Close Bros has scrapped its dividend due to the possible outcome of the FCA investigation into motor finance lending.
In a trading statement, the independent bank said: “While there is no certainty regarding any potential financial impact as a result of the FCA's review, the board recognises the need to plan for a range of possible outcomes”.
As a result, Close Bros believes it prudent to further build capital strength ahead of any decision, so won’t pay any dividends for the current financial year and any payment in 2025 will depend on the conclusions of the FCA review.
Other actions to improve its finances are being taken, it added, including optimising risk-weighted assets and more cost-saving measures.
“The board is confident that these actions will further build our capital strength, leaving the group in a strong position to continue to support our customers and protect our valuable franchise,” said the statement.
Motor finance uncertainty aside, Close Bros said its businesses were performing well.
Banking generated a profit of around £112m in the six months to 31 January, asset management saw inflows of 9% net and market maker Winterflood is “well-placed” for a recovery in investor confidence.
Underlying profits for the half year will be around £94m, it added with a financial strength/CET1 ratio of 12.5%.