Close Brothers has seen its share price slump after the finance house announced eye-watering losses in excess of £100m.
The lender has today (Mar 18) published its half-year results for the six months to the end of January with the documents painting a bleak picture for the firm.
Accounts show that Close Brothers made a statutory pre-tax loss of £103.8m in the first half of its financial year – a complete collapse on the £87m profits reported this time last year.
Following the news, shares in the company slumped by 14% earlier this morning.
It comes after Close Brothers last month put aside £165m to dealing with the car finance crisis, ahead of its Supreme Court appeal in April.
The firm added today that half-year results were also impacted by £8.4m for complaints, handling and other operational and legal costs linked to motor finance commissions.
It warned that over the full-year, additional costs related to the car finance scandal are expected to cost around £22m.
Chief executive Mike Morgan, who took on the top job at Close Brothers in January, said: ‘Despite the short-term impact of the motor finance commissions uncertainty on our financial performance, our core banking model remains resilient.
‘We continue to deliver a robust underlying profit in our banking business.’
The latest results have also revealed that Close Brothers is now aiming to cut costs by around £25m over the financial year as a whole, up from the previous target of £20m.
This is expected to include job losses, with the firm saying it has made ‘good progress on streamlining the workforce through the consolidation of roles across our businesses and functions, as well as through the management of vacancies’.
The group has also been overhauling its technology team – with its IT staff cut by about 30% since the 2023 financial year – and reducing office space.
The space for its banking division will have been cut by around a third by the end of 2024-25.
Morgan added: ‘My priorities include focusing on greater simplification, improving operational efficiency, and driving sustainable growth.
‘Our goal is to ensure that, once the motor finance commissions uncertainty has been resolved, the group is well positioned to generate strong, sustainable returns.’
Analysts at Panmure Liberum said: ‘Motor finance is not the only issue to be addressed by the group – costs are coming down but are still too high.’