ShoreCap downgrades Close Brothers to ‘hold’
Shore Capital downgraded Close Brothers on Thursday to ‘hold’ from ‘buy’ following the company’s third-quarter update a day earlier, which it called "a bit of a mixed bag".
The broker said news of disappointing loan book growth and a downgrade to guidance was offset by continued positive impairment performance and a better-than-expected capital position.
Winterflood also showed signs of life, it noted, delivering a small profit in the period following a loss in first half, as market conditions improved.
"We have tweaked our forecasts accordingly and leave our fair value unchanged at 370p. With just 4% upside remaining, we downgrade our recommendation," it said.
Shore pointed out that there was no new information on the motor finance commissions situation for which the group has already set aside a £165m provision to cover potential future remediation costs.
"We expect the Supreme Court to publish its judgement no sooner than July, after which the FCA has indicated that it will take up to six weeks to consider any industrywide redress proposal," it said.
"This will then likely be subject to consultation, so clarity on the matter is unlikely to be forthcoming until the back end of the year."
Shore’s forecasts still assume a further £135m provision will be required in FY26, taking the total to £300m.
At 1230 BST, the shares were down 5.3% at 338.p.