- Close Brothers Group
- 15 May 2025 10:15:34
Source: Sharecast
The bank noted that Close Bros has had a bad run, leaving the shares trading at 0.4x TBV, with lack of cost control being a significant driver of falling earnings expectations.
"We expect CBG to start to correct this from September," it said. "By FY27 we are 2% more optimistic on costs versus consensus, and 8% ahead on an adjusted profit before tax basis."
RBC, which reiterated its ‘outperform’, speculative risk rating, also said it was more optimistic on a favourable outcome from motor finance.
"The Supreme Court will decide in July how at fault CBG is in relation to motor finance commissions," it noted.
"For CBG, we model an impact of circa £250m (adj. cons c.£280m)."
RBC said that following its roadshow with Julius Grower, an equity lawyer specialising in commercial law, it is more optimistic of a favourable outcome for UK banks and thus has lowered its cost of equity for CBG by 2 percentage points.
"If the SC concludes that there is only liability under the Consumer Credit Act, this will allow the regulator to set up a scheme which focusses solely on egregious commissions," it added.