Good morning and welcome to the presentation of Close Brothers' 2026 preliminary results. I'm Mike Morgan, Group Chief Executive, and I'm joined today by Fiona McCarthy, our Group CFO.

Today I will start with a brief introduction and then hand over to Fiona, who will walk you through our financial performance. After that, I will return to focus on our strategic delivery and wrap up the presentation.

We look forward to taking your questions afterwards, both via the telephone conference line and over the webcast. You can submit your questions either during or after the presentation.

The group has been through significant change over the past 2 years as we have repositioned the business as a focused, specialist bank. Today we support 1.6 million customers with a loan book of £9.5 billion across 3 core divisions of commercial, retail, and property.

Our scale and contribution to the economy is meaningful. In the last year, we lent approximately £6.5 billion to businesses and consumers across the UK and Ireland.

We operate in markets with strong structural demand and where our deep customer relationships, local decision-making, and disciplined underwriting create genuine differentiation. We see significant potential for growth in these markets, and we are taking steps to materially reduce our cost base and deliver a step change in profitability.

Our performance in full year 2026 reflects the significant progress we have made on delivery of our strategic objectives to simplify, to optimize, and to grow the business. We delivered the guidance we set, meeting and, in some areas, exceeding our targets.

Loan book growth resumed. The overall book was flat year-on-year, but underlying growth was 2% and 4% in the second half, with all divisions growing in the fourth quarter, giving us good momentum as we enter full year 2027.

We accelerated our cost program, delivering approximately £36 million of annualized savings ahead of schedule. We now expect to exceed our target of £60 million annualized savings by the end of financial year 2027.

We retain a robust capital position above 14%, which places us well to absorb Basel 3.1 and support continued growth in the business. Our provision in respect of the FCA's motor finance consumer redress scheme is unchanged since the third quarter at £320 million.

The business is now structurally different and capable of generating materially higher risk-adjusted returns. In financial year 2027, we expect to deliver underlying loan book growth within our 5% to 10% target range, costs of approximately £430 million, and a modest increase in return on tangible equity.

Financial year 2028 will be the point at which we expect to see the more meaningful benefits from cost reductions, operational leverage, and growth. By financial year 2028, we expect costs to be at the lower end of our guidance range of £410 million to £430 million whilst growing the loan book.

The progress we have made to date reinforces our confidence that we will deliver double-digit returns by financial year 2028, rising thereafter. We recognize the importance of shareholder distributions and remain committed to resuming distributions at an appropriate time.

However, given the continued uncertainty regarding the outcome of the legal challenges to the FCA's motor finance scheme and any potential financial implications, the board has decided not to declare a final dividend on ordinary shares for the 2026 financial year. We will continue to reassess options as greater clarity emerges, taking into account the group's future capital needs and shareholder feedback.

I'll now hand over to Fiona, who will take you through the financial update.

Thank you, Mike, and good morning, everyone. Turning first to the income statement.

Adjusted operating income reduced by 6% to £643 million. This primarily reflected the deliberate repositioning of the business, a reduction in net interest margin, and a lower average loan book reflecting prevailing market conditions.

Adjusted operating expenses decreased by 3% to £431 million, reflecting strong cost discipline and the cost actions delivered during the year. Adjusted impairment losses were broadly unchanged at £92 million.

Taken together, adjusted operating profit was £120 million, down from £144 million last year. While AOP reduced across all 3 lending divisions, this was partly offset by a reduction in the group central functions' operating loss.

Adjusting items totaled £181 million compared with £267 million last year. I will provide more detail on these in a moment.

As a result, the statutory loss before tax reduced from £122 million to £60 million, whilst the loss after tax from continuing operations reduced to £65 million. Discontinued operations relate to Close Brothers Asset Management, sold in February 2025, and Winterflood Securities, sold in December 2025.

Adjusted earnings per share were 47.5 pence and return on average tangible equity was 5.5%. As Mike stated, we will not be paying a dividend in respect of the 2026 financial year and will reassess as greater clarity emerges in respect of motor finance commissions.

Focusing now on the adjusting items. The largest is the increased provision relating to motor finance commissions, up by £165 million, taking the total provision to approximately £320 million.

The provision has been calculated using a single scenario methodology based on the FCA's published redress scheme from March 2026. While there are aspects of the scheme which we disagree with, we decided not to challenge the scheme.

However, it is currently subject to 4 legal challenges, with the hearing expected in December 2026 or February 2027. As such, the ultimate cost remains dependent on the outcome of the legal challenges and any further legal, regulatory, or industry developments.

We also incurred £7.7 million of other motor finance commissions-related costs, including the unwind of the provision's time value discount and certain legal expenses, partly offset by insurance recoveries. In FY 2027, we expect a broadly similar cost.

The charge of £1.3 million incurred in relation to early settlements in motor finance reflects the unwind of the provision's time value discount. Restructuring costs were £14.3 million, primarily comprising redundancy and associated costs.

As our cost reduction program progresses, we continue to expect restructuring costs of approximately £30 million to £40 million in FY 2027. These charges were partly offset by a total of £7.6 million of profit from businesses being exited, including the gain on the disposal of Brewery Rentals and a small operating profit in Vehicle Hire, which is being wound down over 3 to 5 years.

Now looking at each of our divisions. In Commercial, simplification is largely complete.

Good progress has been made on optimization and the loan book returned to growth. The year-on-year results reflect lower income and margin and an increase in costs as we invest in technology.

The prior year also includes Novitas in the results. Notwithstanding this, the loan book was up 3% to £4.9 billion and up 6% in the second half.

Invoice Finance grew significantly in the second half, while specialist areas within Asset Finance continued to grow. The priority continues to be building on that momentum without compromising pricing or underwriting discipline.

Performance in the Retail division reflects the repositioning of the premium finance business, cost actions taken during the year, and a reduction in impairment charges. Motor Finance delivered growth in both the UK and Ireland, while premium is increasingly focused on commercial lines and higher quality business.

The bad debt ratio reduced from 1.5% to 1%, benefiting from the implementation of an updated IFRS 9 model in Motor Finance. The focus here is on delivering quality, sustainable growth and stronger risk-adjusted returns.

Property continued to face challenging build-to-sell market conditions, which affected the loan book, income, and profit. The higher bad debt ratio reflects provisions against a small number of facilities, including legacy cases.

Recent underwriting continues to perform well. Importantly, diversification is gaining traction through good early momentum in build-to-rent and purpose-built student accommodation.

Finally, the loss from group central functions reduced from £54 million to £37 million, primarily reflecting a reduction in advisor costs. In regard to the loan book, the headline position was broadly flat at £9.5 billion, including the headwind from our legacy motor finance business in Ireland and the repositioning of the premium finance business towards commercial lines.

On an underlying basis, momentum improved with growth of 2% for the year as a whole and 4% in the second half. All 3 divisions grew in the fourth quarter.

Overall, we exited FY 2026 with good momentum and expect underlying growth to be within our 5% to 10% target in FY 2027, subject to market conditions. As we have previously guided, NIM across our lending divisions remained robust at 6.9% compared with 7.2% last year.

The reduction largely reflects the deliberate repositioning of the premium finance business, the wind-down of Novitas, and changes in business mix as we focus on larger deals with attractive risk-adjusted returns. Therefore, the headline NIM movement needs to be seen in context.

We are prioritizing sustainable growth and stronger risk-adjusted returns. All else equal, we expect the NIM in FY 2027 to be slightly below FY 2026, reflecting a further circa 0.1% impact from mix, including premium finance repositioning.

Moving on to costs. Adjusted operating expenses reduced by 3% in FY 2026 and were materially better than guidance.

This reflects strong cost discipline, as well as faster-than-expected delivery of cost-saving initiatives. These savings included workforce efficiencies, an increase in outsourcing and offshoring, lower advisor and third-party spend, and reducing our property footprint.

Together with a reduction in variable compensation, this more than offset the impact of inflation, growth, and ongoing investment in our business, resulting in an overall adjusted operating expenses of £431 million. In 2026, we delivered approximately £36 million of annualized cost savings, substantially ahead of our £25 million target.

By the end of FY 2027, we expect to deliver in excess of £60 million annualized savings from the current phase of our transformation program. Whilst this will result in further in-year cost reduction, we expect this to be broadly offset by inflation and investment in growth, including front office hires and additional variable costs.

As a result, we expect the cost base to remain broadly stable at approximately £430 million this year. By FY 2028, we will see the cost savings more fully reflected in financial performance, with costs towards the lower end of our £410 million to £430 million guidance.

Combined with growth in the loan book, this is expected to support an EI ratio below 60%, demonstrating the scalability of the group operating model. This is not the end point, and we expect further reduction in this ratio as the business continues to grow beyond 2028.

Focusing on credit quality. Credit performance remained solid, with the bad debt ratio at 1%, in line with the prior year and below our long-term average of 1.2%.

This reflects the benefit of an updated IFRS 9 model in Motor Finance earlier in the year, offset by higher provisions in the property business in the fourth quarter. We closely monitor the evolving impacts of inflation and cost-of-living pressures on customers.

Whilst the external environment remains uncertain, we are confident in the quality of the loan book and expect the bad debt ratio to remain below its long-term average in FY 2027. We continue to maintain a strong funding and liquidity position while making progress to optimize the balance sheet.

Over the year, we have reduced our liquidity to more normalized levels whilst significantly increasing the availability of contingent collateral. We've also been focused on managing the cost and level of our deposits across our diversified suite of savings products, with agile pricing reflecting market conditions, demand, and our funding needs.

Overall, total funding stood at £11.4 billion, down from £12.7 billion last year, retaining a well-diversified mix and a predominantly retail deposit base, which represents 57% of total funding. Deposits are largely term, with only 10% available on demand.

Our liquidity position remains robust, with £3 billion of liquidity resources split between cash, high-quality liquid assets, and contingent collateral. We have benefited from a lower interest rate environment, along with active management of our funding base, with the average cost of funds reducing to 4.6%.

We've maintained strong access to wholesale funding markets, raising half a billion during the year through the successful refinancing of our Tier 2 and the issuance of our first senior unsecured bond since 2020. Overall, our funding profile, liquidity pool, and capital markets access provide a strong foundation to support future growth.

Turning to capital. Our CET1 ratio stands at 14.1%, even after the additional £165 million motor finance commissions charge taken during the year.

This demonstrates our conservative capital position and reflects both underlying profits in the year and the RWA benefit from the sale of Winterflood. Our minimum CET1 requirement has increased from 9.7% to 10.3% following a regular periodic review of our capital requirements.

The implementation of Basel 3.1 from the 1st of January 2027 is currently estimated to reduce our CET1 ratio by approximately 80 basis points to 13.3% on a pro forma basis as at 31st of July 2026. It will also reduce our regulatory minimum by approximately 40 basis points to 9.9%, resulting in overall CET1 capital headroom of circa 340 basis points.

In monetary terms, the impact on headroom is largely offset by the PRA's Pillar 2A SME lending adjustment. From here, we expect CET1 to operate within our medium-term range of 12% to 13% as we generate capital, grow the loan book, and resume shareholder distributions at an appropriate time.

On this slide, we have the FY 2027 guidance updates. Having met and exceeded our FY 2026 guidance, we are reiterating our medium-term targets.

While we expect further progress in FY 2027, the trajectory to FY 2028 is phased, particularly on costs and returns. The FY 2026 cost story was about capturing some of the more immediate savings opportunities and putting in place the actions needed to build a more efficient business.

In FY 2027, we are aiming to keep group costs broadly flat at around £430 million. NIM is expected to be slightly below FY 2026, reflecting a further 0.1% impact from mix, including the premium finance repositioning.

We anticipate underlying growth within our target range of 5% to 10%, subject to market conditions, with the bad debt ratio expected to remain below our long-term average of 1.2%. We expect a modest increase in ROTE, although the progression will not be linear.

As per the previous slide, we expect CET1 to be within our 12% to 13% target range in FY 2027 after absorbing Basel 3.1 and loan book growth. As we move to the medium term, the accumulation of loan book growth of 5% to 10% through the cycle, a lower cost base, and operating leverage support a double-digit ROTE by FY 2028 and rising thereafter.

I'll now hand back to Mike, who will provide an update on our strategy.

Thank you, Fiona. To recap, our strategic priority remains clear: we've reshaped the group to improve returns through simplify, optimize, and grow.

We have built good momentum over the last year, which reinforces our confidence as we move into full year 2027 and full year 2028. On simplify, we now have a focused portfolio built around commercial, retail, and property, differentiated businesses operating in attractive, specialist markets.

Our focus is therefore firmly on optimize and grow. Optimize, as you have heard from Fiona, means creating a lower cost, more efficient, scalable operating model.

Grow means building on the strong positions we have in our selected markets, increasing our share, strengthening our customer propositions, and developing new products where we see attractive, sustainable returns. The first pillar of our strategy, simplify, is now largely complete.

We have refocused the group through the disposals of the Asset Management division, Winterflood, and Brewery Rentals, alongside our winding down of Vehicle Hire, and we have closed Novitas. The repositioning of Premium Finance towards commercial lines will be largely concluded by the end of financial year 2027.

Simplification was not an end in itself. It was about establishing stronger foundations for the next phase of our strategy.

These actions have created a more focused organization based on stronger fundamentals with higher returns potential. This slide shows the high-level progress we are making through our transformation program and how it is evolving.

We began with a series of tactical actions designed to reduce costs quickly, delivering approximately £25 million of cost savings back in FY 2025. In late 2025, we launched our transformation program focused on delivering material cost savings through a redesign of our operating model.

We are now well through the first phase of this, which is primarily focused on simplifying individual businesses and functions. We initially targeted approximately £60 million of annualized cost savings, delivering around £20 million each year over financial year 2026, 2027, and 2028.

We now expect this program to exceed £60 million annualized savings by the end of 2027. We're also now planning for the next phase.

This will involve a fundamental change, moving away from our current federated model, bringing functions and operations together at an enterprise level. All of our transformation work is underpinned by embracing the opportunity that AI and automation present to improve efficiency, create a better experience for customers and colleagues in supporting future growth.

We have already deployed a number of AI solutions across our businesses and are seeing tangible benefits. For example, in Commercial, we have deployed agentic AI to automate the submission and processing of broker proposals.

The technology gathers, organizes information, removes manual tasks, and supports faster progression through the credit workflow, enabling quicker decisions, greater efficiency, and improved end-to-end experience for brokers and customers. Over time, we see potential for additional cost savings and growth reflecting the deployment of AI, automation, and digital solutions across our businesses.

As we move into the next stage of delivery of the group strategy, I wanted to share some changes to roles and responsibilities within the executive committee. From the 1st of October, Matt Roper has been appointed to the newly created role of Chief Banking Officer with responsibility for the group's lending activities across commercial, retail, and property.

Phil Hooper remains Chief Executive of Property, and Ian Cowie moves into the newly created role of Chief Operating Officer. I am in no doubt that these changes will sharpen our focus on driving growth across our lending activities and strengthen our enterprise operating model.

Moving on to growth. We have repositioned our portfolio of businesses to focus on markets with strong structural demand and where we can offer a differentiated proposition to our customers.

We see significant potential across our businesses from a combination of underlying market growth, share gains, and the development of new products and propositions. Growth rates will naturally fluctuate, reflecting short-term market conditions, and we will see opportunities and challenges within each business.

Historically, these businesses have grown at 8% CAGR. Overall, we're confident that we can deliver 5% to 10% loan book growth through the cycle.

This slide on Commercial shows how we've been delivering that, focusing on our growth priorities in mature businesses and new and innovative products. Kilwinning is a good example to demonstrate a new sector growth.

By financing [Unibal's?] third Scottish battery project, we're enabling a customer to invest in new capacity in an attractive growth area within the energy sector.

At the same time, we continue to leverage the strength of our relationship-led model and underwriting expertise. This supports larger and more complex financing requirements while maintaining a prudent and well-controlled risk appetite.

By way of example, we recently completed a large asset-based lending transaction for a leading Scottish timber frame manufacturer. The transaction combined multiple lending products across asset and invoice finance within a single capital structure.

This allowed us to deliver flexible funding to help the business invest, innovate, and pursue its growth plans with confidence. In Retail, we are already seeing strong progress in the motor finance business, with a return to growth in the UK and record new business in Ireland.

We re-entered the Irish market through acquisition in 2023 and have since then increased our market share from 8.5% in 2024 to 13%. We are expanding our offering with locally relevant products such as dealer forecourt funding.

In Premium, we are looking to build on our existing partnerships with large commercial lines insurers and underwrite larger and more complex deals. One example is our new 3-year partnership with JMG, one of the UK's leading independent insurance brokers.

This broadens access to commercial customers and supports growth in our core commercial premium finance proposition. I would describe this growth as ambitious, sustainable, and disciplined, built around strong partnerships and a clear path to improved returns.

In Property, we are extending our proposition, supporting larger, more diverse developments. While the near-term market remains challenging, our through-the-cycle approach allows us to stay close to established build-to-sell clients.

We have extended our product offering, and we are growing in new market segments, including build-to-rent and purpose-built student accommodation. We're already seeing tangible evidence of progress.

Our first transaction with GSA was a £20 million revolving credit facility supporting 52 homes at Medburn Yard with a gross development value of £47 million. It brought us a new relationship with an innovative housebuilder while remaining firmly within our areas of expertise.

Similarly, our recent partnership with Draycott in Cardiff is an example of our increasing appetite for larger opportunities in the build-to-rent sector. Importantly, these opportunities complement our core build-to-sell business, enabling us to continue supporting long-standing clients as they navigate market challenges and progress their own development pipeline.

To conclude, we have made significant progress in the 2026 financial year. We enter 2027 with confidence and a growing momentum.

We've repositioned the business, we've returned to loan book growth, and we expect that underlying growth to accelerate in financial year 2027 within our 5% to 10% range. The opportunities are well understood, the priorities are clear, and we are demonstrating that we can turn those opportunities into high-quality growth.

We have also demonstrated strong execution on costs. Savings were delivered ahead of schedule in financial year 2026, and we expect to exceed the overall savings target for full year 2027.

This is creating a more efficient and scalable operating model. More broadly, our strategy is clear.

Simplify is largely complete. We are now firmly focused on optimizing the business and growing in the specialist markets where we have strong positions and attractive opportunities.

We have been through a challenging period, and it has been difficult with tough decisions to make. I would like to thank our people for their ongoing dedication, support, and commitment.

They have been truly outstanding. I remain fully committed to the targets we have set.

I am confident that we are in the right businesses, have the right team, and have the momentum to continue delivering on our strategy and to achieve our target of double-digit returns by 2028, rising thereafter. Thank you for your time, and we would now be pleased to take your questions.

Morning, both. Thanks for taking my questions.

Three, if that's all right. They're relatively short ones.

Firstly, base rate expectations have gone up by 100 basis points over the last month. Do you mind just talking a little bit about how you expect higher rates might impact your business and to what extent the higher rate environment is baked into your guidance?

Secondly, the upper tribunal hearing will be in December or February. How long post that hearing do you expect it will take to hear the outcome of that hearing?

Then thirdly, one of your competitors in the specialty finance space is up for sale. If that competitor is acquired by a high street bank, providing your competitor access to cheap current account funding, do you expect any disruption to any of your business lines from more aggressive pricing?

Thank you.

Thank you, Ben. Thank you for the questions.

I think let's start with the base rate implications. Clearly, our latest forecasts are built around the latest observations we see in the interest rate markets.

I think as an overriding comment, I would say higher interest rates do put pressure on SMEs, and we have seen those higher for longer. When we started this year, we were expecting to see interest rate reductions over the course of the year.

Of course, those have been built up. Naturally, we pass those through because we want to maintain our margin.

It is a challenge, though, for SMEs, but they are entrepreneurial by nature, and they will find ways to get around this and develop. What I can say is if you look out historically at the markets we are in, we have seen growth at 8% to 9% compound annual growth rate.

It will be above that at certain times and it will be below it at other times. Through the cycle, it has been there in all manner of interest rates.

I think they can cope with that. What we also need, though, is certainty, because for SMEs, they need to be able to plan.

If they don't have certainty, that can be challenging. We've obviously got a budget coming up, and it'll be very interesting to see what comes through from that.

If we can get certainty and some stability in interest rates, then I think that the businesses that we are operating in can provide the growth that we're forecasting. That would be my sense on interest rates.

On the upper tribunal, the question is a particularly challenging one: how long will it take the upper tribunal to arrive at a verdict after they've heard the case? The honest answer, Ben, is I'm not clear, but I would suspect it will be a number of months, but I have no basis for making that comment.

Then I presume you're referring to Aldermore, and whether high street banks step in, I think we would have to look at the facts and circumstances of that acquisition as it comes in. What I can say is, with Close Brothers, we have a diversified funding base, we have strong margins, we're seeing our returns improve, and we have a very clear plan to get that back to double-digit returns in 2028.

I'll focus on what we're doing and let the others focus on what they're doing.

Thank you.

Thank you. Good morning.

Thank you for taking my questions. Two, please.

First, on loan growth, good to see loan growth come back in the second half. A lot of it was the 26% half-on-half growth in Invoice Finance.

What's driving that? Are those levels sustainable?

Then how are you thinking about the rest of the book, especially Asset Finance and Property? Second, could you please also talk about the uptick in impairments in the fourth quarter, taking the 0.8% in the 9 months to 1%, and how are you thinking about asset quality trends into FY 2027?

Specifically, if you could share the coverage levels in the troubled property portfolio lots, please. Thanks.

Okay. The first question, that was around what is driving the loan book forward in the second half of the year, yes?

Okay. I think what was encouraging, Sanjena, when we looked at that second half, we saw 4% growth, and in the final quarter we saw growth right across the portfolio.

Every business grew. The honest answer to the question is all the businesses move into FY 2027 with good momentum.

We gave some examples as part of our presentation areas we're seeing it. Certain parts of asset have grown well over the period.

We've seen good growth in our wholesale portfolio. We've seen areas in invoice finance really pushing on very, very strongly in the second half.

We talked about in motor how the UK business is doing well, but equally Ireland is selling record volumes at the moment. Of course, with premium, we gave examples of new brokers that we're bringing in as we move into commercial lines.

I think on property, yes, build-to-sell is a challenging environment. Very interesting to see the Andy Burnham's announcement around Help to Buy over the weekend, and I think that presents real opportunity as we move into FY 2027.

With the fact that we were talking about other product sets that we have, build-to-rent and purpose-built student accommodation, that has taken off very well indeed. I'm very pleased we showcased an example as part of the presentation there where we're seeing that growth.

We have diversity in our property book. The answer really is right across the book.

We are not relying on one particular book to drive the growth. As I say, historically, those have grown at sort of 8% to 9%.

In terms of asset quality, Fiona, do you want to pick up just on that and on the property piece?

Yes, absolutely. Thanks, Mike.

Good morning, Sanjena. Yes, the fourth quarter, the uptick in impairments, as we disclosed, this related to a small number of cases in our property business, including some legacy cases there.

Indeed, really some business that we wouldn't have written today. We've talked about the stressed build-to-sell environment, and we did see some developers, a very small number of developers, fail as a result of some of those pressures, and that's come through in the impairments.

I'd say a small number of relatively ring-fenced cases there. We are confident in the quality of our portfolio and in our coverage levels across the whole business including in Property.

I think the last part of your question, Sanjena, was around the coverage ratios. Overall for the bank, coverage ratios increased from 2.6% to 2.7% year-on-year.

Our coverage levels overall for the property business are 5.6%, and within that, stage 3 is at 35%. That reflects really that uptick that we saw in Q4 there.

Strong coverage levels, strong book quality, and confidence in our underlying impairments.

I would just reiterate those points. 90% of our book is secured and structurally protected, and we've got prudent lending criteria, I'm very comfortable with our credit quality right now.

Thank you. Can I just follow up back on the first question?

Is there more color you can provide on the invoice finance performance in the second half because that really stands out?

Yes. Apologies, Sanjena, we didn't quite cover that on the first question.

As you say, the growth there in the second half in invoice finance was particularly pronounced at 26%. As you might recall, we called out in the H1 results, we did see a particular seasonal dip in invoice finance at the end of the first half, at the end of January 2026.

Whilst we are confident in the growth opportunities in our invoice finance business, that absolutely forms part of our 5% to 10% go-forward, I would say that H2 performance was a little unusual because of that seasonal dip at the end of the first half.

Thank you very much.

That's all the questions as far as I can see. I'd just like to thank you for coming on the call this morning.

We look forward to updating you in 6 months' time.