Short positions:
Derivative financial instruments
-
100.5
4.2
104.7
-
100.5
4.2
104.7
Level 1 Level 2 Level 3 Total
£ million £ million £ million £ million
At 31 July 2024
Assets
Loans and advances to customers held at FVTPL - - 11.8 11.8
Debt securities:
Sovereign and central bank debt 383.7 - - 383.7
SSA bonds 145.5 - - 145.5
Covered bonds 187.7 - - 187.7
Long trading positions in debt securities 13.8 2.2 - 16.0
Equity shares 5.9 21.4 0.1 27.4
Derivative financial instruments - 95.3 6.1 101.4
Contingent consideration - - 1.2 1.2
Other assets - - 0.8 0.8
736.6 118.9 20.0 875.5
Liabilities
Short positions:
Debt securities 3.3 2.2 - 5.5
Equity shares 2.2 7.1 - 9.3
Derivative financial instruments - 122.6 6.4 129.0
Contingent consideration - - 3.0 3.0
5.5 131.9 9.4 146.8
Level 2
£ million
Level 3
£ million
Total
£ million
At 31 July 2024
Assets
Loans and advances to customers held at FVTPL
-
-
11.8
11.8
Debt securities:
Sovereign and central bank debt
383.7
-
-
383.7
SSA bonds
145.5
-
-
145.5
Covered bonds
187.7
-
-
187.7
Long trading positions in debt securities
13.8
2.2
-
16.0
Equity shares
5.9
21.4
0.1
27.4
Derivative financial instruments
-
95.3
6.1
101.4
Contingent consideration
-
-
1.2
1.2
Other assets
-
-
0.8
0.8
736.6
118.9
20.0
875.5
Liabilities
Short positions:
Debt securities
3.3
2.2
-
5.5
Equity shares
2.2
7.1
-
9.3
Derivative financial instruments
-
122.6
6.4
129.0
Contingent consideration
-
-
3.0
3.0
5.5
131.9
9.4
146.8
Movements in financial instruments categorised as Level 3 were:
Loans and advances to customers held at FVTPL Derivative financial assets Derivative financial liabilities Equity shares Contingent consideration Other assets Total
£ million £ million £ million £ million £ million £ million £ million
At 1 August 2023 - 11.1 (11.2) 0.2 (0.8) - (0.7)
Total (losses)/gains recognised in the consolidated income statement - (5.0) 4.8 - 0.4 - 0.2
Purchases, issues, originations and transfers in 11.8 - - - (0.5) 0.8 12.1
Sales, settlements and transfers out - - - (0.1) (0.9) - (1.0)
At 31 July 2024 11.8 6.1 (6.4) 0.1 (1.8) 0.8 10.6
Total gains/(losses) recognised in the consolidated income statement 1.5 (2.1) 2.2 - - - 1.6
Purchases, issues, originations and transfers in 3.6 - - - - 0.3 3.9
Sales, settlements and transfers out (5.1) - - (0.1) 22.9 - 17.7
Reclassification to liabilities held for sale - - - - - - -
At 31 July 2025 11.8 4.0 (4.2) - 21.1 1.1 33.8
Derivative financial assets
£ million
Derivative financial liabilities
£ million
Equity shares
£ million
Contingent consideration
£ million
Other assets
£ million
Total
£ million
At 1 August 2023
-
11.1
(11.2)
0.2
(0.8)
-
(0.7)
Total (losses)/gains recognised in the consolidated income statement
-
(5.0)
4.8
-
0.4
-
0.2
Purchases, issues, originations and transfers in
11.8
-
-
-
(0.5)
0.8
12.1
Sales, settlements and transfers out
-
-
-
(0.1)
(0.9)
-
(1.0)
At 31 July 2024
11.8
6.1
(6.4)
0.1
(1.8)
0.8
10.6
Total gains/(losses) recognised in the consolidated income statement
1.5
(2.1)
2.2
-
-
-
1.6
Purchases, issues, originations and transfers in
3.6
-
-
-
-
0.3
3.9
Sales, settlements and transfers out
(5.1)
-
-
(0.1)
22.9
-
17.7
Reclassification to liabilities held for sale
-
-
-
-
-
-
-
At 31 July 2025
11.8
4.0
(4.2)
-
21.1
1.1
33.8
The gains recognised in the consolidated income statement relating to Level 3
instruments held at 31 July 2025 amounted to £1.6 million (2024: gains of
£0.2 million).
20. Additional support for customers
Forbearance
Forbearance occurs when a customer is experiencing difficulty in meeting their
financial commitments and a concession is granted, by changing the terms of
the financial arrangement, which would not otherwise be considered. This
arrangement can be temporary or permanent, depending on the customer's
circumstances. The Banking division reports on forborne exposures as either
performing or non- performing in line with regulatory requirements. A
forbearance policy is maintained to ensure the necessary processes are in
place to enable consistently fair treatment of all customers and that each is
managed based on their individual circumstances. The arrangements agreed with
customers will aim to create a sustainable and affordable financial position,
thereby reducing the likelihood of suffering a credit loss. The forbearance
policy is periodically reviewed to ensure it remains effective.
The Banking division offers a range of concessions to support customers which
vary depending on the product and the customer's status. Such concessions
include grace periods/payment moratoria, extensions of the loan term, and
refinancing.
Loans are classified as forborne at the time a customer in financial
difficulty is granted a concession and the loan will remain treated and
recorded as forborne until the following exit conditions are met:
• the loan is considered as performing and there is no past-due amount according
to the amended contractual terms;
• a minimum two-year probation period has passed from the date the forborne
exposure was considered as performing, during which time regular and timely
payments have been made; and
• none of the customer's exposures with Close Brothers are more than 30 days
past due at the end of the probation period.
At 31 July 2025, the gross carrying amount of exposures with forbearance
measures was £406.1 million (31 July 2024: £363.8 million). The key drivers
of this increase have been higher forbearance in Motor Finance, reflecting
continued macroeconomic challenges and enduring cost of living pressures on
customers, and project-specific issues in our Property business.
An analysis of forborne loans is shown in the table below:
31 July 2025 31 July 2024
Gross loans and advances to customers (£ million) 9,709.1 10,276.6
Forborne loans (£ million) 406.1 363.8
Forborne loans as a percentage of gross loans and advances to customers (%) 4.2 % 3.5%
Provision on forborne loans (£ million) 113.8 89.4
Number of customers supported 15,882 13,166
3.5%
Provision on forborne loans (£ million)
113.8
89.4
Number of customers supported
15,882
13,166
The following is a breakdown of forborne loans by segment:
31 July 2025 £ million 31 July 2024 £ million
Commercial 112.9 118.5
Retail 50.6 42.8
Property 242.6 202.5
Total 406.1 363.8
The following is a breakdown of the number of customers supported by segment:
31 July 2025 Number of customers supported 31 July 2024 Number of customers supported
Commercial 948 839
Retail 14,880 12,275
Property 54 52
Total 15,882 13,166
Following review, the concession types reported below have been updated from
those used in the Annual Report 2024 to align to the broader list of
concessions used in regulatory reporting. This change has been made to support
consistency with regulatory frameworks and improve ease of interpretation. The
majority of concessions shown as 'Other forbearance measures' relates to
agreements where collections and recoveries activity has been deferred.
The following is a breakdown of forborne loans by concession type, based on
the updated approach:
31 July 2025 £ million 31 July 2024(1)
£ million
Grace period/payment moratorium 136.3 147.0
Extension of maturity/term 139.5 98.8
Rescheduled payments 32.7 28.0
Debt forgiveness 0.2 -
Other forbearance measures 97.4 90.0
Total 406.1 363.8
Grace period/payment moratorium
136.3
147.0
Extension of maturity/term
139.5
98.8
Rescheduled payments
32.7
28.0
Debt forgiveness
0.2
-
Other forbearance measures
97.4
90.0
Total
406.1
363.8
1. Comparatives have been updated to align to the expanded concession type
categories used in this financial year's reporting
Government lending schemes
Since the pandemic period, following accreditation, customers have been
offered facilities under various UK and Irish government-introduced loan
schemes, thereby enabling the Banking division to maximise its support to
small businesses. At 31 July 2025, there are 3,350 (31 July 2024: 4,112)
remaining facilities, with residual balance of £461.6 million (31 July 2024:
£543.0 million) following further repayments across the Commercial
businesses.
The Banking division maintains a regular reporting cycle of these facilities
to monitor performance. To date, a number of claims have been made and
payments received under the government guarantee.
21. Interest rate risk
The group recognises three main sources of IRRBB which could adversely impact
future income or the value of the balance sheet:
• repricing risk - the risk presented by assets and liabilities that reprice at
different times;
• embedded optionality risk - the risk presented by contractual terms embedded
into certain assets and liabilities; and
• basis risk - the risk presented by a mismatch in the reference interest rate
for assets and liabilities.
IRRBB is assessed and measured on a behavioural basis by applying key
behavioural and modelling assumptions including, but not limited to, those
related to fixed rate loans subject to prepayment risk, the behaviour of
non-maturity assets and liabilities, the treatment of own equity, and the
expectation of embedded interest rate options. This assessment is performed
across a range of regulatory prescribed and internal interest rate shock
scenarios approved by the bank's Asset and Liability Committee.
Two measures are used for measuring IRRBB, namely Earnings at Risk ("EaR") and
Economic Value ("EV"):
• EaR measures short-term impacts to earnings, highlighting any earnings
sensitivity, should interest rates change unexpectedly.
• EV measures longer-term earnings sensitivity, highlighting the potential
future sensitivity of earnings, and any risk to capital, should interest rates
change unexpectedly
No material exposure exists in the other parts of the group, and accordingly
the analysis below relates to the Banking division and company.
EaR impact
The table below sets out the assessed impact on group net interest income over
a 12-month period from interest rate changes. The results shown are for an
instantaneous and parallel change in interest rates at 31 July 2025:
31 July 2025 £ million 31 July 2024 £ million
0.5% increase 2.1 0.1
2.5% increase 10.1 0.5
0.5% decrease (2.1) (0.1)
2.5% decrease (9.3) (0.8)
The group also monitors any potential earning exposure from basis mismatches
between its lending and funding activities on a monthly cadence. To provide a
clearer assessment of the group's exposure to interest rate changes, basis
risk is excluded from the EaR numbers.
The group's EaR at 31 July 2025 reflects its policy to ensure exposure to
interest rate shocks is managed within the group's risk appetites and the
group's strategy to manage and minimise interest rate risk, to that required
to operate efficiently. The EaR measure is a combination of the group's
repricing profile and the embedded optionality risk, of which the latter is
negligible in the current interest rate environment.
Earnings at Risk changed from (£0.1) million as at 31 July 2024, to (£2.1)
million at 31 July 2025, for a 0.5% reduction in interest rates. This reflects
the group's decision to maintain a higher level of liquidity in light of the
uncertainty regarding the FCA's review of motor finance commission
arrangements, noting that for liquidity holdings, earnings reduce when
interest rates fall.
EV impact
The table below sets out the assessed impact on group EV, which measures the
potential change in the balance sheet value following an instantaneous and
parallel change in interest rates at 31 July 2025:
31 July 2025 £ million 31 July 2024 £ million
0.5% increase 1.0 3.5
2.5% increase 4.8 17.2
0.5% decrease (0.9) (3.5)
2.5% decrease (0.3) (14.4)
The group's EV at 31 July 2025 reflects its policy to ensure exposure to
interest rate shocks is managed within the group's risk appetites, and the
group's strategy to manage and minimise interest rate risk, to that required
to operate efficiently. The EV measure is a combination of the repricing
profile and the embedded optionality. Economic Value at 31 July 2025, improved
to (£0.9) million for a 0.5% decrease in interest rates due to the Group bond
being closer to maturity, and more active group hedging.
For a 2.5% decrease in interest rates, Economic Value benefitted from the
interest rate floors embedded in some of the customer loans.
22. Related party transactions
Transactions with key management
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of an entity. The
group's key management are the members of the group's Board and Executive
Committee, which include all Executive Directors and Non-Executive Directors.
The related parties of the group include its key management and their close
family members. Details of Directors' remuneration and interests in shares are
disclosed in the Directors' Remuneration Report. The table below details, on
an aggregated basis, the group's key management emoluments:
2025 2024
£ million £ million
Emoluments
Salaries and fees 5.3 6.0
Benefits and allowances 2.1 0.8
Performance-related awards in respect of the current year:
Cash - 1.7
7.4 8.5
Termination benefits 0.9 -
Post-employment benefits 0.1 -
Share-based awards 1.1 0.7
9.5 9.2
2024
£ million
Emoluments
Salaries and fees
5.3
6.0
Benefits and allowances
2.1
0.8
Performance-related awards in respect of the current year:
Cash
-
1.7
7.4
8.5
Termination benefits
0.9
-
Post-employment benefits
0.1
-
Share-based awards
1.1
0.7
9.5
9.2
Gains upon exercise of options by the group's key management, expensed to the
income statement in previous years, totalled £0.4 million (2024: £1.8
million).
Amounts included in deposits by customers at 31 July 2025 attributable, in
aggregate, to the group's key management were £0.3 million (31 July 2024:
£0.3 million). These relationships are undertaken on standard commercial
terms.
23. Discontinued operations and assets and liabilities classified as held for
sale
At 31 July 2025, the group's discontinued operations comprised Close Brothers
Asset Management ("CBAM") and Winterflood Securities ("Winterflood"). Close
Brewery Rentals Limited ("CBRL") has been classified as held for sale at 31
July 2025 but the business does not meet the criteria to be classified as
discontinued operations under IFRS 5.
Close Brothers Asset Management
On 19 September 2024, the group announced that it had entered into an
agreement to sell its wealth management business, Close Brothers Asset
Management ("CBAM"), one of the group's operating segments, to funds managed
by Oaktree Capital Management, L.P. ("Oaktree"). The sale completed on 28
February 2025.
CBAM relates to the group's 100% shareholding in Close Asset Management
Holdings Limited ("CAMHL") and its subsidiaries. The business is a
well-regarded UK wealth management franchise and the transaction will
strengthen the group's capital base and enhance its position to navigate the
current uncertain environment.
In the group's 2025 Half Year Results, the business fulfilled the requirements
of IFRS 5 to be classified as discontinued operations in the consolidated
income statement. In addition, the assets and liabilities of the business were
presented as held for sale in the consolidated balance sheet. On completion,
the assets and liabilities were derecognised and a gain on disposal was
recognised as follows.
Results of discontinued operations
Seven months ended Year ended
28 February 2025 31 July 2024
£ million £ million
Operating income 95.4 157.8
Operating expenses (90.8) (146.8)
Trading profit 4.6 11.0
Gain on disposal 60.8 -
Operating profit before tax 65.4 11.0
Tax(1) (1.5) (3.6)
Profit after tax 63.9 7.4
Year ended
31 July 2024
£ million
Operating income
95.4
157.8
Operating expenses
(90.8)
(146.8)
Trading profit
4.6
11.0
Gain on disposal
60.8
-
Operating profit before tax
65.4
11.0
Tax(1)
(1.5)
(3.6)
Profit after tax
63.9
7.4
1. The tax charge of £1.5 million relates to the trading profit of the business
prior to disposal. The gain on disposal is not taxable.
Cash flow from discontinued operations
Seven months ended Year ended
28 February 2025 31 July 2024
£ million £ million
Net cash flow from operating activities (1.5) 17.4
Net cash flow from investing activities (3.5) (9.7)
Net cash flow from financing activities (1.7) (2.9)
Year ended
31 July 2024
£ million
Net cash flow from operating activities
(1.5)
17.4
Net cash flow from investing activities
(3.5)
(9.7)
Net cash flow from financing activities
(1.7)
(2.9)
Consolidated gain on disposal
31 July 2025
£ million
Cash consideration received 146.4
Contingent deferred consideration 21.1
Total consideration 167.5
Disposal transaction costs (7.0)
160.5
Net assets on completion date 99.7
Consolidated gain on disposal 60.8
Cash consideration received
146.4
Contingent deferred consideration
21.1
Total consideration
167.5
Disposal transaction costs
(7.0)
160.5
Net assets on completion date
99.7
Consolidated gain on disposal
60.8
Cash consideration of £146.4 million was received on completion. The
contingent deferred consideration is in the form of preference shares,
redeemable no later than Oaktree's exit, for an amount of up to £28.0 million
plus interest at a rate of 8% per annum, stepping up to 12% after five years.
The contingent deferred consideration is subject to potential deductions,
including in relation to retention of key individuals and certain potential
regulatory costs and separation cost overruns. The preference shares are
measured at fair value through profit or loss under IFRS 9. The fair value is
calculated to be £21.1 million based on a discounted expected cash flow
method, with the main assumptions relating to the expected time until
redemption and the aforementioned potential deductions.
Winterflood Securities
As announced on 25 July 2025, the group agreed to the sale of Winterflood
Securities, an execution services and securities business and one of the
group's operating segments, to Marex Group plc. The sale is expected to
complete in early 2026, upon receipt of the customary regulatory approvals.
The business has fulfilled the requirements of IFRS 5 to be classified as
discontinued operations in the consolidated income statement with comparative
information restated. In addition, the assets and liabilities of the business
have been presented as held for sale in the consolidated balance sheet.
Assets and liabilities held for sale
The major classes of assets and liabilities classified as held for sale, which
exclude intercompany balances eliminated on consolidation, are as follows:
31 July 2025
£ million
Balance sheet
Intangible assets 10.3
Property, plant and equipment 20.2
Loans and advances to banks 54.8
Settlement balances 726.4
Equity shares 28.3
Debt securities and loans 32.8
Other assets 14.2
Total assets classified as held for sale 887.0
Bank loans and overdrafts 15.3
Settlement balances 698.2
Equity shares 10.4
Debt securities and loans 14.8
Accruals and deferred income 8.5
Other liabilities 20.2
Total liabilities classified as held for sale 767.4
Balance sheet
Intangible assets
10.3
Property, plant and equipment
20.2
Loans and advances to banks
54.8
Settlement balances
726.4
Equity shares
28.3
Debt securities and loans
32.8
Other assets
14.2
Total assets classified as held for sale
887.0
Bank loans and overdrafts
15.3
Settlement balances
698.2
Equity shares
10.4
Debt securities and loans
14.8
Accruals and deferred income
8.5
Other liabilities
20.2
Total liabilities classified as held for sale
767.4
Results of discontinued operations
Year ended Year ended
31 July 2025 31 July 2024
£ million £ million
Operating income 77.3 73.0
Operating expenses (77.1) (74.8)
Impairment credit on financial assets 0.1 0.1
Goodwill impairment recognised on remeasurement of disposal group as held for (14.5) -
sale
Operating loss before tax (14.2) (1.7)
Tax (0.5) (0.6)
Loss after tax (14.7) (2.3)
Year ended
31 July 2024
£ million
Operating income
77.3
73.0
Operating expenses
(77.1)
(74.8)
Impairment credit on financial assets
0.1
0.1
Goodwill impairment recognised on remeasurement of disposal group as held for
sale
(14.5)
-
Operating loss before tax
(14.2)
(1.7)
Tax
(0.5)
(0.6)
Loss after tax
(14.7)
(2.3)
Cash flow from discontinued operations
Year ended Year ended
31 July 2025 31 July 2024
£ million £ million
Net cash flow from operating activities (8.3) 53.0
Net cash flow from investing activities 0.1 (9.0)
Net cash flow from financing activities (0.5) (1.5)
Year ended
31 July 2024
£ million
Net cash flow from operating activities
(8.3)
53.0
Net cash flow from investing activities
0.1
(9.0)
Net cash flow from financing activities
(0.5)
(1.5)
Close Brewery Rentals Limited
As announced on 15 July 2025, the group agreed to the sale of its brewery
container rentals business, CBRL, to MML Keystone, a fund managed by MML
Capital. The sale was subsequently completed on 31 August 2025, as disclosed
in Note 24. At 31 July 2025, the assets and liabilities of the business have
been classified as held for sale but it does not meet the criteria to be
classified as discontinued operations under IFRS 5. The results of CBRL are
therefore included within continuing operations.
Assets and liabilities held for sale
The major classes of assets and liabilities classified as held for sale, which
exclude intercompany balances eliminated on consolidation, are as follows:
31 July 2025
£ million
Balance sheet
Property, plant and equipment 42.8
Loans and advances to banks 0.2
Other assets 4.0
Total assets classified as held for sale 47.0
Accruals and deferred income 0.7
Other liabilities 5.3
Total liabilities classified as held for sale 6.0
Balance sheet
Property, plant and equipment
42.8
Loans and advances to banks
0.2
Other assets
4.0
Total assets classified as held for sale
47.0
Accruals and deferred income
0.7
Other liabilities
5.3
Total liabilities classified as held for sale
6.0
24. Post balance sheet event
Close Brewery Rentals Limited
On 31 August 2025, the group completed the sale of Close Brewery Rentals
Limited ("CBRL") to MML Keystone, following the agreement announced on 15 July
2025. As disclosed in Note 23, the business was classified as held for sale at
31 July 2025. The completion of this sale, which resulted in an immaterial
gain, is a non-adjusting event under the requirements of IAS 10 "Events after
the reporting period".
Cautionary Statement
Certain statements included or incorporated by reference within this
announcement may constitute "forward-looking statements" in respect of the
group's operations, performance, prospects, financial condition and/or
environmental, social and governance ambitions, targets and commitments. All
statements other than statements of historical fact are, or may be deemed to
be, forward-looking statements. 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. There are also
a number of factors that could cause actual future operations, performance,
financial conditions, results or developments to differ materially from the
plans, goals and expectations expressed or implied by these forward-looking
statements and forecasts. These factors include, but are not limited to, those
contained in this announcement and the group's Annual Report (available at:
https://www.closebrothers.com/investor-relations). 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
document should be construed as a profit forecast. Past performance cannot be
relied upon as a guide to future performance and persons needing advice should
consult an independent financial adviser.
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
shall it or any part of it or the fact of its distribution form the basis of,
or be relied on in connection with, any contract or commitment or investment
decisions relating thereto, nor does it constitute a recommendation regarding
the shares or other securities of the company or any of its group members.
Statements in this report reflect the knowledge and information available at
the time of its preparation. Liability arising from anything in this report
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.
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