Close Brothers Group PLC has released its preliminary results for the year ended 31 July 2023. The company reported a decrease in statutory operating profit before tax to £112.0 million, including provisions of £114.6 million in relation to Novitas. Excluding Novitas, adjusted operating profit decreased to £220.1 million. The company achieved 3% income growth in its Banking business, reflecting good loan book growth and a strong net interest margin of 7.7%. However, adjusted operating profit in Banking decreased 2% to £324.1 million due to inflationary pressures and continued investment in the business.
The company's loan book grew 5% to £9.5 billion, with growth of 8% excluding businesses in run-off. Close Brothers Asset Management (CBAM) delivered strong net inflows of 9%, with a significant contribution from new hires. Winterflood's performance was impacted by a slowdown in trading activity and challenging market conditions. Total funding increased 7% to £12.4 billion as the company sought to grow its retail deposit base and optimize its funding mix.
Close Brothers Group's Common Equity Tier 1 (CET1) ratio was 13.3% at the end of July 2023, significantly above the minimum regulatory requirement of 9.5%. The company proposes a final dividend of 45.0p per share, resulting in a full-year dividend per share of 67.5p.
Moving forward, the company is focused on delivering its strategic priorities. It aims to provide £1 billion of funding for battery electric vehicles by 2027 and is making progress in its Commercial business with strong pipelines. In CBAM, the hiring strategy is proving successful, and Winterflood Business Services (WBS) continues to grow. The company is also focused on cost management initiatives and optimizing its capital structure.
Overall, Close Brothers Group is encouraged by the momentum generated in its Banking business in the second half and has seen a good start to the 2024 financial year. The company is well positioned to maintain stable returns and resume its track record of earnings growth and returns by focusing on disciplined growth, cost efficiency, and capital optimization.