Close Bros Group Plc
Scheduled Trading Update
Close Brothers Group plc (“the group” or “Close Brothers”) today issues its scheduled trading update relating to the first quarter of its 2022 financial year from 1 August 2021 to 31 October 2021 (“the quarter”)
Adrian Sainsbury, Chief Executive Officer
“We are encouraged by our performance at this early stage of the financial year as we continue to make the most of opportunities arising in the current environment. Although the economic trajectory remains uncertain, the strengths of our proven and resilient model, together with the expertise of our people, leave us well placed to continue supporting our customers and clients and to protect, grow and sustain our business over the long term.
Our responsibility towards the environment remains at the forefront of our minds. In addition to targeting being operationally net zero through our Scope 1 and 2 emissions by 2030, we have now started an assessment of our indirect Scope 3 emissions as we look to better understand our impact and how we can help with the transition to a lower carbon future.”
Group and divisional performance
The group has made an encouraging start to the year, with a strong performance in Banking and good growth momentum in Close Brothers Asset Management (“CBAM”), although in Winterflood, trading income has continued to moderate since the end of the 2021 financial year.
We maintained a strong capital position, with a Common Equity Tier 1 (“CET1”) capital ratio of 15.7% at 31 October 2021 (31 July 2021: 15.8%), significantly above the applicable minimum regulatory requirement1.
In Banking, the loan book increased 2.4% in the quarter to £8.6 billion (31 July 2021: £8.4 billion). This was driven by improved utilisation in Invoice Finance, along with good demand in the Asset and Motor Finance businesses. The Property book remained stable from 31 July 2021.
The annualised net interest margin remained strong as we continued to focus on our pricing discipline.
We are making good progress with our key strategic investment programmes to protect, grow and sustain our business model. We continue to exercise rigorous management of business as usual costs, although we are mindful of inflationary pressures, particularly on staff costs.
The credit performance of the loan book as a whole remained strong. We remain confident in the quality of our lending, which is predominantly secured, prudently underwritten and diverse. Our impairment provisions continue to reflect the improved but still uncertain economic outlook2.
CBAM has seen good growth momentum, benefiting from strong net inflows and rising markets in the period. The business achieved annualised net inflows of 8% (FY 2021: 7%) and increased managed assets to £16.0 billion (31 July 2021: £15.6 billion). Total client assets grew to £17.4 billion (31 July 2021: £17.0 billion).
Winterflood has experienced further moderation of trading performance since the end of the 2021 financial year, with income in the quarter reverting to close to pre-Covid-19 levels, reflecting a market wide slowdown in retail trading activity and a change in the mix of trading volumes in the quarter. The team's experience and focus on managing risk resulted in no loss days in the quarter.
Outlook
While the economic trajectory remains uncertain, we have made an encouraging start to the year.
We are well positioned to maximise opportunities in the current environment and remain confident in the long-term growth prospects of our Banking businesses.
In Asset Management, we are well placed to benefit from the proven, ongoing demand for our services and continue to invest to support the long-term growth potential of the business.
Winterflood is well positioned to continue trading profitably in a range of market conditions but remains sensitive to changes in the market environment. We remain focused on growing Winterflood Business Services.