Close Brothers Group PLC (LSE:CBG) reported a narrower loss in the first half of its financial year as cost discipline and improving credit quality offset the continued drag from the motor finance commission scandal, while the group accelerated its cost-cutting programme.
The specialist lender’s adjusted operating profit fell 19% to £65.2 million for the six months to 31 January 2026, as a smaller loan book weighed on income.
On a statutory basis, the group reported a pre-tax loss of £65.5 million, primarily reflecting a £135 million provision taken in October for potential motor finance redress, part of an industry-wide issue stemming from the mis-selling of car loan commission arrangements.
The loan book shrank 2% to £9.2 billion, though the group said its net interest margin – the difference between what it charges borrowers and what it pays savers – held up at 7.1%.
The group’s CET1 capital ratio improved to 14.3% from 13.8%, which chief executive Mike Morgan said left the bank “well placed to absorb a range of potential outcomes” from the Financial Conduct Authority’s (FCA) motor finance review.
No dividend was declared, with reinstatement dependent on greater clarity on the ultimate cost of the motor finance redress scheme.
Morgan outlined new guidance, saying cost-saving targets had been accelerated, with £60 million of annualised savings now expected by end of 2027 rather than 2028, including a headcount reduction of around 600 planned over the same period, as the bank targets a return to double-digit returns on equity by 2028.