Close Bros Group Plc (Close Brothers Group PLC (LSE:CBG)) said it is making progress with financial strengthening measures ahead of the FCA's review into motor finance mis-selling.
The specialist bank stopped its dividend and announced plans to boost its balance sheet by £400 million when the regulator first announced the probe but there were no additional measures in today's statement.
Adrian Sainsbury, chief executive, said: “We are making good progress against the actions previously outlined to further strengthen our capital position."
Analysts estimate that the eventual cost of the review for lenders involved could run into the billions.
The bank had already flagged that costs associated with handling complaints related to the review are expected to be around £10 million, with banking costs this year to rise by 8-10%.
A different investigation into past forbearance practices is expected to conclude by the end of this 2024 financial year with any subsequent potential customer compensation to follow and be in the 'single-digit millions, the bank added.
Close Bros said it was still continuing with car finance lending and this alongside strong customer demand in property and continued growth in Invoice Finance helped its loan book rise 1.5% in the most recent quarter and by 5.4% year-to-date.
Bad debts are benign, with the ratio unchanged at 0.9% and for the 2024 financial year are expected to be below its long-term average of 1.2% based on current market conditions.
In financial markets, Close’s market-making subsidiary Winterflood is seeing signs of London’s share trading malaise easing, with trading conditions marginally improved in the quarter.
Asset management [CBAM] saw inflows of 9% with total assets rising to £19.6 billion, up by £1.1 billion in the past three months.
Sainsbury added: “Performance in the third quarter reflected continued loan book growth, strong margins and resilient credit quality in Banking.
"CBAM delivered strong net inflows and Winterflood's performance benefited from marginally improved market conditions in the quarter.”
Shares fell 7% to 458p.