Motor-Finance Uncertainty Hits Lenders
Close Brothers reports a £60.3 million loss and suspends its dividend amid motor-finance uncertainties.
Anonymous
Close Brothers reported a £60.3 million pretax loss for the year ended July 2026 and will not pay a final dividend, as uncertainty continues over legal challenges to the UK financial regulator’s motor-finance redress scheme. Its provision for potential compensation remains about £320 million. Adjusted operating profit fell 17% to £120.3 million, while the lender’s loan book was broadly flat at £9.5 billion, though it grew in the second half. The bank is accelerating its restructuring after delivering £36 million in cost savings, ahead of target, and aims to exceed £60 million in savings by 2027; it previously announced plans to cut about 600 jobs. Its capital ratio stood at 14.1%, above its medium-term target range, and it expects loan-book growth to resume in fiscal 2027.
Key Points
1
The lender’s loss attributable to shareholders was £63.4 million, while adjusted operating income fell 6% to £642.9 million and net interest margin declined to 6.9% from 7.2%.
2
For FY27, Close Brothers expects underlying loan-book growth of 5%–10%, adjusted operating expenses of about £430 million, and a net interest margin slightly below FY26’s level; it expects the bad-debt ratio to stay below its long-term average of 1.2%.
3
The bank has been simplifying its business by selling Close Brewery Rentals and Winterflood, running off Close Brothers Vehicle Hire, and repositioning premium finance toward commercial lines.
4
Restructuring costs rose to £14.3 million from £2.3 million in FY25, primarily because of redundancies, and the bank expects them to increase to between £30 million and £40 million in the next financial year.
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