Close Brothers reduced its annual costs by about £36 million but remained loss-making after adding £164.7 million to provisions for the motor-finance redress scheme. It plans more than £60 million in annual savings, further restructuring and faster AI adoption, while legal uncertainty over the scheme continues to weigh on dividends, capital and the path back to profitability.
## Verified facts
Close Brothers reported a pre-tax operating loss of £60.3 million for the year to July 31, although this was about half the £122.4 million loss reported for 2024-25. The result included a further £164.7 million provision for the motor-finance redress scheme, bringing total provisions to about £320 million. The group said legal challenges surrounding the Financial Conduct Authority’s scheme created continued uncertainty and said it would not pay a final dividend for 2026.
The bank cut annual costs by around £36 million during the year, exceeding its initial £25 million target. It expects to generate more than £60 million in annual savings in the 2026-27 financial year, while planning further restructuring, including centralising support functions, reducing its office network, outsourcing and offshoring work, and accelerating the use of artificial intelligence. Close Brothers said 600 jobs had already been identified for removal; the supplied reports differ on whether management definitively ruled out additional cuts beyond those roles.
The group is also seeking to strengthen its capital position through the planned sales of its Winterflood arm and asset-management businesses. Underlying operating profit was reported at £120.3 million, and lending increased on an underlying basis, including a 4% rise in the final six months. The chief executive said the group expects to return to profit in 2026-27 if no further cash provision is required for the motor-finance scheme.
## Interpretation
The figures indicate that management’s cost-reduction programme is progressing faster than initially planned and that the bank is attempting to simplify its business around specialist lending. The reported improvement in the statutory loss, underlying operating profit and stronger lending provide evidence of operational progress. However, the overall result remains loss-making because of motor-finance provisions and restructuring costs, while the proposed dividend suspension highlights the continuing financial impact of the redress issue.
The strategy therefore appears to depend on two developments: delivering the planned savings and avoiding a materially larger motor-finance bill. Accelerated AI adoption and further outsourcing may support efficiency, but the supplied evidence does not establish their eventual financial impact or whether they will prevent further workforce reductions.
