Close Brothers Group (LSE:CBG) reported adjusted operating profit of £120.3 million for the year ended 31 July 2026, down 17% year on year, as the specialist lender continued to restructure its operations and address potential costs related to motor finance commissions.
The group recorded a statutory operating loss before tax of £60.3 million, while return on tangible equity declined to 5.5%. Adjusted earnings per share from continuing operations fell to 47.5 pence.
Close Brothers said no ordinary dividend will be paid for the year amid uncertainty surrounding potential motor finance redress.
Cost Savings Reach £36 Million
During the year, Close Brothers continued to simplify its operations through the sale of Close Brewery Rentals and Winterflood, the run-off of Close Brothers Vehicle Hire and the repositioning of its premium finance business towards commercial lines.
The group achieved approximately £36 million of annualised cost savings during FY26, exceeding its previous target of £25 million.
Close Brothers now expects annualised savings to exceed £60 million by the end of FY27 as further restructuring and efficiency measures are implemented.
Loan Book Remains at £9.5 Billion
The group’s overall loan book was broadly unchanged at £9.5 billion but increased 2% on an underlying basis.
Underlying loan book growth reached 4% during the second half, with Close Brothers reporting growth across all divisions during the final quarter.
Net interest margin declined to 6.9% from 7.2%, which the group attributed to changes in its business mix and its focus on risk-adjusted returns.
The bad debt ratio remained at 1.0%. The results incorporated updated IFRS 9 modelling and increased provisions relating to a small number of property finance facilities.
Motor Finance Provision Increases to Around £320 Million
Close Brothers increased its provision relating to motor finance commission matters to approximately £320 million.
The provision comes amid continuing legal and regulatory developments concerning the Financial Conduct Authority’s motor finance consumer redress scheme.
The group said its capital position had strengthened despite the increased provision, with its Common Equity Tier 1 ratio rising to 14.1%. This was above Close Brothers’ medium-term target range of 12% to 13%.
The board did not declare a final dividend, citing uncertainty associated with motor finance redress.
Close Brothers Targets Double-Digit Returns by FY28
Close Brothers is continuing to invest in restructuring and digital initiatives as part of its strategy for the specialist banking business.
Chief executive Mike Morgan reiterated the group’s objective of achieving a double-digit return on tangible equity by FY28.
The target remains dependent on the execution of the group’s strategy and the impact of regulatory and other developments affecting the business.
More About Close Brothers Group
Close Brothers Group is a UK-based specialist banking group providing secured lending and related financial services across areas including motor finance, property and premium finance.
The group has been reducing its exposure to non-core activities through disposals and business exits while investing in technology, data and digital capabilities across its specialist lending operations.
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