Operating income rose 1% to £944.2m for merchant bank and investment provider Close Brothers for the year ending 31 July.

Growth in the firm’s banking and asset management divisions offset a fall in income for its Winterflood securities arm and a 10% rise in operating expenses for the group due to increases in staff costs.

Close Brothers Asset Management (CBAM) - the company's wealth management arm - was sold today for £200m to private equity firm Oaktree. 

Group assets under management increased 18% to £19.3bn, driven by net inflows and positive market performance. However, adjusted operating profit decreased 23% to £12.2m (2023: £15.9m) as income growth was more than offset by higher costs due to new hires.

Group statutory operating profit before tax increased 27% to £142m (2023: £112m). However, the rise was primarily due to the impairment charges of £116.8m (related to specialist motor insurance arm Novitas) affecting the previous year's figures.

Adjusted operating profit for the merchant bank increased 50% to £170.6m (2023: £113.5m).

Close Brothers said it has paid out £28.6m in relation to complaints handling expenses and other operational costs associated with the FCA’s review of historical motor finance commission arrangements.

In July the FCA said it would set out next steps in its motor finance probe in May 2025. The regulator could set up a redress scheme if it rules that a large number of customers should be compensated.

Close Brothers said that it expects continued uncertainty from the FCA’s review of the motor finance industry, and expects net expenses to be between £55m and £60m for the 2025 financial year primarily due to expenses related to the review.

Adrian Sainsbury, chief executive of Close Brothers, said: “The FCA's review of historical motor finance commission arrangements announced in January introduced significant uncertainty for the group.

“Against this backdrop, our top priority has been to further strengthen our capital position and protect our valuable franchise, whilst continuing to support our nearly three million customers, including c.350,000 SME businesses.”

Mr Sainsbury recently began a temporary medical leave of absence from the business. He was appointed group CEO in 2020, having previously been managing director of Close Brothers’ banking division since 2016 and a director at the bank since 2013.

In today's financial results Close Brothers said its Winterflood securities arm delivered an operating loss of £1.7m (2023: £3.5m profit) due to “unfavourable” market conditions.

As part of the financial results announcement, Close Brothers announced that it has sold its CBAM wealth management arm to private equity firm Oaktree Capital Management for £200m. Oaktree plans to develop CBAM as an independent wealth manager.

Close Brothers is a UK merchant banking group providing lending, deposit taking, wealth management and securities trading. It employs over 4,000 people, mainly in the UK and Ireland, and has a significant Financial Planning arm.