Close Brothers Posts Operating Loss, Announces Job Cuts

Close Brothers Group (LON: CBG) released its half-year results for the period ending January 31, 2026, revealing an operating loss before tax of £65.5 million, an improvement from the £102.2 million loss in the same period last year.

Adjusted operating profit, however, stood at £65.2 million, down 19% from £80.5 million in the first half of 2025.

The financial services firm is undergoing a strategic repositioning, leading to a marginal reduction in the loan book to £9.2 billion. This reflects a focus on markets with strong and sustainable opportunities, and the wind-down of Novitas and planned reduction of personal lines in Premium Finance.

Despite the operating loss, Close Brothers maintains a strong CET1 capital ratio of 14.3%, providing a buffer against potential liabilities from the FCA’s motor finance commission redress scheme. The company is actively pursuing cost-saving measures, accelerating its plans to achieve approximately £25 million in annualised savings in the current financial year and a total of around £60 million by the end of 2027, a year ahead of schedule.

The adjusted basic earnings per share from continuing operations were 27.1p, compared to 33.8p in the prior year. The group reported a loss attributable to shareholders of £64.4 million, a notable improvement from the £111.8 million loss in the first half of 2025.

Return on average tangible equity (RoTE) decreased to 6.3% from 8.7% in the previous year. Net interest margin remained robust at 7.1%, slightly below the 7.3% recorded in the first half of 2025. The company anticipates a slight dip below 7% for the full year, influenced by loan book mix impacts.

The expense/income ratio worsened to 68% from 63%, while the bad debt ratio improved to 0.8% from 1.0%, aided by an updated IFRS 9 model for the Motor Finance book. The company anticipates the bad debt ratio to stay below the long-term average of 1.2% for the full year.

The company is undergoing a simplification process, which is largely complete, that has now moved into the optimisation phase. Close Brothers is aiming for double-digit returns by the 2028 financial year.

Chief Executive Mike Morgan stated, “We are well positioned for future growth as a specialist banking group,” reinforcing the company’s focus on simplifying operations and achieving sustainable growth.

The company expects to reduce headcount by approximately 600 full-time employees by the end of the 2027 financial year. The group’s adjusted operating expenses are now expected to be approximately £450 million in the 2026 financial year.

The reinstatement of dividends will be reviewed upon further clarity regarding the financial impact of the FCA’s review of motor finance commission arrangements.