The reduced cost of credit is increasing competition among larger banks and newer, alternative lenders for new business. Despite this, Close Brothers (CBG) still managed to grow its loan book 12 per cent to £6.4bn during the 12 months to July. At the same time, its bad debt ratio declined by 10 basis points to 0.6 per cent. This helped increase adjusted operating profit, which was up 4 per cent to £234m.
But the alternative lender was not immune to market changes. The net interest margin for its core banking division, comprising retail, commercial and property finance, declined from 8.6 per cent to 8.2 per cent. Return on opening equity reduced from 27 per cent to 26 per cent, but chief executive Preben Prebensen insists "the glass is much more than half full here". The group does not chase a particular growth target but focuses on stringent loan writing, he added.