Close Brothers Group PLC (LON:CBG) has announced its Preliminary Results for the year ended 31 July 2026
Mike Morgan, Chief Executive, said:
“In FY 2026 we have made significant progress against our strategic priorities to simplify, optimise and grow the business. We have taken decisive action: exiting non-core activities and repositioning business lines; taking out costs; returning to growth, and sharpening our focus on our specialist lending markets in which we have expertise. In so doing we have established a stronger foundation for future growth, operating leverage and returns.
We continue to make good progress on costs as we track ahead of schedule, delivering c.£36 million of annualised cost savings in FY 2026 against a target of c.£25 million. As execution continues through FY 2027, we expect to realise further benefits of our cost initiatives, supporting sustainable growth, driving operating leverage and positioning us to deliver further efficiency in the future.
Loan book growth accelerated through the second half of FY 2026 as the benefits of our strategic actions became increasingly evident across the business. With all divisions delivering growth in the final quarter, we enter FY 2027 with confidence to achieve our target of 5-10% p.a. growth through the cycle.
Capital (CET1 ratio) remains elevated at 14.1% against a medium-term target range of 12-13%, with capacity to absorb Basel 3.1 from 1 January 2027, and to support growth opportunities across all divisions. During the year, we added c.£165 million to our provision in relation to the FCA’s motor finance consumer redress scheme, which now stands at c.£320 million. As we await further clarity on the outcome, our focus remains on the execution of our strategy.
We are now a simpler, more focused specialist bank, better positioned to serve customers, invest in growth and enhance returns for shareholders. The progress we have made this year gives me confidence in our strategy and I remain fully committed to returning the group to double-digit returns by FY 2028, rising thereafter.”
Key Financials1
Unless otherwise stated, all metrics refer to continuing operations only
| 2026£ million | 2025£ million | Change% | |
| Operating loss before tax | (60.3) | (122.4) | (51) |
| Adjusted operating profit2 | 120.3 | 144.3 | (17) |
| Profit from discontinued operations, net of tax3 | 2.0 | 49.2 | (96) |
| Loss attributable to shareholders and other equity owners (continuing and discontinued operations) | (63.4) | (77.9) | (19) |
| Adjusted basic earnings per share (continuing operations)2,4 | 47.5p | 59.3p | |
| Basic (loss)/earnings per share (continuing operations)4 | (58.5)p | (99.8)p | |
| Basic (loss)/earnings per share (continuing and discontinued operations)3,4 | (57.1)p | (66.9)p | |
| Ordinary dividend per share | – | – | |
| Return on opening equity5 | 4.9% | 6.2% | |
| Return on average tangible equity5 | 5.5% | 7.1% | |
| Net interest margin | 6.9% | 7.2% | |
| Bad debt ratio | 1.0% | 1.0% | |
| Expense/income ratio | 67% | 65% |
| 31 July 2026 | 31 July 2025 | Change % | |
| Loan book6 | £9.5bn | £9.5bn | – |
| Net asset value (“NAV”) per share (continuing and discontinued operations) | £9.7 | £10.3 | |
| Tangible net asset value (“TNAV”) per share (continuing and discontinued operations) | £8.7 | £9.1 | |
| CET1 capital ratio (continuing and discontinued operations)7 | 14.1% | 13.8% | |
| Tier 1 capital ratio (continuing and discontinued operations)7 | 16.3% | 15.8% | |
| Total capital ratio (continuing and discontinued operations)7 | 19.1% | 17.8% |
| 1. | Please refer to definitions on pages 23 to 25. |
| 2. | 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 adjusting items include: customer remediation provisions, unwind of time value discount, and operational or legal costs incurred in relation to an event that is deemed to be adjusting, Close Brewery Rentals Limited (“CBRL”) which was sold in the year, Close Brothers Vehicle Hire (“CBVH”) which is in wind-down, restructuring costs and amortisation of intangible assets on acquisition. There are no exceptional items presented in these financial results. Please refer to the Basis of presentation on page 5 for further information, and the tables on page 10 for details on the reconciliation between adjusted and statutory measures. |
| 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 2025 and 2026 financial years in line with the requirements of IFRS 5. The related assets and liabilities were classified as held for sale on the group’s balance sheet at 31 July 2025. Please refer to Note 20 “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 average tangible equity, defined as adjusted operating profit less tax and AT1 coupons divided by average total shareholders’ equity, excluding intangible assets and AT1, for continuing operations. See footnote 7 on page 10 for further details. |
| 6. | Loan book includes operating lease assets of £1.1 million (31 July 2025: £1.3 million) and excludes £130.0 million (31 July 2025: £165.0 million) of operating lease assets related to CBVH, which is in wind-down, and £nil (31 July 2025: £41.0 million) of operating lease assets related to CBRL, sold on 31 August 2025. |
| 7. | IFRS 9 transitional arrangements ceased to apply and therefore had no impact on regulatory capital at 31 July 2026. Capital ratios at 31 July 2025 shown after applying IFRS 9 transitional arrangements and the Capital Requirements Regulation (“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%. |
Strategic Highlights
| • | We completed the sales of Close Brewery Rentals Limited and Winterflood in August and December 2025 respectively, largely completing the simplification of the group. The run-off of Close Brothers Vehicle Hire and the repositioning of Premium Finance towards commercial lines are progressing well, in line with plans |
| • | Our transformation programme has delivered c.£36 million of annualised cost savings in the 2026 financial year, ahead of schedule and substantially higher than the c.£25 million latest target. We now expect to exceed £60 million of annualised cost savings by the end of the 2027 financial year |
| • | Planning for the next phase of restructuring is well underway, focusing on the development of shared enterprise-wide services and digital adoption. We continued to develop technology, data and AI capabilities, with the aim of improving efficiency, reducing costs and enhancing customer experience |
| • | We continued to optimise our balance sheet position and successfully issued a number of debt transactions during the year |
| • | Repositioning the business and focusing on new growth initiatives has led to growth resuming during the second half of the year, with all divisions delivering loan book growth in the final quarter. Growth remains diversified across our specialist businesses, giving us confidence in achieving our target of 5-10% p.a. growth through the cycle |
Financial Performance
| • | Adjusted operating profit of £120.3 million (2025: £144.3 million), with the repositioning of our business and current market conditions resulting in lower income. RoTE of 5.5% (2025: 7.1%) |
| • | Adjusted operating income decreased 6% to £642.9 million (2025: £681.2 million), with a net interest margin of 6.9% (2025: 7.2%), in line with guidance, reflecting business repositioning and mix impacts as we focus on risk-adjusted returns |
| • | The loan book was flat at £9.5 billion (31 July 2025: £9.5 billion). On an underlying basis1 the loan book increased 2% year-on-year and 4% in the second half |
| • | Adjusted operating expenses reduced to £430.9 million (2025: £445.1 million), materially better than guidance, reflecting strong cost discipline and accelerated delivery of cost initiatives |
| • | Adjusted impairment losses on financial assets of £91.7 million (2025: £91.8 million), with a stable bad debt ratio of 1.0% (2025: 1.0%) reflecting the implementation of an updated IFRS 9 model for the Motor Finance book, offset by an increase in individually assessed provisions on a small number of facilities in Property, including legacy cases |
| • | Additional provision of £164.7 million in the year in relation to motor finance commissions. Our provision remains unchanged since the Q3 2026 trading update at c.£320 million |
| • | CET1 capital ratio of 14.1% (31 July 2025: 13.8%), remaining above the medium-term target range of 12-13% and including the impact of the c.£320 million provision in relation to motor finance commissions |
| • | Given the continued uncertainty regarding the outcome of the legal challenges to the FCA’s motor finance consumer redress scheme and any potential financial impact, the group will not pay a final dividend on its ordinary shares for the 2026 financial year |
| • | The progress achieved this year reinforces our confidence in the delivery of our target of double-digit return on tangible equity by the 2028 financial year, rising thereafter |
Guidance
| We have delivered the 2026 financial year targets originally set out at the 2025 results and are now providing new guidance for the 2027 financial year to support delivery of our 2028 financial year and medium-term objectives. |
| 1. | Underlying loan book excludes the planned reduction in the personal lines book of Premium Finance and run-off of the legacy Republic of Ireland Motor Finance business. |
FY 2027 guidance
| • | Loan book: We expect underlying loan book growth of 5-10%, subject to market conditions | |
| – | Following the withdrawal from selected personal lines relationships in Premium Finance, our planned exit broker cohort will be substantially run-off by the end of the 2027 financial year, impacting growth by c.1% / c.£100 million | |
| • | Net interest margin: All else equal, we expect the net interest margin to be slightly below FY 2026 reflecting a further c.0.1% impact from mix, including Premium Finance repositioning | |
| • | Costs: We expect adjusted operating expenses of c.£430 million in FY 2027, with cost savings broadly offsetting inflation and selective investment to support growth | |
| • | Adjusting items: We continue to expect restructuring costs of c.£30-40 million in FY 2027 | |
| • | Adjusting items: Other motor finance commissions related costs, broadly similar to FY 2026 (2026: £7.7 million) | |
| • | Cost savings: We now expect to exceed £60 million of annualised cost savings by the end of FY 2027 | |
| • | Bad debt ratio: We expect the bad debt ratio to remain below our long-term average of 1.2% | |
| • | Capital: We expect the CET1 capital ratio to operate within the medium-term target range of 12-13%, after absorbing the impact of Basel 3.1 and loan book growth | |
| • | RoTE: Modest increase on FY 2026, as we continue to deliver the optimisation stage of the strategy | |
Medium-term guidance
| • | Loan book: We expect loan book growth of 5-10%, through the cycle |
| • | Net interest margin: We expect the net interest margin to remain slightly below 7% |
| • | Costs: We now expect adjusted operating expenses to be at the lower end of the £410-430 million range in the 2028 financial year |
| • | Expense/income ratio: We continue to target an expense/income ratio of below 60% by FY 2028, demonstrating the scalability of the group’s operating model as growth returns |
| • | Bad debt ratio: We expect the bad debt ratio to remain below our long-term average of 1.2% |
| • | Capital: We expect the CET1 capital ratio to operate within the medium-term target range of 12-13% |
| • | RoTE: We continue to target double-digit RoTE by FY 2028, rising thereafter |
Shareholder distributions
We remain committed to the resumption of shareholder distributions at an appropriate time and will reassess our options as greater certainty emerges regarding motor finance commissions, taking into account the group’s future capital needs and shareholder feedback.
Presentation
A virtual presentation to analysts and investors will be held today at 9.30 am BST followed by a Q&A session.
A webcast and dial-in facility will be available by registering at: https://webcasts.closebrothers.com/results/2026preliminaryresults
