Actions from nearby brothers sinks as engines financing costs mounted

Tuesday 18 March 2025 9:03 AM
| Updated:

Tuesday 18 March 2025 12:08 PM

Close Brothers set aside £ 165 million for car financing requests

Banking Group Close Brothers plunged into a loss of pounds 104 million in the first half of 2025, after the company set aside provisions for Car finance scandal.

Ftse 100 The creditor registered a loss before taxation in the first half of the financial year 2025, compared to a profit of 88.1 million pounds in the same period of 2024 due to a provision of 165 million pounds for car financing payments.

The shares of Close Brothers sank with 14 % in early transactions because the market digested the figures.

The group added that the impact of managing complaints and other legal costs incurred on the car commission scandal has also caused losses.

The operational income decreased by one percent to 390 million pounds, the company citing a marginal decrease in bank revenues and lower interest income.

The net interest margin of the group reduced by 30 basic points to 7.2 % compared to 7.5 %.

The creditor said Sale of administration of Close Brothers assetswhich was completed on February 28, it was estimated to generate 59 million pounds and increased the group’s CET1 ratio by approximately 120 basic points to 13.4 %.

He added that the transaction allowed him to emphasize the focus on the lending activity.

Mike Morgan, the executive director of Close Brothers, said: “The group’s performance reflects the power and resistance of our business model, with a robust basic profit in the banking activity.”

“At our base, we were here to serve our customers, to provide excellent services, to provide specialized expertise and to build strong, lasting relationships over the years.

Morgan added that the group’s bank model was “more relevant than ever” and aligned the “British government growth agenda.”

“My priorities include focusing on greater simplification, improving operational efficiency and determining sustainable growth.

“Our goal is to make sure that, once the uncertainty of the car financing commissions has been resolved, the group is well positioned to generate strong and durable returns,” he added.

The decision to finance the Supreme Court of Finance will set the tone

At the beginning of next month, the Supreme Court is to hear an appeal by car loan suppliers contesting October The Court of Appeal Decision This was confronted with consumers who complained of “secret” commissions for car loans.

The decision decided that it is illegal for banks to pay a commission to a car dealer without the client’s informed consent.

The decision opened the door for a potentially fresh wave of complaints from consumers who believe that they could have been funded in the previous years.

The Supreme Court will hear an appeal against the Court of Appeal decision between April 1 and 3. The result could have a major impact on the UK finance industry, because FCA indicated that it will go to a recovery scheme at the level of the whole sector, if the decision is respected.

Broker Peel Hunt said the next case adds great uncertainty to the brothers’ prospects.

“It depends so much on the decision of the Supreme Court and the result of the FCA review of the use of discretionary committees in motor finances,” the company analysts wrote in a note about the creditor this morning.