Close Brothers has reported a 0.9% fall in its loan book in the three months to April, which is now down 3.5% for the financial year to date.

The specialist lender, reporting a Q3 trading update, revealed it had seen increased levels of repayments in its property business, reduced activity in some of its asset finance businesses, and a “competitive” market environment in premium finance.

In terms of its involvement in the ongoing historic motor finance payments investigation – in which Close Brothers has set aside approximately £200m in direct and indirect costs for a potential redress scheme – the group reiterated that it is still awaiting the outcome of a Supreme Court judgment. The FCA will confirm within six weeks of this verdict whether it will be introducing a scheme to compensate motor finance customers.

Close Brothers said it had still been “encouraged” by a resilient performance though the first three quarters of its financial year, while “significantly strengthening” its capital position.

However, the firm said it now expects its loan book at the end of the 2025 financial year to be “broadly flat”.

Close Brothers’ share price dipped by more than 4% to £3.54 in the wake of the trading statement.

“We are taking proactive steps to ensure that the group is well positioned to generate strong, sustainable returns once the motor finance commissions uncertainty has been resolved,” Close Brothers chief executive, Mike Morgan, said.

“As outlined in March, my priorities include focusing on simplification of the group, improving operational efficiency, and driving sustainable growth.

“Alongside a stronger capital position, delivering on these priorities will create a more efficient and resilient business, one that delivers greater value for shareholders and continues to support customers, as we have through many cycles.”

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