Close Brothers Group plc (LON: CBG) today issued its scheduled pre-close trading update ahead of its 2020 half year end. Close Brothers will be releasing its half year results for the six months ending 31 January 2020 on 10 March 2020.
All statements in this release relate to continuing operations over the five months to 31 December 2019 unless otherwise indicated.
Group and divisional performance
The group’s performance year to date reflects the disciplined application of our proven and resilient business model and lower activity levels in a difficult UK economic environment.
In the Banking division, we maintained our focus on pricing, prudent underwriting and long-term investment. The loan book remained broadly flat in the period, increasing 0.4% to £7.68 billion (31 July 2019: £7.65 billion), with modest growth in Commercial offset by a slight decline in Property, while Retail remained broadly flat.
The net interest margin remained broadly stable on the 2019 financial year at 7.8% (2019: 7.9%). While overall credit quality remained strong, bad debts have increased modestly relative to historically low levels, with a bad debt ratio of 0.8% (2019: 0.6%) for the period.
We continue to invest in strategic initiatives to protect and grow our business and remain committed to maintaining this long-term investment through the current period of lower activity. As a result, costs are expected to continue to grow ahead of income in the current year.
The Asset Management division continued to deliver strong net inflows, consistent with our growth strategy and investment in this business. Combined with positive market movements, managed assets grew to £12.6 billion at 31 December 2019 (31 July 2019: £11.7 billion) and total client assets increased to £14.0 billion (31 July 2019: £13.3 billion).
Following a slow start to the year, Winterflood experienced an improvement in trading activity towards the end of 2019. The business remains focused on maximising its trading opportunities in all market conditions.
Close Brothers Group Outlook
While there remains uncertainty about the economic outlook for the UK, we are well positioned to continue supporting our customers and clients in a wide range of market conditions.