Close Bros Grp PLC - Scheduled Trading Update
Scheduled Trading Update
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All statements in this release relate to the 11 months to
· The group delivered a resilient performance overall, reflecting our strong customer proposition and the diversity of our business
· In Banking, the loan book decreased 2.3% to
· While we remain focused on our pricing and underwriting discipline, income in the period continued to be impacted by a reduction in fee income driven by lower activity levels and forbearance, particularly in recent months, with an annualised net interest margin of 7.6% (2019: 7.9%)
· Credit provisions continue to reflect the ongoing uncertainty in the external environment and the forward-looking recognition of impairment charges under IFRS 9. We have recognised a further
· The Asset Management division generated strong net inflows of 10% year-to-date as we continue to attract client assets and new hires despite the challenging market conditions
· Winterflood delivered a very strong performance, benefiting from significantly higher trading volumes since the Covid-19 outbreak. Performance in the second half of the financial year-to-date was materially ahead of the first half, resulting in average year-to-date daily bargains of 82k, 46% higher than last year (2019: 56k)
· The group maintains a strong capital, funding and liquidity position. Our Common Equity Tier 1 capital ratio of 14.2% (
· As announced on
"Despite these challenging and unprecedented times, the group has again proven resilient and we are confident that we will end the financial year in a strong financial and operational position. Our colleagues have continued to respond admirably, enabling us to help our customers and clients during this period.
While early indications of a return to activity following the easing of lockdown restrictions are encouraging, it remains too early to know the full impact of Covid-19 on the
Our strong operational resilience has enabled us to continue to serve our customers and clients effectively throughout this challenging period. A number of our staff have now returned to work on-site or begun to meet customers in person where it is safe to do so, but the majority remain successfully working from home.
We have granted a broad range of forbearance and other measures, including payment holidays in our Commercial and Retail businesses and fee-free term extensions in our Property business, to support customers and clients who find themselves in difficulty. Our Commercial and Property businesses continue to account for the vast majority of our forborne loan balances.
While it is too early to tell the full impact of Covid-19 on customers' ability to recommence payments once their forbearance period comes to an end, we remain in close contact with them to discuss their position and tailor the most appropriate financing solutions.
Our accreditation to lend under the support schemes introduced by the
Strong capital, funding and liquidity
The group maintains a strong capital and liquidity position and is prudently funded.
The group's Common Equity Tier 1 capital ratio increased to 14.2% at
Our strong liquidity position remained comfortably ahead of both our internal risk appetite and regulatory requirements, with an average liquidity coverage ratio in the 11 months of 807%.
As previously announced on
Group and divisional performance
The group delivered a resilient performance overall, reflecting our strong customer proposition and the diversity of our business. While higher impairment charges have impacted the Banking division, Winterflood has benefited from higher trading volumes since the Covid-19 outbreak and the Asset Management division achieved strong net inflows.
In Banking, the loan book decreased 2.3% to
While we remain focused on our pricing and underwriting discipline, income in the period continued to be impacted by a reduction in fee income driven by lower activity levels and forbearance, particularly in recent months, with an annualised net interest margin of 7.6% (2019: 7.9%).
We remain committed to investing in our key strategic programmes to protect, improve and extend our business model. Given the current environment, we will continue to review and prioritise investment spend while maintaining our focus on cost discipline.
Credit provisions continue to reflect the ongoing uncertainty in the external environment and the forward-looking recognition of impairment charges under IFRS 9. We have recognised a further
Our approach to provisioning continues to reflect the application of our expert judgement to determine the appropriate allocation of loan balances between stages, to incorporating macroeconomic weightings, and to provision coverage at the individual portfolio level.
We will continue to refine our assumptions as revised economic forecasts become available and visibility on the performance of the loan book evolves.
While the impact of Covid-19 has led to higher credit provisions year-to-date, we remain confident in the quality of our loan book, which is predominantly secured, prudently underwritten and diverse, and supported by the deep expertise of our people.
The Asset Management division continued to focus on maintaining excellent service for their clients in the current operational environment and remains committed to investing in new hires and technology to support the long-term growth potential of the business. The division generated strong net inflows of 10% year-to-date with managed assets of
Winterflood delivered a very strong performance, benefiting from significantly higher trading volumes since the Covid-19 outbreak. Performance in the second half of the financial year to date was materially ahead of the first half, resulting in average year-to-date daily bargains of 82k, 46% higher than last year (2019: 56k). The division is well positioned to continue trading profitably in a range of conditions, but due to the nature of the business, it remains sensitive to changes in the market environment.
Despite these challenging and unprecedented times, the group has again proven resilient and we are confident that we will end the financial year in a solid financial and operational position.
While early indications of a return to activity following the easing of lockdown restrictions are encouraging, the effects of Covid-19 on the
2 The group applies IFRS9 regulatory transitional arrangements which allows banks to add back to their capital base a proportion of the impact of IFRS 9 adoption on their impairment provisions during the transitional period. Our capital ratio is presented under these arrangements and without their application, the CET1 capital ratio would be 13.2%. Further relief measures recently announced by the regulators in light of Covid-19 will be applied to the group's capital ratios on
3 Expected credit losses reflect the application of macroeconomic scenarios and weightings, updated in
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020 3857 6574
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020 3857 6577
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020 3857 6576
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07738 346 460
About Close Brothers
Close Brothers is a leading UK merchant banking group providing lending, deposit taking, wealth management services and securities trading. We employ over 3,000 people, principally in the UK.
Certain statements included within this announcement may constitute "forward-looking statements" in respect of the group's operations, performance, prospects and/or financial condition. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "anticipates", "aims", "due", "could", "may", "will", "should", "expects", "believes", "intends", "plans", "potential", "targets", "goal" or "estimates". By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Except as may be required by law or regulation, no responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast. This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any shares or other securities in the company or any of its group members, nor does it constitute a recommendation regarding the shares or other securities of the company or any of its group members. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser or other professional. Statements in this announcement reflect the knowledge and information available at the time of its preparation. Liability arising from anything in this announcement shall be governed by English law. Nothing in this announcement shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.
This information is provided by RNS, the news service of the
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