Close Brothers Group (LSE:CBG) reported a resilient but softer performance for the six months to 31 January 2026, with adjusted operating profit from continuing operations falling 19% to £65.2m. Return on average tangible equity also declined to 6.3%. The statutory loss before tax narrowed to £65.5m, largely reflecting the impact of a previously announced £135m provision linked to motor finance. The group’s loan book decreased 2% to £9.2bn, reflecting weaker property markets and a strategic decision to withdraw from certain lending segments.
Across its lending divisions, the net interest margin remained steady at 7.1%. Credit quality also improved, with the bad debt ratio falling to 0.8% following an update to IFRS 9 modelling for motor finance exposures. These factors helped offset the impact of lower income resulting from the reduced loan book. The group’s CET1 capital ratio strengthened to 14.3%, supported by the disposal of Winterflood and a reduction in risk-weighted assets, improving the bank’s capacity to absorb potential liabilities linked to the FCA’s proposed motor finance commission redress scheme.
Management has accelerated its transformation programme, shifting the focus toward operational optimisation. The initiative is expected to deliver approximately £25m in annualised cost savings in the current financial year and around £60m by the end of 2027—one year ahead of earlier plans. The strategy includes higher restructuring expenditure and a planned reduction of around 600 roles by 2027. Close Brothers reiterated its goal of achieving double-digit returns on tangible equity by the 2028 financial year, supported by a more targeted loan portfolio focused on selected growth areas.
The company’s outlook remains pressured by weaker profitability and higher leverage, alongside bearish technical signals that indicate a broader downward trend in the share price. While stronger cash flow and a relatively low P/E valuation offer some support, these factors may not fully offset concerns around earnings momentum and financial performance.
More about Close Brothers Group
Close Brothers Group is a UK-based specialist banking group that has supported the domestic business community for nearly 150 years. The bank focuses on niche areas of commercial, retail and property finance, including premium finance and motor finance. Its strategy centres on serving segments where it believes it can achieve sustainable growth and strong long-term returns.
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