Close Brothers, the banking group, suffered a steep £104m loss in the first half of 2024. The fall into the red was a result of provisions set aside for a motor finance scandal.
In contrast, the FTSE 100 lender posted a pre-tax profit of £88.1m during the same six months of the previous year, but a substantial £165m provision for motor finance payouts has turned the tide, as reported by .
Early trading saw Close Brothers' shares take a hit, dropping 14 per cent as investors assessed the news.
Further contributing to the losses were the expenses related to the handling of complaints and additional legal costs linked to the car commission scandal.
Operating income slipped by one per cent to £390m due to a slight decline in banking and reduced interest income.
The net interest margin of the group was trimmed by 30 basis points, dipping to 7.2 per cent from 7.5 per cent.
Despite these setbacks, the lender announced the completion of the sale of its asset management division on February 28, estimating a gain of £59m and enhancing the group's CET1 ratio by approximately 120 basis points to 13.4 per cent.
The divestiture is part of a strategic sharpening of focus on its lending operations. Chief Executive Mike Morgan commented, "The group's performance reflects the strength and resilience of our business model, with robust underlying profit in the Banking business."
Morgan expressed the company’s commitment to its clientele and professional performance, affirming, "At our core, we have been here to serve our customers, deliver excellent service, provide specialist expertise and build strong, lasting relationships over the years. Today we are a trusted partner to º£½ÇÊÓƵ SMEs, millions of customers, and our dedicated colleagues."
He then emphasised the crucial role of their banking model in the current landscape: "more relevant than ever" and perfectly in step with "the º£½ÇÊÓƵ government's growth agenda."
Setting forth his leadership goals, Morgan stressed the importance of focusing on efficiency and growth: "My priorities include focusing on greater simplification, improving operational efficiency, and driving sustainable growth."
Looking ahead, he outlined the strategic aims of the group: "Our goal is to ensure that, once the motor finance commissions uncertainty has been resolved, the group is well positioned to generate strong, sustainable returns," highlighting an optimistic future trajectory for their operations.
