Close Brothers Group PLC (LSE:CBG) shares have been hit hard by the FCA motor finance review but rallied today on a bullish write-up from Deutsche Bank, which sees ‘considerable value’ at this level.
“We expect the outcome of the FCA motor finance review to be manageable; capital to remain within range; ROTEs to trend higher; and the discount to eventually unwind,” said the bank.
“If we take the PPI ruling as precedent and factor in differential risk across the motor finance lending portfolio the impact could be negligible.
“We factor in £150m conduct charge which is manageable without too much additional adjustment to the financial outlook.”
Deutsche Bank adds that the shares trade at half tangible book value and at that level is a buy with a target price of 610p.
Shares jumped 7% to 486.8p.