Close Brothers Group Plc kept its £320 million provision for motor finance redress in place and posted a £60.3 million pretax loss for the financial year through July. On Tuesday, the London-based lender said it is waiting for more detail on how the Financial Conduct Authority's proposed compensation framework will be implemented, noting that the plan is currently the subject of legal challenges.
Close Brothers, a specialist lender, is among the firms caught up in the UK's so‑called motor finance scandal. Industry-wide, lenders and automakers have earmarked billions of pounds to compensate customers who unknowingly paid commission on car purchases. Earlier in the year, a report from a short seller asserted that Close Brothers might face greater exposure to the car‑loans saga.
Analysts at Shore Capital, including Gary Greenwood, called the results "encouraging," highlighting "better-than-expected cost delivery, improving loan book growth and a solid capital position." The company aims to achieve £60 million in savings on costs by the close of the current financial year and anticipates a "modest improvement" in returns. The firm added that there will be no year-end payout for the period through July. In early London trading, shares rose as much as 10%, cutting this year's decline to 19%.
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Chief Executive Officer Mike Morgan said the group achieved £36 million in annualized savings on costs over the past fiscal year, beating its target, and that every division grew in the final quarter. "The progress we have made this year gives me confidence in our strategy and I remain fully committed to returning the group to double-digit returns by FY 2028, rising thereafter," he said. For everyday investors, the setup is straightforward to track: a big provision that has not moved, cost cuts stacking up, and a share price that is sensitive to regulatory clarity. Keep an eye on the FCA process and whether the savings plan hits the timeline.
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