Regulatory announcement (RNS) · Annual Financial Report

Annual Financial Report

Close Brothers Group plc · published 2 October 2026 14:26 UTC · Close Brothers credit rating and record

Annual Report 2026

Close Brothers Group plc

Our purpose is to help people and businesses thrive

Our attributes embody our distinctive culture and

customer-centric approach

Deep

expertise

Our deep industry knowledge

and specialist expertise help people

and businesses unlock their

potential and plan for the future

with confidence.

Consistent

service

We pride ourselves on delivering the

highest levels of service in specialist

sectors we know and understand.

Long-term

relationships

We take the time to understand and

build strong long-term relationships

with our customers and partners.

Our strategy focuses on ensuring our business model

continues to deliver in the long term

Simplify

Optimise

Grow

Underpinned by our responsibility

To help address the social, economic and environmental challenges facing our business,

employees and customers, now and into the future.

Enabling us to create value and deliver positive

outcomes for our stakeholders

Customer and partners

Colleagues

Regulators and government

Communities and environment

Suppliers

Investors

Contents

Strategic report

At a glance

Chairman’s statement

Chief Executive’s statement

Our business model

Our strategy

Investment case

Key performance indicators

Our businesses

Stakeholder engagement

Section 172 statement

Sustainability report

Task Force on Climate-related Financial

Disclosures report

Non-financial and sustainability information statement

Financial overview

Risk report

Going concern

101

Viability statement

102

Governance report

Chairman’s introduction to governance

104

Governance at a glance

106

Board of Directors

108

Executive Committee

111

Corporate governance report

112

Nomination and Governance Committee report

122

Audit Committee report

126

Risk Committee report

134

Directors’ remuneration report

137

Directors’ report

152

Financial statements

Independent auditors’ report

156

Consolidated income statement

164

Consolidated statement of comprehensive income

165

Consolidated balance sheet

166

Consolidated statement of changes in equity

167

Consolidated cash flow statement

168

Company balance sheet

169

Company statement of changes in equity

170

The notes

171

Glossary and definition of key terms

214

Shareholder information

217

Read more on p46

At a glance

Close Brothers is a UK specialist banking group

providing lending and deposit taking.

Commercial

Retail

Property

Commercial offers specialist and

predominantly secured lending

principally to the SME market.

Retail provides intermediated

finance through motor dealers,

motor finance brokers and

insurance brokers, and savings

products for individuals and

corporates.

Property offers residential

development finance to

established UK property

developers, funding for

commercial properties, and

bridging and refurbishment

loans.

Find out more on page 16

Find out more on page 18

Find out more on page 20

Serving approximately

1.6 million

customers

26 offices

predominantly in the UK and Ireland

c.2,400

full time equivalent employees

Constituent of the

FTSE 250

Close Brothers Group plc Annual Report 2026

Strategic report

Governance report

Financial statements

Adjusted1 operating profit

£120.3 million

2025: £144.3 million

Operating loss before tax

£(60.3) million

2025: £(122.4) million

Adjusted1 basic earnings per share

(continuing operations)

47.5p

2025: 59.3p

Basic earnings per share

(continuing operations)

(58.5)p

2025: (99.8)p

Return on average tangible equity2

5.5%

2025: 7.1%

Total Scope 1 and 2 emissions (market-based)

790 tCO2e

2025: 1,160 tCO2e5

Employee engagement

72%

2025: 78%

Customer sentiment scores

Asset Finance CSAT3

96%

2025: 92%

Invoice Finance CSAT3

87%

2025: 87%

Motor Finance UK Dealer NPS4

+65

2025: +65

Savings online CSAT3

89%

2025: 82%

1. Adjusted measures are presented on a basis consistent with prior periods and exclude any exceptional and adjusting items which do not reflect

underlying trading performance. Current adjusting items include: customer remediation provisions, unwind of time value discount, and operational or

legal costs, incurred in relation to an event that is deemed to be adjusting, Close Brewery Rentals Limited ("CBRL") which was sold in the year, Close

Brothers Vehicle Hire ("CBVH") which is in wind-down, restructuring costs and amortisation of intangible assets on acquisition. There are no

exceptional items presented in these financial results. Please refer to the Basis of presentation and the tables on page 49 for details on the

reconciliation between adjusted and statutory measures.

2. Adjusted operating profit less tax and AT1 coupons divided by average total shareholders’ equity, excluding intangible assets and AT1, for continuing

operations. See footnote 1 on page 15 for further details.

3. Customer satisfaction score (“CSAT”).

4. Net Promoter Score ("NPS").

5. To support meaningful year-on-year comparisons following the disposal of Winterflood and Brewery Rentals, 2025 comparative emissions have been

restated to exclude both businesses. Unless otherwise stated, all operational emissions disclosures presented in this report are reported on a

continuing operations basis.

Chairman’s statement

"I am proud of the resilience, integrity and

commitment shown by colleagues across the

group during another important year for Close

Brothers.

With a more focused specialist banking model,

continued progress against our strategic

priorities, and a clear succession plan for the

Board, the group is well placed for the next

stage of its development."

Michael N. Biggs

Chairman

The 2026 financial year has been an important

year for Close Brothers. The group has

maintained a clear focus on the execution of its

strategy, the strength of its franchise and the

needs of customers, colleagues and

shareholders while continuing to manage the

external uncertainties facing the sector.

The Board and management team have remained focused

on those matters within our control: preserving capital

strength, delivering operational efficiencies, simplifying the

group, maintaining credit discipline and positioning Close

Brothers to generate stronger returns over time. This

disciplined approach has been particularly important during

a period of continued regulatory developments, geopolitical

and macro volatility and the continued uncertainty relating to

motor finance commissions - all of which have continued to

influence investor sentiment.

Throughout the year, the underlying strengths of the

business have remained evident. Close Brothers continues to

benefit from well-established positions in specialist markets,

a relationship-led model, deep lending expertise and a

culture of disciplined underwriting. These attributes have

served the group well over many years and continue to

underpin the Board’s confidence in the long-term prospects

of the business.

The Board is acutely aware of the importance of shareholder

distributions. Decisions in relation to the reinstatement of

distributions will continue to be taken carefully, reflecting the

group’s capital position, the evolving regulatory backdrop

and the Board’s responsibility to balance prudence with the

creation of long-term shareholder value.

We remain committed to the resumption of shareholder

distributions at an appropriate time and will reassess our

options as greater certainty emerges regarding motor finance

commissions, taking into account the group's future capital

needs and shareholder feedback.

Board and management alignment

The Board has continued to work closely with management

to oversee the delivery of the group’s strategy, focused on

simplification, optimisation and growth. This strategy has

provided a clear framework for decision-making and has

helped the group to respond decisively to the challenges of

recent years.

During the year, management has continued to make

significant progress on cost reduction, transformation

initiatives and the strengthening of operational and control

frameworks. These actions have led to delivery of annualised

costs savings ahead of target, on an accelerated schedule,

protecting both the company and the customer proposition,

and creating the foundations for a more efficient and focused

organisation capable of delivering improved returns.

Investor engagement during the year has reinforced the

importance of maintaining this clarity of purpose. As part of

our 2026 corporate governance roadshow, we were pleased

to have strong bilateral engagement with shareholders,

reflecting a shared interest in the long-term success of the

company. Feedback was constructive and supportive, with

investors recognising the group’s capital strength,

operational rigour and the progress made by management.

Close Brothers Group plc Annual Report 2026

In particular, shareholders were supportive of the Board’s

approach to succession and oversight during this period of

uncertainty. The clear message from those discussions was

a preference for continuity, experience and stability as the

group continues to execute its long-term strategy.

Our people and culture

The Board recognises that the strength of our franchise is

built on the expertise and judgement of colleagues across

the group. Their specialist knowledge, customer focus and

commitment are fundamental to our business model and to

the trust that customers place in Close Brothers.

Our people have continued to demonstrate professionalism

and commitment, supporting customers and maintaining

high standards through a demanding external environment

and a period of significant organisational change. The results

of the 2026 employee opinion survey were an encouraging

reflection of that commitment through this period of

transformation, with engagement remaining strong at 72%,

overall satisfaction at 80%, and over 90% of colleagues

reporting a strong sense of fairness, inclusion and integrity.

We remain focused on maintaining an inclusive and

supportive culture, where colleagues are engaged, able to

speak up and committed to delivering good outcomes for

customers. The Board will continue to monitor culture closely

and ensure that the group’s values remain in focus as we

simplify and evolve the business.

Sustainability and responsible business

Close Brothers continues to have an important role to play in

supporting customers, colleagues and communities. Our

approach to sustainability remains grounded in our business

model and the needs of the customers we serve.

We remain committed to supporting customers in their own

sustainability journeys in a practical and commercially

relevant way. This includes helping customers finance assets

and investments that support their transition plans, while

continuing to manage our own environmental impact and

operate responsibly.

More broadly, the Board continues to view sustainability

through the lens of responsible stewardship: maintaining

strong governance, supporting customers fairly, investing in

colleagues, contributing to communities and managing the

group for long-term value creation.

Board and management changes

Board succession has been an important area of focus

during the year. As announced on 31 July 2026, I will step

down as Chairman of the Board and Chair of the Nomination

and Governance Committee with effect from the conclusion

of the Annual General Meeting in November.

It has been an immense privilege to serve as Chairman of

Close Brothers over the past nine years. During that time, the

group has faced periods of opportunity and challenge, and I

have been consistently impressed by the resilience, integrity

and commitment of colleagues across the organisation. I am

grateful to my past and current Board members,

management team and colleagues across the group for their

support during my tenure.

I am delighted that Mark Pain will succeed me as Chair of the

Board of Close Brothers Group plc and Close Brothers

Limited, and as Chair of the Nomination and Governance

Committee. Mark has served as Senior Independent Director

since 2021 and brings over 30 years’ finance, risk

management and commercial experience, as well as

significant regulated financial services board experience. His

deep knowledge of the group and the sector will provide

valuable continuity as Close Brothers continues to execute

the next phase of its strategy.

I would also like to congratulate Tracey Graham, who will

succeed Mark as Senior Independent Director. Tracey has

made a significant contribution to the Board since her

appointment in 2022 and brings extensive experience as a

Non-executive Director, Senior Independent Director and

Remuneration Committee Chair across a range of sectors,

including financial services.

The Board remains committed to ensuring that it has the

right balance of skills, experience, independence and

diversity to support the long-term success of the group. I am

confident that, under Mark’s chairmanship and with Tracey’s

support as Senior Independent Director, the Board will

continue to provide effective oversight and constructive

challenge to management.

Thanks

Finally, I would like to thank colleagues, management, fellow

Board members and shareholders for their continued

support during another important year for Close Brothers.

The group has taken decisive action in recent years to

strengthen its position, simplify its business and focus on the

opportunities where it can deliver the greatest value. While

external uncertainty persists, Close Brothers remains a

strong franchise with deep customer relationships, specialist

expertise and a clear strategy.

As I step down as Chairman, I do so with confidence in the

future of the group, in the leadership of the management

team and in the Board that will support them. I wish Mark,

Tracey, the Board and everyone at Close Brothers every

success for the years ahead.

Michael N. Biggs

Chairman

29 September 2026

Strategic report

Governance report

Financial statements

“We were pleased to have strong

bilateral engagement with

shareholders, reflecting a shared

interest in the long-term success

of the company.”

Chief Executive’s statement

“In 2026 we have made significant progress

against our strategic priorities to simplify,

optimise and grow the business. We have

taken decisive action: exiting non-core

activities and repositioning business lines;

taking out costs; returning to growth, and

sharpening our focus on our specialist lending

markets in which we have expertise. In so

doing we have established a stronger

foundation for future growth, operating

leverage and returns."

Mike Morgan

Chief Executive

I am encouraged by the progress we have made in delivering

our strategy over the past 12 months. From the start of the

financial year with the successful appeal of the "Hopcraft"

case at the Supreme Court and the conclusions of the

Financial Conduct Authority ("FCA") on their Market Study

Review into Premium Finance, through to the sales of

Winterflood Securities and Brewery Rentals, the 2026

financial year has been a year of progress and change,

resulting in significant repositioning of the group as a

focused specialist lender. Our transformation activities have

gained real momentum, with cost savings delivered ahead of

schedule. The underlying loan book returned to growth, with

all divisions growing in the final quarter. We have laid the

foundations for improved returns in the future.

Nonetheless, our return on average tangible equity ("RoTE")

of 5.5% for FY 2026 remains below both last year and where

we expect Close Brothers to operate over the medium term.

While the comparison to prior year is impacted by the

repositioning, simplification and refocus we have undertaken,

we recognise that improved returns must be demonstrated

through performance. With growth building across our

divisions, and the benefits of strategic actions increasingly

coming through, we are well positioned to build on this

progress through FY 2027, and remain confident in achieving

our target of double-digit returns by FY 2028, rising

thereafter.

Financial performance reflects delivery of FY

2026 targets

Overall, adjusted operating profit reduced 17% to £120.3

million (2025: £144.3 million) and return on average tangible

equity reduced 160 basis points (bps) to 5.5% (2025: 7.1%),

primarily driven by lower income reflecting both the

repositioning of the business and prevailing market

conditions.

The loan book was flat over the year, as a modest reduction

in the first half was offset by growth in the second. On an

underlying basis, the loan book increased 2% year on year,

and 4% in the second half. All divisions grew in the fourth

quarter.

The net interest margin was 6.9% (2025: 7.2%), in line with

guidance, and credit performance remained resilient, with a

bad debt ratio of 1.0% (2025: 1.0%), in line with prior year

and guidance of below the long-term average of 1.2%.

Adjusted operating expenses of £430.9 million (2025: £445.1

million) were better than guidance, primarily driven by the

acceleration of cost initiatives into the current year.

On a statutory basis, we reported a pre-tax loss of £60.3

million (2025: pre-tax loss of £122.4 million) reflecting a

number of adjusting items, notably the increase in our motor

finance provision to c.£320 million (31 July 2025: £165.0

million), as well as restructuring costs and other adjusting

items outlined in further detail on page 50.

Our CET1 capital ratio remains strong at 14.1% (2025:

13.8%), comfortably ahead of both our medium-term target

range of 12-13% and the applicable regulatory minimum.

We have maintained a strong funding position with a 12-

month average liquidity coverage ratio ("LCR") of 1,113%

(2025: 1,012%) as we continue to optimise the balance

sheet, supported by a number of debt transactions in the

second half of the financial year.

During the year, we increased our provision in respect of

motor finance commissions by £164.7 million, and it now

stands at c.£320 million. While we recognise the ongoing

uncertainty posed by the legal challenges to the FCA's

redress scheme, we continue to prepare for the delivery of

Close Brothers Group plc Annual Report 2026

redress under the scheme as well as preparing for the

possibility of alternative scenarios that could arise from the

legal challenges. As we await clarity on the outcome, our

focus remains on the execution of our strategy.

Delivering on our strategic priorities

In FY 2026 we have continued to deliver on our strategic

priorities to simplify, optimise and grow the business,

reinforcing our confidence in achieving our target of double-

digit returns by the 2028 financial year, rising thereafter.

We substantially concluded our simplification agenda with

the sales of Winterflood Securities and Brewery Rentals both

completing in the first half of the financial year. We are

progressing with the run-off of the Vehicle Hire business, and

the repositioning of our Premium Finance business towards

commercial lines will be substantially complete in FY 2027.

At the start of the financial year, we initiated our

transformation programme, which has now gained real

momentum. In the first year we have delivered c.£36 million

of annualised cost savings, substantially ahead of the c.£25

million target, and now expect to exceed £60 million of

annualised cost savings by the end of the 2027 financial year

primarily through streamlining of businesses and functions,

increased use of outsourcing and offshoring, and reduction

in our property footprint and third-party spend. In addition,

we are now well into planning for the next stage of

restructuring activity, with a focus on developing shared

enterprise-wide services.

We are also continuing to develop our capabilities in AI and

automation, where we see significant potential to improve

efficiency, as well as develop proposition enhancements, growth

enablers and solutions to improve the customer journey. To

date, our AI and automation focus has been on developing and

implementing practical solutions which deliver immediate

benefits. Over time, we see scope for additional cost savings

and loan book growth reflecting the deployment of AI,

automation and digital solutions across the business.

Loan book growth has returned in the second half, and

notwithstanding challenging market conditions, all our

divisions delivered positive growth in the fourth quarter. Over

the year, the loan book was up 2% on an underlying basis

and flat overall, reflecting the planned run-off of certain

Premium Finance personal lines brokers and our legacy

Motor Finance business in Ireland. In addition to our core

loan book performance, we are demonstrating our ability to

convert targeted opportunities into scalable, high-quality

growth across the divisions. This includes deals such as:

Property Finance's £20 million Revolving Credit Facility with

award-winning developer, gs8; innovative Asset Finance

lending supporting SME growth in emerging clean-energy

markets; and Premium Finance’s strategic partnership with

JMG, a top-30 UK insurance broker, covering approximately

£500 million of gross underwritten assets.

We continue to see significant growth opportunities through

a combination of overall market growth, share gains and new

business initiatives. We are already seeing positive

momentum in a number of our businesses: the Invoice

Finance book grew 8% overall; Motor Finance grew 9%

supported by strong growth in Ireland; and we have seen

good momentum in a number of Asset Finance markets

including Ireland. While the Property development market

remains challenging, we are seeing acceleration of growth in

the Build-to-Rent and across some regional territories.

As part of this, we are seeing an ongoing shift to larger

transactions which typically have a lower net interest margin,

but deliver high credit quality and attractive returns.

Overall, we see growth now trending towards our target of

5-10% p.a. through the cycle.

We are also continuing to optimise our balance sheet position,

while maintaining prudent capital, funding and liquidity. The

diversity of our funding base has helped to mitigate cost

pressure in the deposit market, benefiting both from the

breadth of our deposit offering and a number of debt

transactions issued during the year. We have also started

building contingent collateral, allowing us to further optimise

the level and maturity of funding, while remaining in line with

both our internal risk appetite and regulatory requirements.

Given the continued uncertainty regarding the outcome of

the legal challenges to the FCA’s motor finance consumer

redress scheme and any potential financial impact, the group

will not pay a final dividend on its ordinary shares for the

2026 financial year. We remain committed to the resumption

of shareholder distributions at an appropriate time and will

reassess our options as greater certainty emerges regarding

motor finance commissions, taking into account the group's

future capital needs and shareholder feedback.

Crucially, notwithstanding a period of unprecedented

change, our most recent employee opinion survey shows

that colleague engagement remains strong, supported by an

active programme of internal communication and a number

of new internal engagement forums.

Looking ahead

We enter the new financial year with confidence and remain

focused on delivering sustainable growth and long-term value

for our stakeholders. Although the external environment

remains uncertain, we believe the group is well positioned to

benefit from the opportunities available in our chosen markets.

Demand for specialist lending and trusted banking services

remains resilient, and we continue to see attractive growth

prospects across our divisions.

FY 2027 will be an important year in demonstrating the benefits

of the strategic changes we have made, as growth continues to

build across the portfolio, and the impact of our cost actions

increasingly come through. With continued investment through

FY 2027 to support demand and fuel growth, we expect this to

result in a modest improvement in returns.

As cost savings are more fully realised, and growth continues to

accumulate, we expect FY 2028 to reflect the benefits of our

strategy with greater operational leverage, enhanced efficiency

and the accumulation of growth supporting double-digit returns.

As we move into the next stage of delivery of the group’s

strategy, we are making a number of changes to roles and

responsibilities within the Executive Committee. Effective 1

October 2026, Matt Roper has been appointed to the newly

created role of Chief Banking Officer with responsibility for the

group’s lending activities across Commercial, Retail and

Property. Phil Hooper remains Chief Executive of Property, and

Ian Cowie moves into the newly created role of Chief Operating

Officer. I am in no doubt that these changes will help create

greater focus on driving growth across our lending activities and

strengthening our enterprise operating model.

It is with this confidence, we are reiterating our medium-term

guidance and I remain fully committed to the targets we have

set. I am confident that we are in the right businesses, have

the right team, and have the early momentum to continue

delivering on our strategy and to achieve our target of

double-digit returns by 2028, rising thereafter.

Mike Morgan

Chief Executive

Strategic report

Governance report

Financial statements

Our business model

What we do

Close Brothers is a UK specialist

banking group providing lending

and deposit taking. We focus

on delivering excellent service

in specialist sectors we know

and understand.

Commercial

Commercial offers specialist and predominantly

secured lending principally to the SME market.

Find out more on page 16

Retail

Retail provides intermediated finance through motor

dealers, motor finance brokers and insurance brokers,

and saving products for individuals and corporates.

Find out more on page 18

Property

Property offers residential development finance to

established UK property developers, funding for

commercial properties, and bridging and refurbishment

loans.

Find out more on page 20

Enabled by the distinctive

strengths of our model

Deep expertise

Consistent service

Long-term relationships

How we do it

Disciplined pricing

and underwriting

We apply our lending criteria and pricing discipline

consistently at all stages of the cycle, with the net

interest margin we generate reflecting the

specialist expertise of our teams. Our lending is

predominantly secured or structurally protected,

with conservative loan-to-value ratios, small loan

sizes and short maturities.

Prudent management

of financial resources

A fundamental part of our model is having a strong

capital position and taking a conservative

approach to liquidity management and funding, as

we focus on diversity of funding and a prudent

maturity profile.

Customer-centric approach

We listen to our customers, putting their needs at

the heart of our business. We are there for our

customers across all market conditions and seek

to build long‑lasting relationships with them.

Close Brothers Group plc Annual Report 2026

Conservative

approach to risk

Our prudent and conservative appetite to risk

remains unchanged throughout the cycle. We are

committed to sustaining high standards of

business conduct in line with regulatory,

governmental and legal expectations and strive, at

all times, to operate prudently within the laws and

regulations that apply to us.

Diversified portfolio of

banking businesses

We lend in a variety of sectors and locations

across a diverse range of assets including

transport, industrial equipment, renewable energy,

wholesale finance, broker finance, used cars, light

commercial vehicles and residential property.

Our distinctive culture

We see our distinctive culture as our most

valuable asset. Our culture, combined with our

long-term approach, is embodied by our values of

service, expertise and relationships. These values

are embedded at all levels across the

organisation.

The value we create

Customers and partners

We provide tailored financing and trusted

partnerships, helping customers and

partners achieve their ambitions, grow

sustainably, and navigate changing market

conditions.

Regulators and government

We engage transparently and constructively

with regulators and government, maintaining

high standards of compliance, governance,

and accountability across our operations.

Suppliers

We build long-term, responsible supplier

relationships, promoting fairness, reliability,

and shared standards to support operational

resilience and mutual, sustainable value

creation.

Colleagues

We support colleagues to develop their

careers, build on their strengths, and

contribute meaningfully to delivering long-

term value for all stakeholders.

Communities and environment

We act responsibly to support local

communities and manage environmental

impacts, contributing positively and

sustaining our social licence to operate.

Investors

We aim to deliver sustainable financial

returns through disciplined strategy, strong

governance, and transparent

communication, maintaining confidence

across market cycles.

Strategic report

Governance report

Financial statements

Our strategy

At Close Brothers, we strive to

provide exceptional service to our

customers across our banking

activities. We are committed to

building on our proven business

model and strong customer

relationships to deliver attractive

returns over the long term.

We are focused on supporting our customers and delivering

long-term value creation. Our strategy is centred on three

clear priorities: Simplify, Optimise and Grow.

In line with these priorities, we have streamlined the portfolio

of businesses, with our Simplify actions largely complete. We

are focused on executing the next stage of our journey,

driving efficiency and capturing growth in our chosen

markets.

Decisive actions have been taken to reposition the business,

implement significant cost reductions and identify future

growth markets to deliver the strategy and rebuild returns.

Simplify

An in-depth review and repositioning of our

portfolio of businesses has sharpened our

focus on specialist banking.

Simplified group structure

• Over the last two years, we have sold Close

Brothers Asset Management, Winterflood

Securities and the Brewery Rentals business, and

are winding down the Vehicle Hire business.

• We have simplified our federated structure to

reduce the number of businesses.

• These actions have simplified our portfolio and

allowed us to focus on the core lending

businesses, where we can leverage our expertise

and deliver growth and sustainable returns.

Realignment of existing activities with

core business model

• We repositioned our Premium Finance business to

focus on commercial lines.

• We have exited sub-scale products that no longer

meet our strategic objectives or returns thresholds.

• These actions have created a portfolio of

businesses with a strong strategic fit. We are

confident in the enduring growth opportunity

across our core markets, focusing on areas that

offer attractive risk-adjusted returns.

Close Brothers Group plc Annual Report 2026

Simplified portfolio focused on three lending

divisions

Over £275m

Cash consideration from the sale of our non-

core businesses

Optimise

Implementing a step-change in operating

profitability.

Group-wide cost reduction actions

• We initiated a transformation programme focused

on significant cost reduction and streamlining to

create a more efficient organisation. In 2025, we

delivered £25 million of annualised cost savings

through streamlining our technology, suppliers,

property and workforce.

• Over the 2026 financial year, we have delivered a

further c.£36 million of annualised cost savings.

• We are now expecting to exceed £60 million of

annualised cost savings by the end of the 2027

financial year, primarily through streamlining of

businesses and functions, increased use of

outsourcing and offshoring, and reductions in our

property footprint and third-party spend.

• We are advancing our planning for the next stage

of restructuring activity, with a focus on developing

shared enterprise-wide services.

A leaner, more agile organisation well

positioned for the future

• We continue to build on the progress from our

technology transformation, initiated in 2023, which

has helped create a more digitally enabled and

agile IT environment that is secure, resilient and

sustainable. We are further embedding AI and

automation across the business to remove manual

processes, increase efficiency and support a more

scalable operating model.

• In parallel, we continue to evaluate opportunities to

optimise capital, funding and liquidity.

Grow

Using our strong market positions, reputation

and specialist expertise to target growth in

the segments where we can truly differentiate.

Pursuing targeted growth opportunities in

our chosen markets

• Commercial continues to expand lending. Through

the year, we have sought opportunities across our

businesses, where we have developed strong

relationships including in specialist areas such as

Energy, Aviation and Marine and Wholesale Fleet.

• In Retail, we are deepening our motor dealer

relationships and expanding our reach through

commercial partnerships, especially in Ireland, and

we have a renewed focus on growing our

commercial lines business in Premium Finance

through leveraging new and existing broker

relationships.

• In Property, we have expanded our regional

presence and are focusing on adjacent markets of

Build-to-Rent and Purpose-Built Student

Accommodation.

Expanding our product offering to target

new areas of growth

• Commercial has repositioned its intermediated

Asset Finance business.

• Through Retail, we are enhancing our product

options, such as our dedicated Electric Vehicle

proposition for Motor Finance, and supporting the

international presence of our commercial brokers in

Premium Finance, to write larger, high value and

complex business through strengthened underwriting.

• Property has launched a new cash flow-led product,

CA Revolve, in the bridging business, and now

offers a Revolving Credit Facility to our larger

customers.

Strategic report

Governance report

Financial statements

Exceed

£60m

Annualised cost savings achieved by end

of FY 2027

336k

Complaints cases processed by our AI tool

5-10% p.a.

Loan book growth through the cycle target

+8%

Loan book CAGR since 20091

1. Excludes £130.0 million (31 July 2009: £8.6 million) of

operating lease assets related to Close Brothers Vehicle

Hire which is in wind-down, and £nil (31 July 2009: £4.9

million) of operating lease assets relating to Close

Brewery Rentals Limited, sold on 31 August 2025.

Investment case

Attractive market

opportunities

We operate in markets with

long-term demand, offering

sustainable growth

opportunities.

Focused specialist

bank

Our specialist focus, long-term

customer relationships, and

trusted brand allow us to

differentiate and win in markets

we serve.

Commercial

Lending to SMEs for over 40 years

c.60% of business sourced directly by

our sales force

90% lending secured

Retail

Support 100,000+ new motor

customers annually

c.1,100 UK and ROl premium brokers

c.100,000 Savings customers

Property

Lending to SMEs for 50 years

72% of loans are to repeat customers

Close Brothers Group plc Annual Report 2026

£41.1bn

new business

£17.7bn

advances

£80bn

premiums

c.2,400

SME

housebuilders

25%

■UK asset finance market

■Our market share

Source: Finance & Leasing

Association ("FLA") Industry

Statistics 12 months to June

2026.

■UK invoice finance market

■Our market share

Source: UK Finance data for

12 months to July 2026.

■UK used consumer car finance

market

■Our market share

Source: FLA Statistics 12

months to June 2026.

■UK general insurance market

■Our market share

Source: GlobalData's UK Top

25 General Insurance

Competitor Analytics.

■Estimated number of UK SME

housebuilders

■Proportion of UK SME

housebuilder market we

provide finance to

Source: Home Builders

Federation January 2017.

£22bn

sales

A clear strategy

to rebuild returns

We are progressing well on our

strategy, with simplification

largely complete and

optimisation evident, allowing

for future growth.

Our strategic priorities provide a clear

path back to stronger returns.

Simplify

Exit or restructure

underperforming, low-

returning businesses

Optimise

Cost reduction and

a step-change in

profitability

Grow

Drive sustainable

growth across our

chosen markets

The path to improved

shareholder returns

Our target

Double-digit RoTE by the 2028

financial year, rising thereafter

Capital allocation priorities

Absorb regulatory impacts

• Motor commissions redress,

Basel 3.1

Grow the loan book

• Driving strong strategic growth

across divisions

Shareholder distributions

• Resumption of shareholder

distributions at an

appropriate time

Maintaining a CET1 capital ratio of

12-13%

over the medium term

Strategic report

Governance report

Financial statements

Key performance indicators

Financial key performance indicators (“KPIs”)

Return on average tangible

equity1 (%)

2026

2025

2024

Profit after tax divided by

average tangible shareholders’

equity, excluding intangible

assets and goodwill.

Measures how effectively

tangible capital generates profits

and is a key indicator of

shareholder value creation.

Loan book growth (%)

2026

2025

2024

Percentage increase or decrease in

the value of loans outstanding over a

reporting period.

Indicates business momentum,

market demand and future earnings

potential, provided growth is

achieved with prudent risk.

Group expense/income ratio2

(%)

2026

2025

2024

Operating expenses divided by

operating income, measuring how

efficiently revenue is converted into

operating profit.

Highlights cost discipline and

operational efficiency; lower ratios

generally indicate stronger profitability

and better scalability.

Bad debt ratio2 (%)

2026

2025

2024

Annual impairment charges as a

percentage of average loan book,

measuring credit losses arising from

customer defaults.

Indicates asset quality and credit risk

management, helping assess

sustainability of future earnings and

capital strength.

Common Equity Tier 1 capital

ratio (%)

2026

2025

2024

Common shareholders’ equity and

retained earnings divided by risk

weighted assets, measuring highest-

quality capital available to absorb

losses.

Indicates financial resilience,

regulatory strength and capacity to

withstand losses while supporting

lending, growth and distributions.

Total funding as a

percentage of loan book3 (%)

2026

2025

2024

Total customer deposits and

wholesale funding divided by the

loan book, measuring the extent

loans are funded.

Demonstrates funding adequacy and

balance sheet stability, reducing

refinancing risk and supporting

sustainable lending growth.

Liquidity coverage ratio,

12-month average (%)

2026

2025

2024

High-quality liquid assets divided by

projected net cash outflows over 30

days under stress conditions.

Assesses ability to meet short-term

obligations during market stress

without requiring emergency funding

or asset sales.

Net interest margin2 (%)

2026

2025

2024

Net interest income divided by average

net loans and advances to customers

and operating lease assets, measuring

profitability generated from lending and

funding activities.

Shows effectiveness of generating

earnings from balance sheet assets

and liabilities, directly influencing

profitability and returns.

Close Brothers Group plc Annual Report 2026

1.0

1,113

1,012

1,034

(4)

119

132

128

6.9

7.2

7.4

5.5

7.1

9.3

14.1

13.8

12.8

Adjusted basic earnings

per share (continuing

operations)2 (p)

2026

2025

2024

Basic earnings per

share (continuing

operations)2 (p)

2026

2025

2024

Profit attributable to ordinary

shareholders, on an adjusted, or

basic (unadjusted), basis divided

by the weighted average number of

ordinary shares outstanding.

A measure of shareholder returns and

profitability, adjusted EPS helps

stakeholders assess the underlying

performance of the business by

excluding items that may distort year-

on-year trends, while basic EPS

provides the statutory result, ensuring

transparency and comparability.

Dividend per share (p)

2026

2025

2024

Total dividends paid to ordinary

shareholders divided by the

number of ordinary shares in issue.

Shows cash returned to

shareholders. We remain

committed to the resumption of

shareholder distributions at an

appropriate time and will reassess

our options as greater certainty

emerges regarding motor finance

commissions, taking into account

the group's future capital needs

and shareholder feedback.

Non-financial KPIs

Employee engagement (%)

2026

2025

2024

We are committed to fostering a

culture that attracts and retains

engaged and motivated employees.

Total Scope 1 and 2

emissions (market-based)

(tonnes CO2e)4

2026

2025

2024

We have made significant progress

on climate actions and remain

committed to achieving net zero

across our operations, our supply

chain and the activities we finance

by 2050 or sooner.

Customer sentiment scores

Asset Finance

CSAT

Motor Finance UK

Dealer NPS

Savings online

CSAT

Invoice Finance

CSAT

Customers are at the heart of our

model, as we focus on delivering high

levels of service and sharing our deep

industry expertise to meet their needs.

Strategic report

Governance report

Financial statements

(58.5)

(99.8)

56.2

47.5

59.3

75.8

790

1,160

1,701

96%

+65

89%

87%

0.0

See pages 214 to 216 for the full definitions of these key performance indicators.

1. Return on average tangible equity uses adjusted operating profit after tax from continuing

operations, less AT1 coupons (2026: £71.3 million, 2025: £88.7 million, 2024: £113.5 million).

Average tangible equity excludes discontinued operations. Average tangible equity is calculated

based on closing equity per the balance sheet (2026: £1,651.6 million, 2025: £1,735.5 million, 2024:

£1,842.5 million), less AT1 (2026, 2025 and 2024: £197.6 million), less intangibles (2026: £155.0

million, 2025: £166.3 million, 2024: £266.0 million), less Close Brothers Asset Management

("CBAM") and Winterflood Securities ("Winterflood") tangible equity (2026: £nil, 2025: £90.6 million,

2024: £155.9 million).

2. Group expense/income ratio, bad debt ratio, net interest margin, adjusted basic earnings per share

and basic earnings per share calculations re-presented to exclude Close Brewery Rentals Limited,

which was sold in the year, and the Close Brothers Vehicle Hire business, which is in wind-down.

3. Total funding as a percentage of loan book includes £131.1 million (31 July 2025: £207.3 million,

31 July 2024: £267.9 million) of operating lease assets in the loan book figure.

4. The total Scope 1 and 2 emissions for 2024 and 2025 have been restated to exclude CBAM,

Winterflood and Close Brewery Rentals Limited.

Commercial adjusted operating profit1 (£m)

Commercial loan book split at 31 July 20262

£4.9bn

Commercial

Specialist SME and corporate lending

We have two businesses operating across the UK and Ireland with strong market positions that

together deliver resilient, secured SME lending with strong recurring revenue and clear growth

capacity.

Close Brothers Group plc Annual Report 2026

How we win

Excellent service makes us

the lender of choice in our

chosen markets

We pride ourselves on

supporting businesses

through the credit cycle

Deep expertise in both

Asset Finance and Invoice

Finance is unique

Our dual channel strategy

(direct and intermediated)

is a key differentiator

97.0

112.2

90.9

75%

25%

Asset Finance

£3.6bn/75%

Invoice Finance

£1.2bn/25%

NIM

Bad debt

Expense/income

ratio

6.4%

0.6%

62%

Supporting over 28,000 SMEs through a

blended origination model comprising a direct

sales force with asset and sector expertise

and a range of intermediary partners.

"Our growth comes from supporting

ambitious businesses with practical

funding solutions and responsive,

relationship-based service."

Matt Roper

Chief Executive Officer Commercial

2024

2025

2026

1. Excludes Close Brewery Rentals Limited, which was sold in the year, and the Close Brothers Vehicle Hire business, which is being wound down.

2. Numbers may not cast due to rounding.

3. All financial metrics for the 2026 financial year.

Asset Finance

• Specialist financing for SMEs and individuals

including hire purchase, lease, refinancing and loans.

• Distribution: direct (67%) and intermediated (33%).

• Market share: 4.2% (Source: FLA).

Invoice Finance

• Working capital solutions through invoice discounting,

debt factoring and asset-based lending ("ABL").

• Distribution: direct (37%) and intermediated (63%).

• Market share: 6.3% (Source: UK Finance).

Our operating environment

Regulatory environment

• Basel 3.1, to be implemented in January 2027, will result in

an increase in risk weighted assets ("RWAs"); however, the

impact on capital headroom will be limited due to the Pillar

2a SME Lending Adjustment.

Competitive landscape

• Some larger high street banks are retreating from specialist

SME lending to focus on larger-scale corporates.

• Smaller specialist lenders are partnering with larger high

street banks, combining their local origination capabilities

with access to funding.

• Continued activity in the Irish M&A market.

Economic environment

• Consumer affordability has been challenged, testing

resilience of SMEs.

• Subdued UK macroeconomic environment and global

geopolitical uncertainty have impacted SME demand and

market growth.

• According to Close Brothers’ Business Sentiment Index,

SME confidence has remained largely unchanged since

mid-2023, reflecting business owners’ continued cautious

approach to investment as they wait for improvements in

the macro economy.

• Growth in both asset and invoice finance markets shows

continued demand.

Regulatory environment

• Maintain open and cooperative relationship with

regulators, including the FCA and PRA.

• Continually monitor the landscape to stay abreast of

regulatory change.

Competitive landscape

• Continue to see growth opportunities to strengthen

current proposition, with option to extend capabilities

into new areas that fit our model, either through

partnerships or bringing in specialist teams to

complement our expertise.

• Remain committed to our model of maintaining margin

and underwriting discipline.

Economic environment

• Continue to monitor the potential impact of ongoing

uncertainty, prudently assessing affordability across

lending proposals and offering additional support to

customers where needed.

• Subdued economic activity may impact business

confidence; however, bad debt levels have remained

resilient, showing the strength of the business model.

• Strong signs of growth in SME asset finance market

prior to the conflict in the Middle East. We continue to

focus on the SME market, where we have specialist

expertise, and where growth has exceeded the wider

asset finance market.

External environment

What we are seeing

How we are responding

• Customer service, responsiveness, clarity of

communication, value for money, as well as ease of doing

business are key customer requirements.

• SME focus on green energy has slowed over last 12

months.

• Our direct sales force comprises more than 100

colleagues across the UK and Ireland, who are sector

experts and provide specialist service to customers.

• We have simplified and relaunched our broker

proposition, which has reduced the burden on the

customer and helped streamline the lending process.

• We help SMEs adapt and respond to their changing

requirements, providing specialist lending over the

long term.

Customer behaviour

What we are seeing

How we are responding

• Digital channels, new technology and AI are expected to

provide a differentiated offering, an enhanced customer

experience and focus on improving speed of service for

lenders and customers.

• Through our transformation programme, we are

improving our customer and intermediary service by

embedding automation capability and AI; for example:

– AI credit proposal generation: improves cycle time

from two days to two hours, reduces rework and

enables more tailored customer solutions.

– Automated credit decisioning: enables faster

responses from hours to minutes, increases

throughput and reduces friction.

Technology and digital

What we are seeing

How we are responding

Strategic report

Governance report

Financial statements

Retail adjusted operating profit (£m)

Retail loan book at 31 July 20261

£2.8bn

Retail

Three specialist retail-focused businesses

Our three specialist businesses deliver through diversified intermediary partnerships, generating

strong margins and supporting the group’s stable retail deposit base.

Close Brothers Group plc Annual Report 2026

37.9

18.9

17.4

NIM

Bad debt

Expense/

income ratio

Customer

deposits

7.9% 1.0% 79%

£7.9bn

How we win

77%

23%

Motor Finance

£2.2bn/77%

Premium Finance

£0.7bn/23%

Intermediated finance provided through

motor dealers, motor finance brokers and

insurance brokers across the UK and

Ireland, and savings products for individuals

and corporates.

"Our continued growth reflects

the strength of our partnerships,

customer focus and ability to scale

responsibly in evolving markets."

Ian Cowie

Chief Executive Officer Retail

Partnership approach to helping

our dealers and brokers grow

Established brand and strong

market following

Consistency and dependability

for lending through the cycle

Expertise and reliability of

response

Adding value through human

engagement

2024

2025

2026

1. Numbers may not cast due to rounding.

2. All financial metrics for the 2026 financial year and customer deposits at 31 July 2026.

Motor Finance

• Point-of-sale finance for

predominantly used cars.

• Distributed via dealers, brokers

and commercial partners.

• Helping customers finance

vehicle purchases.

Premium Finance

• Instalment payments for

insurance policies.

• Delivered through broker

partnerships.

• Makes insurance payments

more manageable.

Savings

• Retail and business deposits.

• Sourced through digital

channels, aggregators and

relationship managers.

• Support customers’ long-term

financial goals.

Our operating environment

Regulatory environment

• Ongoing legal challenges to the FCA’s motor finance

consumer redress scheme.

• The FCA's final market study report on premium finance

published, concluding no market-level intervention required

and motor finance concerns not able to be mapped directly

to this market.

• Consumer Duty continues to shape savings pricing,

product governance and customer treatment.

Competitive landscape

• Motor Finance: geopolitical and regulatory pressures,

together with aggressive competitor pricing, have disrupted

the UK market, although demand remains resilient.

• Premium Finance: market remains competitive amongst

third-party lenders, direct insurers and self-funded brokers.

• Savings: competition remained strong for retail deposits as

interest rates fell.

Economic environment

• Used car market activity has stabilised and is poised to

grow, though affordability remains under pressure.

• Electric vehicles now represent an increasing proportion of

all markets.

• Demand for premium finance remains robust within the UK

general insurance market of c.£80 billion.

• Insurance premiums have softened, reflecting increased

market competition and a stable reinsurance market.

Regulatory environment

• Maintain open and cooperative relationship with

regulators, including the FCA and PRA.

• Continued preparations to support operational

readiness for expected ISA reforms from April 2027.

• Enhanced oversight of customer communications,

support for customers in vulnerable circumstances and

Inclusive Design Framework introduced in Savings.

Competitive landscape

• Selectively growing where competitor capacity and

activity has reduced.

• Continued strong growth in the Irish motor business,

while reviewing additional growth opportunities.

• Maintained product availability across key Savings

markets, supported by agile pricing to reflect market

conditions, customer demand and funding needs.

Economic environment

• Maintaining a prudent approach to affordability.

• Adapting product offering in line with increased

demand, including strengthening dealer funding

support and broker facilities.

• Accelerating growth in Ireland through expansion into

large manufacturer dealer networks.

• Worked closely with the regulator as part of the

planned withdrawal from selected personal lines

relationships in Premium Finance.

External environment

What we are seeing

How we are responding

• Customers are increasing digital engagement and expect

straightforward digital services, while retaining access to

telephone support where needed.

• A growing proportion of UK customers starting their car-

buying journeys online and c.66% using online tools and AI

in the vehicle purchase journey.

• Customer affordability remains a key consideration,

influencing product selection and loan structures.

• Actively positioning distribution where customers are

choosing to finance, continued expansion and

optimisation of our dealer and broker network, and

seamless integration into customer journeys.

• Adapting product structures and enhancing customer life

cycle propositions to meet evolving customer needs.

• Continuing to enhance our digital and telephone

service in Savings, evidenced through improved

customer satisfaction scores and call answer times.

Customer behaviour

What we are seeing

How we are responding

• Digital channels, new technology and AI are expected to

provide a differentiated offering, an improved customer

experience and focus on improving speed of service for

lenders.

• Significant investment in modernising origination and

collections and recoveries platforms to improve speed

of decisioning, underwriting consistency and operational

efficiency.

• Extending digital capabilities to support customer self-

service and reduce cost-to-serve.

• Simplified website navigation and improved accessibility

of customer journeys via Savings platform.

• Using data and feedback to identify online friction points

and prioritise improvements in Savings.

Technology and digital

What we are seeing

How we are responding

Strategic report

Governance report

Financial statements

Property

Specialist development and bridging finance

We combine medium-term property development finance across all living sectors, commercial

development and residential investment finance, in addition to short-term specialist lending across

the UK.

Close Brothers Group plc Annual Report 2026

Property loan book at 31 July 2026

£1.8bn

How we win

78.0

67.2

49.0

NIM

Bad debt

Expense/

income ratio

6.5%

2.0%

28%

85%

15%

Property Finance

£1.5bn/85%

Commercial Acceptances

£0.3bn/15%

Providing personalised, flexible finance to

property developers and investors.

"Specialist expertise and trusted long-

term relationships have enabled us

to continue growing successfully.

We have diversified our offering and

make the process as simple as

possible for our customers. We do

what we say, and we deliver on time."

Phil Hooper

Chief Executive Officer Property

Fast, responsive credit

decisions and operations

Reputation for consistent

support through the

economic cycles

Sector expertise in property

asset classes and first-class

customer service

Being a long-term partner

who our customers can trust

2024

2025

2026

1. All financial metrics for the 2026 financial year.

Property Finance

• Secured residential development finance across living

subsectors for experienced developers and

operators.

• Market leader in UK residential development finance

over many years.

• Customer base over 500 developers, providing

lending solutions from £1m-£70m.

Commercial Acceptances

• Short to medium-term secured lending including

refurbishment and bridging loans.

• Flexible structures to support transitional property

assets.

• 400 customers with loans from £50k-£10m.

• Coverage focused on London and the South East.

Property adjusted operating profit (£m)

Our operating environment

Regulatory environment

• Government initiatives to increase housing delivery through

planning reform.

• Evolving energy requirements.

Competitive landscape

• Larger high street banks remain active but typically focused

on lower-risk "vanilla" schemes with limited flexibility and

slower processes.

• Challenger banks, non-bank and private credit lenders

remain active but are increasingly selective.

• This is creating a funding gap for SME housebuilders and

further paving the way for experienced, relationship-led

lenders.

Economic environment

• Higher interest rates continue to weigh on housing activity,

customer confidence and sale prices, with SME developers

operating in more challenging conditions.

• Structural undersupply of UK housing persists, with annual

completions remaining below government targets of c.300k

homes per annum as the cost of building new homes

continues to rise (up £76k per home since 2020).

• Demand for living sectors, including PBSA and BTR,

remains supported by structural demographic trends and

strong institutional investor demand.

Regulatory environment

• Acting as a voice for SME lenders through our "State of

Play" report and the All-Party Parliamentary Group

(“APPG”) for SME Housebuilders, including sharing the

sector's views on planning reform.

• Monitoring developments in energy efficiency

requirements.

Competitive landscape

• Continuing to support SME housebuilders, particularly

where mainstream capacity has reduced.

• Leveraging our experience to provide certainty of

execution in a more selective market.

• Maintaining disciplined underwriting and pricing.

Economic environment

• Continuing to support established SME housebuilders

through a more challenging market environment.

• Leveraging the opportunity in new growth sectors.

• Accelerating regional penetration and presence.

• Innovative product development, such as our new

offerings: Revolving Credit Facility and CA Revolve.

• Engaging with government initiatives to support SME

housebuilding and housing delivery, for example

through delivering the ENABLE build programme with

the British Business Bank and actively supporting the

APPG for SME Housebuilders.

External environment

What we are seeing

How we are responding

• Developers are taking a more cautious and selective

approach to new project origination, with increased focus

on scheme viability and delivery risk.

• Developers are prioritising schemes with stronger visibility

on costs, funding and exit strategies in an uncertain

demand environment.

• Maintaining our approach of supporting clients through

the cycle, combining strong underwriting discipline with

a focus on structuring and executing viable

transactions.

Customer behaviour

What we are seeing

How we are responding

• Improvements in process efficiency to improve speed of

service to customers.

• Continuing to enhance internal processes and systems

to improve speed, consistency and execution for

customers, while maintaining a relationship-led

approach that supports customers through complex

and evolving market conditions.

Technology and digital

What we are seeing

How we are responding

Strategic report

Governance report

Financial statements

Leading expertise

across specialist

finance

Preformed Windings is a highly specialised UK firm operating in

advanced manufacturing, producing high-voltage bars and coils

used in critical generators and motors.

As demand grew, the business needed to bring its production,

testing and development capability together in a larger facility,

while maintaining the working capital required to keep

operations moving.

Working collaboratively across our Invoice Finance and Asset

Finance teams, Close Brothers delivered a funding package

tailored to Preformed Windings. Invoice Finance, supported by

the Growth Guarantee Scheme, provided additional cash flow

funding, while Asset Finance refinanced existing specialist

machinery through a sale and hire purchase back arrangement.

This demonstrates the strength of our expertise-led approach.

Drawing on specialist knowledge from across our businesses,

the teams were able to structure a complete funding solution

that supported both immediate investment and long-term

growth.

“Close Brothers understood

the commercial opportunity

and operational complexity,

structuring their support

accordingly.”

James Stevens

Chief Executive Officer,

Preformed Windings

Close Brothers Group plc Annual Report 2026

Stakeholder engagement

Delivering for our stakeholders

At Close Brothers, we have a long-term track record of

creating value and delivering positive outcomes for all of our

stakeholders.

We work hard to understand and meet the needs of our

different stakeholder groups, engaging with them and

adapting our service and offering to create value for them.

We undertake a comprehensive programme of stakeholder

engagement and consider the feedback provided,

embedding this in the decision-making process throughout

the group.

Section 172 Statement and Statement of

Engagement with Employees and Other

Stakeholders

Section 172(1) of the Companies Act 2006 requires the

directors of a company to act in a way that they consider, in

good faith, would be most likely to promote the success of

the company for the benefit of its members as a whole, and

in doing so have regard (amongst other factors) to various

other considerations and stakeholder interests:

• the likely consequences of any decision in the long term;

• the interests of the company’s employees;

• the need to foster the company’s business relationships

with suppliers, customers and others;

• the impact of the company’s operations on the community

and the environment;

• the desirability of the company maintaining a reputation for

high standards of business conduct; and

• the need to act fairly as between members of the

company.

The Board is responsible for establishing and overseeing the

company’s values, strategy and purpose, all of which centre

around the interests of key stakeholders and other factors

set out in section 172(1).

The Directors are conscious that their decisions and actions

have an impact on stakeholders, including employees,

customers, suppliers, communities and investors, and they

have had regard to stakeholder considerations and other

factors in section 172(1) during the year.

Regular engagement with stakeholders, both directly and

indirectly via management, has continued to be an important

focus for the Board and has ensured that the Directors are

aware of and have effective regard to the matters set out in

section 172(1). Throughout the year, the Board received and

discussed stakeholder insight and feedback and it ensured

that stakeholder considerations were taken into account in

the Board’s deliberations and decision-making.

Whilst the Board acknowledges that, sometimes, it may have

to take decisions that affect one or more stakeholder groups

differently, it seeks to treat impacted groups fairly and with

regard to its duty to act in a way that it considers will be

most likely to promote the success of the company for the

benefit of its members as a whole, having regard to the

balance of factors set out in section 172(1).

Considerations relating to the factors in section 172(1) are an

important part of governance processes and decision-

making at both Board and executive level, and more widely

throughout the group. For example, the schedule of matters

reserved to the Board and the terms of reference for each of

the Board’s committees emphasise the importance of

decision-making with regard to relevant factors under

section 172(1) and broader stakeholder considerations.

Necessarily in a large and regulated group, some decisions

are taken by management or the directors of subsidiary

companies. These decisions are taken within parameters set

by the Board and there is a robust framework that ensures

ongoing oversight, monitoring and challenge by the Board

and its committees (including certain decisions and activities

that are always reserved to the Board or its committees). The

Board has regard to relevant factors set out in section 172(1)

in its activities in these areas, including considerations

relating to the potential impact of delegated decisions on the

long-term success of the group as a whole, the group’s

reputation for high standards of business conduct and the

consequences of local decisions on the group’s

stakeholders.

Detail on the Board’s engagement with, and consideration of,

the company’s stakeholders can be found on pages 119 to

121 of the Corporate Governance Report.

Strategic report

Governance report

Financial statements

Customers and

partners

Customers and partners are central to our purpose.

We aim to help them access financial solutions that

meet their needs, supported by specialist expertise,

responsive service and trusted relationships.

Key priorities of our customers

and partners

• They value consistent service, products that deliver

value, strong personal relationships, fair conduct

and support that adapts to changing economic,

technological and regulatory conditions.

• Our approach is to be flexible, clear and

responsive, making decisions informed by

expertise and executing with pace. We want

customers, partners and colleagues to feel valued

and confident, and to find it easy to do business

with us.

• Listening, learning and acting is central to this. We

gather feedback, monitor sentiment and use long-

running customer forums to bring the voice of the

customer into decision-making. Feedback from

forums, customer metrics and operational insight

helps us improve processes, collaborate across

teams and enhance the customer experience.

Our engagement during the year

• During the year, we delivered customer-focused

training to support continuous improvement,

streamline processes and enhance the customer

experience.

• We also strengthened digital capabilities, making it

easier for customers and partners to access our

products and services and improving

responsiveness across several businesses.

• The feedback process has led to practical

improvements, including extending our “language

line” to support Motor Finance customers where

English is not their first language, building on

functionality already available in Premium Finance.

We have also improved support for vulnerable

customers through automated processes,

colleague training and, in Savings, a dedicated

Extra Support Group and forum.

• Looking ahead, we will continue to capture,

consolidate and act on customer and partner

sentiment across end-to-end journeys, helping us

deliver a differentiated experience and earn

customer loyalty.

Regulators and

government

We are committed to sustaining high standards of

business conduct in line with regulatory,

governmental and legal expectations and operating

prudently within the laws and regulations that apply

to us.

We foster an open, transparent and cooperative

relationship with regulators, government authorities

and trade associations in the jurisdictions in which we

operate. Active engagement helps to ensure we are

aware of and adapting to the evolving regulatory

framework.

Key priorities of our regulators

and government

• Achieving good customer outcomes.

• Operational and financial resilience.

• Strategic risk management.

• Data security.

• Financial crime prevention.

• Corporate social responsibility.

• Digitisation, use of artificial intelligence and

enhanced data analytics.

• Supporting growth and innovation.

Our engagement during the year

• We have engaged constructively with our

regulators during this period, engaging in key areas

of regulatory interest including the Premium

Finance Market Study as well as the FCA’s review

of historical motor finance commission

arrangements and proposed redress scheme.

• We have also engaged with the government, the

FOS, and our regulators in respect of the proposals

to modernise the UK redress system.

• We continued to enhance our approach and ensure

this aligns with regulatory expectations. We actively

monitored the FCA’s formal and informal guidance

on Consumer Duty as well as the results of the

annual Financial Lives survey and the Consumer

Protection Code within our Irish business.

• We continued to engage actively with the PRA on

our IRB application and Basel 3.1 implementation.

• We undertook reporting and analysis as requested,

and held regular meetings with our regulators,

enabling them to better understand our business

activities, strategic plans and how we are operating

in a controlled and prudent manner.

Stakeholder engagement continued

Close Brothers Group plc Annual Report 2026

Suppliers

Our business continues to be supported by a diverse

and reliable network of suppliers, which plays an

important role in enabling us to deliver consistently

high standards of service to our customers and

partners. We are committed to maintaining

transparent, sustainable and mutually beneficial

supplier relationships, underpinned by fair

commercial practices, clear expectations and

effective oversight.

Our approach to supplier engagement is based on

openness, accountability and collaboration. We work

with suppliers to support delivery against our

business objectives, while identifying opportunities to

improve service, strengthen controls and achieve

better long-term outcomes for Close Brothers and its

stakeholders.

Key priorities for our suppliers

• Building strong, sustainable relationships.

• Fair, ethical and equitable business conduct.

• Supporting clear, timely and efficient processes.

• Understanding and aligning with the group’s

purpose, strategy and priorities.

• Maintaining robust and proactive risk management.

• Delivering good service outcomes and operational

resilience.

• Achieving appropriate commercial value.

Our engagement during the year

• We continued to engage with suppliers through

established relationship management, oversight

and governance processes, including regular

engagement with key strategic suppliers to review

service performance, discuss emerging risks,

monitor delivery against expectations and identify

opportunities for improvement.

• We also continued to develop our approach to

supplier oversight, with a focus on ensuring that

supplier relationships remain aligned to business

needs, regulatory expectations and our risk

management framework. This supports greater

transparency across our supplier population and

helps ensure that appropriate attention is given to

suppliers that are material to our operations,

customers or resilience.

• In July, we held our annual technology strategic

partner event, with 35 suppliers in attendance. This

proved a great opportunity to share our strategic

challenges, hear about innovative ideas developed

by our partners, and encourage valuable intra-

supplier discussions.

• We remain committed to building strong,

collaborative supplier relationships that support

mutual success, effective risk management and the

continued delivery of good outcomes for our

customers, clients, partners and the wider

business.

Colleagues

With approximately 2,400 FTE around the UK, Ireland,

the Channel Islands and Germany, we have a diverse

and motivated workforce which delivers the highest

levels of service to our customers and partners. We

are committed to the development of our colleagues,

ensuring they are supported and engaged.

Listening to our colleagues enables us to build an

engaged workforce, allowing us to develop and retain

high levels of expertise. We are able to ensure we are

considering the views of all colleagues and making

sure everyone feels included.

Key priorities of our colleagues

• A safe working environment.

• A fair and inclusive culture where employee

feedback is valued.

• Being appropriately rewarded for their

contributions.

• Opportunities for training and development.

Our engagement during the year

• We created our Employee Engagement Forum

where members serve as catalysts for change,

acting as a trusted channel for feedback,

supporting colleague outreach and contributing to

our organisational change efforts both across the

group and within local business areas. The forum

plays an important role in building support for

change initiatives, being a vital link between the

Executive Committee, senior leadership and the

wider organisation. Further detail on the Employee

Engagement Forum and how employee

engagement has been considered through the

transformation programme can be found on page

121.

• We conducted our latest employee opinion survey,

which closed in May 2026, to gather feedback from

our colleagues, anonymously. The results of this

survey gave us insight into key topics including our

customers and clients, leadership, culture, a sense

of belonging, and colleague wellbeing. Managers

were assigned access to the survey results for their

teams to understand more around colleague

sentiment and determine localised action plans.

This ensures we are focusing on the areas that

matter most to our colleagues, as well as ensuring

we are meeting the needs of other stakeholders.

• We held regular town halls, providing employees

with updates from across the business and the

opportunity to ask questions directly to senior

management.

• We continued to engage with colleagues at the

point of joining, when returning from parental leave

and celebrating work anniversaries, through

completing surveys to share their personal

experiences of working at Close Brothers.

• We have eight employee-led inclusion networks

which act as a voice for our colleagues.

Strategic report

Governance report

Financial statements

Communities

and environment

Close Brothers is committed to contributing long-

term value and making a positive impact on the

communities in which we operate and the

environment more broadly. This underpins the

growing range of programmes and initiatives we

support that benefit society and the environment.

Engaging with local communities helps the Board and

our employees develop their understanding of our

customers and partners so that we can support them

and help them to achieve their ambitions, whilst also

building employee engagement. We firmly believe

that environmental considerations should form an

integral part of our business decisions, and

employees across the group are actively engaged on

responsible behaviours and environmental issues.

Key priorities of our communities and

the environment

• A suitable strategy for approaching sustainability

issues.

• Support for community initiatives.

• Take active steps to ensure equity of opportunity,

regardless of background or experience.

• A long-term focus on addressing the impacts of

climate change.

Our engagement during the year

• Colleagues completed numerous volunteering

activities to positively impact local communities,

including volunteering at food banks, soup kitchens

and local hospices and supporting youth groups

such as Guides, Scouts and children’s sports

teams.

• Several colleagues, including members of our

Group Executive Committee, continue to fulfil

trustee roles for various charities to support local

communities.

• Supported social mobility and disability awareness

programmes, hosting 14 interns across the group

in partnership with upReach and Variety, the

Children's Charity.

Investors

Close Brothers has a proven and resilient business

model and is focused on generating long-term,

sustainable value for its investors, while also

maintaining a strong balance sheet.

Our investors are the providers of capital to our

business, so it is important that we engage actively

with them and listen and respond to their feedback

through an established and comprehensive

programme throughout the year.

Key priorities of our investors

• Strong returns and financial resilience through the

cycle.

• Managing the impact on the group following the

FCA’s review of historical motor finance

commission arrangements and any subsequent

consumer redress scheme.

• Capital generation and distributions.

• Sustainable business model.

• Appropriate governance practices and regard for

environmental and social responsibility.

Our engagement during the year

• Continued our comprehensive programme of

communication, providing regular market updates

and, in total, hosting over 200 meetings in the year

with current and prospective equity and debt

investors.

• Held analyst presentations for the Half Year 2026

and 2025 Preliminary results and attended multiple

sales desk briefings and conferences, enabling

market participants to further understand the

performance.

• In March, alongside our Half Year results, we also

hosted a deep dive business update, outlining the

business and market opportunity for each of our

businesses and providing further detail on the

group's strategy and investment case.

• Undertook investor roadshows covering the UK,

Europe and North America, meeting more than 70

existing and prospective equity and debt holders.

• Held our annual corporate governance roadshow,

with our Chairman meeting with 12 of our largest

shareholders.

• Welcomed retail investors at our AGM, where they

had the opportunity to engage with Board

members.

• Regularly engaged with all of our sell-side analyst

followers, as well as our credit rating agencies.

Stakeholder engagement continued

Close Brothers Group plc Annual Report 2026

Consistent service supporting

lasting ambition

Close Brothers Motor Finance has supported

Car Brothers Northern Ireland since the

business was established in 2020, initially

supplying funding to help build its stock while

preserving capital to invest in infrastructure.

As the company has grown, Close Brothers

has remained a consistent partner. Through a

dedicated account manager who provides

practical guidance and responsive support, the

dealership has access to a familiar team that

understands its business and ambitions.

This continuity is increasingly valuable as

changing regulation, customer expectations

and the transition to electric vehicles reshape

the motor industry.

The relationship demonstrates that

consistent service does not mean standing

still. By combining dependable personal

contact with products, tools and expertise

that evolve with the market, we can

continue to support the dealership through

its next stage of development.

“We want to have a

successful dealership and

have no doubt that Close

Brothers are going to be

beside us, supporting us

all the way.”

Colin McNab

Director, Car Brothers

Northern Ireland

Strategic report

Governance report

Financial statements

Sustainability report

In our Sustainability Report, we set out how we are

embedding our responsibility across the group, grounded in

our distinctive model: deep expertise, strong customer

relationships, disciplined risk management and a focus on

delivering long-term value for all our stakeholders.

Our approach is both business-led and customer-led,

recognising that customers are progressing through their

sustainability journeys at different paces, not only across

sectors but also within them. Rather than applying a single

group-level pathway or interim targets that would not reflect

this diversity, we focus on supporting customers in practical,

commercially viable ways that align with their individual

transition needs towards more sustainable practices.

We remain committed to our ambition of achieving net zero

across our operations, supply chain and the activities we finance

by 2050 or sooner, structured around three areas of focus:

1.Achieving net zero operational emissions

We remain focused on reducing our own environmental

impact across the areas we can directly control. Through

2026, we have further reduced our Scope 1 and 2 emissions

against our 2019 baseline by 82%, while continuing to work

with our supply chain to strengthen the measurement and

management of relevant Scope 3 operational emissions.

2. Monitoring and managing financed emissions

By providing finance, expertise and tailored support, we aim

to help customers decarbonise in ways that are achievable,

proportionate and consistent with their business priorities. To

track our progress effectively, we continue to develop our

understanding of the emissions linked to the assets and

businesses we finance, giving us a clearer basis for

managing climate-related impacts and delivering against our

climate ambitions.

3. Financing the transition

Sustainability-related financing is complementary to our

existing portfolio and relationship-led model. By helping

customers invest in assets, properties and technologies that

improve efficiency, reduce reliance on fossil fuels or respond

to changing end-market demand, we can deepen customer

relationships, support attractive risk-adjusted returns and

position the group to adapt quickly and capture future

growth opportunities. We are building deeper capability in

areas where sustainability, efficiency and commercial

performance increasingly intersect.

Our divisions understand customers' day-to-day financing

requirements, the constraints they face and the opportunities

that arise as technology, regulation and customer demand

evolve. This enables us to support sustainability-related

investment alongside normal business-as-usual financing

needs, rather than treating it as a separate or standalone

activity.

This approach is already embedded across the group. In

Commercial, we continue to support long-term UK

infrastructure, including financing a 40MW solar project in

Shropshire for Rock Farm. In Motor Finance, we continue to

support EV adoption through our partners, capturing customer

demand. In Property, sustainability is increasingly embedded

within lending and customer relationships, including supporting

customers developing eco-homes, Passivhaus schemes and

Modern Methods of Construction. These examples

demonstrate how we can help customers access lower-

carbon, more efficient options while continuing to apply the

same disciplined approach to underwriting, pricing and

returns.

Our progress has also been recognised by the Financial

Times Europe's Climate Leaders ranking, where we placed

34th in Europe among financial services, near the top of our

peer group, for our progress in reducing greenhouse gas

emissions and disclosing climate-related financial metrics.

Our wider sustainability agenda is underpinned by our culture

and focus on customers, colleagues and the communities.

Financial inclusion remains a key part of how we create long-

term value, supporting SMEs, borrowers and savers across the

UK with access to specialist finance and savings products. Our

relationship-based model enables us to help customers who

may be under-served by larger financial institutions, supporting

economic activity, job creation and prosperity in communities

across the UK. In providing access to finance and savings

products throughout economic cycles, we play an important

role in supporting the real economy and the effective

functioning of the UK financial system.

A strong, aligned culture is essential to delivering this

agenda. When our colleagues understand our priorities and

work together in an inclusive environment, we can bring the

full strength of the group to bear for our customers.

By maintaining a clear connection between sustainability,

culture, customer outcomes and long-term value creation,

we continue to support stakeholders and build a stronger,

more resilient business.

Close Brothers Group plc Annual Report 2026

Our sustainability objectives

Supporting our customers and partners in the transition

towards more sustainable practices.

Promoting an inclusive culture in everything we do.

Reducing our impact on the environment and

responding to the threats and opportunities of climate

change.

Promoting financial inclusion, helping borrowers that

might be overlooked by larger finance providers and

enabling savers to access financial markets.

What sustainability means at Close Brothers

At Close Brothers, we are here to help people and businesses thrive. This means supporting our

colleagues and customers, as well as the communities and environment in which we operate.

“Our responsibility is to help

address the social, economic and

environmental challenges facing

our business, employees and

customers. By understanding our

customers' individual needs and

providing disciplined, specialist

finance, we can help them invest

in more efficient, sustainable

solutions in a way that supports

their ambitions and strengthens

our business."

Mike Morgan, Chief Executive

Our car fleet

Our car fleet is now

72%

battery electric with average stated emissions

now down to 8.5 gCO2/km (2025: 14.7 gCO2/km).

Our green lending

£1 billion+

has been financed by our energy team across

multiple energy projects over the last 12 years.

£226 million

lending for zero emissions battery electric

vehicles achieved in this financial year

(2025: £154 million).

Our charitable giving

£75,000

donated to charities aligned with our ESG goals

(2025: £100,000).

Our inclusivity

92%

of our colleagues feel included (2025: 91%).

Our communities

1,288

reading sessions have been delivered by 74

colleagues since the start of our partnership

with Bookmark Reading Charity in 2020.

Our emissions

82%

Scope 1 and 2 emissions (market-based)

reduction since 2019 (2025: 53%).

32%

Scope 1 and 2 emissions (market-based)

reduction in 2026.

Our social mobility

14 students

completed our six-week internship programme in

partnership with upReach and Variety, the

Children's Charity.

Our culture

90%

of employees believe they are treated with

respect (2025: 90%).

Environmental

Social

Governance

Strategic report

Governance report

Financial statements

8.5

14.7

20.7

23.6

32.9

57.3

2026

2025

2024

2023

2022

2021

Task Force on Climate-related Financial Disclosures Report

We are pleased to present our fifth Task Force

on Climate-related Financial Disclosures ("TCFD")

report. Our disclosures comply with FCA UK

Listing Rule (UKLR) 6.6.6R(8) and are consistent

with the TCFD's 2017 Recommendations.

Where practicable, we have also incorporated

the 2021 Annex to the Implementing Guidance.

Climate progress

During the financial year, Close Brothers delivered against its

climate strategy through our three pillars: achieving net zero

operations, monitoring and managing financed emissions,

and financing the transition. The group reduced operational

emissions, strengthened the quality and coverage of

financed emissions reporting, and delivered measurable

progress in transition-related financing. This progress

reflects Close Brothers' business-led approach to climate

management, balancing climate-related risks and

opportunities while maintaining a resilient business model.

Highlights include:

Climate risk and resilience

• We completed a comprehensive review of climate risk

management against the Prudential Regulation Authority’s

(“PRA”) Supervisory Statement SS5/25 expectations,

including climate scenario analysis.

• This assessment supported the group's view that its

business model remains resilient to climate-related risks

across all time horizons, driven primarily by its short

average lending tenor and predominantly UK-based

customer and asset base.

• We improved our climate risk monitoring through

expanded physical risk indicators and continued to embed

climate factors further within governance and risk

management processes.

Operational emissions

• Scope 1 and 2 market-based emissions from continuing

operations reduced by 32%, from 1,160 tCO₂e in 2025 to

790 tCO₂e in 2026.

• Total emissions have decreased by 82% compared with

the 2019 baseline (noting the baseline has not been

restated to account for business disposals and therefore

the reduction reflects changes in the group's structure

rather than emissions reductions alone).

• Progress was supported by estate optimisation, fleet

electrification, renewable electricity procurement and

targeted energy-efficiency initiatives across the property

portfolio, including occupancy-based building controls and

heating system optimisation.

Financed emissions

• Financed emissions reporting was enhanced through more

granular PCAF-aligned methodologies, improved data

quality, and increased transparency across our lending

portfolio.

• Assessed approximately £9.3 billion of lending exposure,

covering 96% of the loan book, with financed emissions

intensity remaining broadly stable year on year.

Supporting customer transition

• We supported customers through financing activities

across renewable energy, electric vehicles, sustainable

property and wider transition opportunities, including

continued lending with a bespoke Green Asset Fund

building expertise within emerging technologies, and £226

million of financing for zero-emission battery electric

vehicles during the year.

External ratings

• External recognition remained strong, with a 2025 CDP

Climate Change score of B, and a current MSCI

environmental, social and governance (“ESG”) rating of AA

and a Sustainalytics ESG Risk Rating of 23.8.

• Recognition by the Financial Times as one of Europe’s

climate leaders.

Climate-related risks and opportunities are integrated into

Close Brothers' existing governance framework and subject

to oversight through established Board, executive and risk

management structures. The Board is responsible for the

long-term success of the group and oversees the delivery of

the group's sustainability and climate strategy, including the

management of climate-related risks and opportunities. This

oversight is supported by defined roles and responsibilities

across the Board and its committees, ensuring climate

considerations are appropriately reflected in strategic

decision-making, risk management, and business planning.

Board oversight

The Board retains overall responsibility for oversight of

climate-related risks and opportunities and for considering

the resilience of the group's strategy under a range of future

climate outcomes. They receive regular updates on

sustainability and climate-related matters and approve the

group's overall approach to risk management, including how

climate factors are incorporated.

The Board Risk Committee ("BRC") supports the Board by

overseeing the identification, assessment, and management

of climate-related risks across the group. During the financial

year, the Committee reviewed the outcomes of the group's

climate-related risk assessment and oversaw the action plan

arising from the group's SS5/25 self-assessment, including

improvements to climate risk management, monitoring and

reporting.

Sustainability report continued | Task Force on Climate-related Financial Disclosures report

Close Brothers Group plc Annual Report 2026

Sustainability and climate governance

Management responsibility

The Chief Executive is accountable for the group's

sustainability and climate strategy and is supported by the

Executive Committee in determining how climate-related

risks and opportunities are considered within business

strategy and operations. At group level, the Executive

Committee oversees implementation of the sustainability and

climate strategy, reviews progress against key objectives

and priorities, and monitors delivery of climate-related

actions arising from risk assessments, scenario analysis and

regulatory developments.

The Group Chief Risk Officer ("GCRO") has responsibility for

the management of climate-related financial risks. Climate

risk is managed through the group's existing risk

management framework and governance processes, with

oversight provided through the Group Risk and Compliance

Committee ("GRCC"), Credit Risk Management Committee

("CRMC") and other established risk forums. Climate-related

matters are reported through regular risk reporting channels,

ensuring climate risks are assessed, monitored, and

managed alongside the group’s principal risks and other

emerging risks. During the financial year, climate risk

monitoring was further enhanced through additional physical

risk monitoring and continued development of climate-

related management information.

Climate capability and continuous improvement

Responsibility for climate-related reporting, risk management

and oversight is embedded across relevant functions,

including Risk, Investor Relations, and Procurement. During

the year, Close Brothers continued to strengthen climate-

related capabilities through targeted professional

development and ongoing engagement with evolving

industry standards and regulatory expectations. This

included relevant professional development undertaken by

members of the risk team to maintain and build climate

expertise, including programmes such as the Partnership for

Carbon Accounting Financials (“PCAF”) Academy and the

Global Association of Risk Professionals (“GARP”)

Sustainability and Climate Risk Certificate.

The group is strengthening its approach to climate

governance through planned improvements to climate risk

monitoring, embedding climate factors within risk

management frameworks, and periodic review of climate risk

materiality and scenario analysis.

The Group is also supported by edenseven, an independent

sustainability consultancy, which provides technical support

on climate-related reporting, operational greenhouse gas

emissions accounting, and evolving regulatory and

disclosure requirements.

Close Brothers' climate strategy is delivered through three

interconnected pillars: achieving net zero operations,

monitoring and managing financed emissions, and financing

the transition. Together, these pillars support the group's

ambition to reduce its operational climate impact, strengthen

understanding of emissions associated with lending

activities, and support customers as they adapt to a lower-

carbon economy.

As a specialist lender with a predominantly UK-focused

portfolio, Close Brothers aligns its climate ambitions with its

wider business strategy, recognising that progress towards a

lower-carbon economy will be shaped by evolving customer

needs, technological developments, regulatory change and

market opportunities.

Climate-related risks and opportunities

Close Brothers identifies climate-related risks and

opportunities through monitoring of lending exposures and

climate scenario analysis. Climate-related risks are

considered across the group's defined time horizons of short

term (0-1 year), medium term (1-3 years) and long term

(greater than 3 years to 2050). The most relevant risks arise

through both transition and physical channels, while

opportunities are linked to the group's specialist lending

model and its ability to respond to customer investment

needs as the economy decarbonises.

Strategic report

Governance report

Financial statements

Climate strategy

Time horizon

Climate-related risks identified

Climate-related opportunities identified

Implications for strategy and business

planning

Short term

(0-1 year)

Evolving regulatory and

supervisory expectations,

including emerging climate-

related reporting and disclosure

requirements, may increase

compliance obligations and the

need for enhanced climate risk

data, monitoring and reporting

capabilities.

Customer demand for renewable

energy, battery electric vehicles,

sustainable property and wider

transition-related financing.

Supports ongoing development of

sustainable finance activities,

climate risk monitoring and

reporting, and incorporating

climate risk factors within lending

and risk management processes.

Medium term

(1-3 years)

Changes in policy, market

conditions, customer transition

pathways and asset values may

influence the risk profile of

financed assets and customer

sectors. Climate considerations

may increasingly influence lending

decisions and sector and asset-

class analysis.

Growth in transition finance,

electrification, renewable energy

infrastructure and sustainable

property opportunities.

Supports further development of

financed emissions

methodologies, monitoring of

lending exposures and oversight

of financed assets.

Long term

(3 years - 2050)

Physical climate risks, including

flooding, severe weather events

and broader climate impacts

affecting customers, property-

related exposures, supply chains

and operations.

Opportunities to support

customer adaptation measures,

resilience investments and

technologies that contribute to a

lower-carbon economy.

Supports the ongoing

development of lending portfolios,

climate risk assessment

methodologies, scenario analysis

capabilities and building climate

insights into strategic planning.

During the year, the group monitored these risks and opportunities through its climate risk management framework. The

outputs informed the group's assessment of strategy resilience, as set out below.

Impact on strategy and business planning

The group's climate strategy informs business planning by

linking identified climate-related risks and opportunities to

monitoring of lending exposures, risk management,

customer financing priorities and operational decision-

making. This ensures climate considerations are addressed

through existing strategic and risk processes, rather than

managed separately from the group's wider business model.

During the year, this approach supported continued action

across operational emissions reduction, financed emissions

methodology improvements and transition-related customer

financing.

Close Brothers' business-led approach provides flexibility to

respond to evolving market, technological and regulatory

developments while maintaining disciplined risk management

across its lending activities.

Strategy resilience

During the financial year, Close Brothers completed climate

scenario analysis using the Network for Greening the

Financial System ("NGFS") Delayed Transition and Current

Policies scenarios to assess the implications of physical and

transition risks across multiple time horizons to 2050. This

analysis informed the group's assessment of climate-related

risks and opportunities and the resilience of its business

model. The group intends to refresh this analysis periodically

as part of its ongoing approach to climate risk management.

These scenarios provide contrasting views of potential

climate futures and their implications for the group. The

Delayed Transition scenario reflects a disorderly transition in

which global emissions do not begin to decline until 2030,

requiring rapid and stringent policy intervention thereafter to

limit warming to approximately 1.7°C. In contrast, the

Current Policies scenario assumes no additional climate

policies beyond those already implemented, resulting in

continued emissions growth, significantly higher physical

climate risks and approximately 3°C of warming by 2100.

Together, these scenarios enabled Close Brothers to assess

climate-related risks from both a high transition risk

perspective and a high physical risk perspective, providing

insight into the potential impacts of differing policy

responses and levels of climate change. Considering both

scenarios therefore provides a balanced and comprehensive

view of the group's climate-related risks and opportunities.

The assessment reaffirmed the resilience of the group's

business model and did not identify any material

idiosyncratic climate-related risks. A key factor supporting

this conclusion is the group's relatively short average lending

tenor of approximately 16 months, which enables lending

portfolios to adapt over time in response to evolving

customer preferences, technological developments,

regulation and market conditions. This flexibility helps

mitigate the potential impact of both transition and physical

climate risks over the longer term.

Sustainability report continued | Task Force on Climate-related Financial Disclosures report

Close Brothers Group plc Annual Report 2026

Climate-related risks are managed through Close Brothers' existing Enterprise Risk Management Framework ("ERMF") and are

assessed alongside principal and other emerging risks. The group recognises that climate-related risks may affect existing risk

categories, including credit, operational, reputational, funding and liquidity, and third-party risks. Climate factors are therefore

embedded within existing governance, risk management and decision-making processes rather than managed as a standalone

risk category.

Identification and assessment of climate-related

risks

Close Brothers identifies and assesses climate-related risks

through a combination of established risk management

processes, sector and asset-class analysis and climate

scenario analysis. Climate-related risks are considered

across both transition and physical risk channels and are

assessed over short, medium and long-term time horizons to

reflect the potential timing and nature of climate-related

impacts.

Climate scenario analysis is a key tool used to support the

identification and assessment of climate-related risks. During

the financial year, the group used scenario analysis to assess

potential implications for its business activities, lending

portfolios and customers across multiple time horizons.

Outputs from the assessment will be reviewed annually

through the Internal Capital Adequacy Assessment Process

(“ICAAP”), with climate scenario analysis refreshed at least

every five years.

In addition to scenario analysis, climate-related risks are

identified through ongoing monitoring of lending exposures,

counterparties and emerging risk trends. The group's climate

risk methodology is applied across the majority of the

Banking loan book and is used to identify exposures that

may be more sensitive to climate-related developments,

including energy-consuming assets such as motor vehicles

and lending to higher-impact sectors. Emerging regulatory,

market and sector-specific risks are also monitored to

assess potential impacts on customers and financed assets

over time.

Climate-related risk assessments are supported by

management information and risk reporting processes.

During the year, the group enhanced its approach to physical

risk assessment through the introduction of additional

monitoring, including flood-risk indicators within relevant

Property and Commercial portfolios. The outputs of climate

risk assessments are reviewed through established

governance processes and are used to inform risk

management activities, strategic planning and the ongoing

development of the group's climate risk framework.

The group is advancing its approach to climate risk

identification and assessment, including further development

of climate-related metrics and reporting capabilities.

Monitoring and management of climate-related

risks

Climate-related risks are monitored through established

governance, reporting, and risk management processes.

Risk committees, including the Group Risk and Compliance

Committee ("GRCC") and Board Risk Committee ("BRC"),

receive regular reporting on climate-related matters,

supported by management information, oversight of financed

assets, and climate risk assessments.

Monitoring activities focus on sectors, portfolios, and asset

classes that may be more sensitive to climate-related

Strategic report

Governance report

Financial statements

Risk management

developments, together with emerging regulatory, market,

and physical risk trends. During the financial year, Close

Brothers expanded its climate risk monitoring capabilities,

including the introduction of additional physical risk

indicators and flood-risk monitoring within relevant lending

portfolios.

Where climate-related risks are identified, these are

managed through existing risk management tools and

processes, including credit risk management, risk appetite

frameworks, policy development and operational resilience

arrangements. Climate considerations are incorporated into

relevant lending, supplier and third-party oversight

processes, helping to ensure that potential climate-related

impacts are considered alongside broader commercial and

risk factors.

During the year, Close Brothers continued to enhance its

climate risk management capabilities, with a focus on

improving the monitoring, oversight and reporting of climate-

related risks and opportunities and embedding climate

considerations within existing risk management processes.

Close Brothers uses a range of operational, financed

emissions and climate risk metrics to monitor climate-related

risks and opportunities and to assess progress against its

climate objectives. Metrics are reviewed through established

governance and risk management processes.

Metrics used to assess climate-related risks and

opportunities

The group uses both climate performance metrics and

climate risk metrics to support the assessment of climate-

related risks and opportunities. Operational emissions,

financed emissions and transition finance activity provide

insight into the group's climate impacts and transition-

related opportunities. Climate risk metrics are used to assess

lending exposures that may be sensitive to physical or

transition risks and support reporting through governance

and risk management forums.

Targets and performance monitoring

Achieving net zero operations

Close Brothers remains committed to its ambition of

achieving net zero operations by 2050 and monitors

progress through operational emissions and energy-related

performance metrics. Since 2019, Scope 1 and 2 emissions

have reduced by approximately 82% (noting the baseline has

not been restated to account for business disposals and

therefore the reduction reflects both changes in the group's

structure as well as emissions reductions). The reductions

reflect the impact of estate optimisation, renewable

electricity procurement, fleet electrification and energy

efficiency initiatives implemented across the group.

Monitoring and managing financed emissions

The group does not currently use financed emissions

reduction targets as a primary strategic measure, reflecting

its business-led approach and focus on supporting

customers' individual transition pathways.

Instead, the group monitors financed emissions data

alongside relevant climate risk indicators and measures of

sustainable finance lending. These measures support the

assessment of climate-related risks and opportunities and

help inform the ongoing development of the group's climate

strategy and risk management approach.

Financing the transition

Close Brothers supports customers through financing

solutions that enable the transition to a lower-carbon

economy. During the financial year, the group provided

continued support of renewable energy financing and £226

million of financing for zero-emission battery electric

vehicles. The group also continued to develop specialist

capabilities through its Green Asset Fund, supporting

investment in emerging technologies and sectors expected

to play an important role in the transition. In sustainable

property lending, 79% of the relevant portfolio is Energy

Performance Certificate (“EPC”) rated A or B, and the group

will respond to customer demand and evolving regulatory

frameworks in relation to energy-efficient homes and

sustainable developments.

Future focus

During the upcoming financial year, Close Brothers will focus

on implementing actions arising from its SS5/25 review,

including improving climate risk reporting, strengthening

physical risk assessment capability and building climate

insights into governance and risk management processes.

The group will continue to review opportunities to reduce

operational emissions, improve financed emissions data

quality and methodologies, and support transition-related

financing activities in response to customer demand,

regulatory developments and market opportunities.

Sustainability report continued | Task Force on Climate-related Financial Disclosures report

Close Brothers Group plc Annual Report 2026

Metrics and targets

Scope 1 and 2 operational emissions

(market-based) tCO2e

32%

operational emissions reduction in the year

Total energy use

(GWh)

26%

reduction in energy consumption

Our operational impacts

Scope 1

Buildings – fuel and refrigerants3

108

Owned vehicles – fuel3

575

930

575

930

Total Scope 1

576

954

658

1,038

Scope 2

Buildings – electricity3

371

432

Owned vehicles – electricity3

131

112

131

112

Total Scope 2

214

206

502

544

Total Scope 1 and 2 (Operational)

790

1,160

1,582

Scope 3 (Operational)

Category 1 – Purchased goods and services3

15,063

19,622

Category 2 – Capital goods3

4,514

4,902

Category 3 – Fuel and energy-related emissions3

178

194

Category 4 – Upstream transportation and distribution3

515

528

Category 5 – Waste generated in operations3

Category 6 – Business travel

848

859

Category 7 – Employee commuting3

1,730

3,622

Total Scope 3 (Operational)

22,855

29,742

Total Scope 1, 2 and 3 (Operational)

24,015

31,324

Of which UK

23,998

31,239

Market-based

Location-based

Greenhouse gas emissions1,2,4,5

Emissions source

2026

tCO2e

2025

tCO2e

2026

tCO2e

2025

tCO2e

Total energy use

5.29

7.14

Of which UK total energy use

5.23

6.97

Energy use

2026

GWh

2025

GWh

Operational Scope 1 and 2 emissions intensity

0.31

0.37

0.45

0.51

Operational Scope 1, 2 and 3 emissions intensity

9.37

10.1

Calculated using: Average number of employees in year

2,562

3,101

2,562

3,101

Market-based tCO2e per

employee

Location-based tCO2e

per employee

Emissions intensity

2026

2025

2026

2025

Notes on methodology

1. We have reported on all emission sources required under the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon

Report) Regulations 2018.

2. Emissions have been calculated in accordance with the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and are reported as

tonnes of carbon dioxide equivalent (tCO₂e). Emissions factors published by the UK government have been applied throughout the assessment.

Operational emissions have been calculated using activity-based data wherever available, including utility consumption, vehicle fuel use, travel records,

and supplier information.

3. To support meaningful year-on-year comparisons following the disposal of Winterflood and Brewery Rentals, 2025 comparative emissions have been

restated to exclude both businesses. Unless otherwise stated, all operational emissions disclosures presented in this report are reported on a

continuing operations basis.

4. During the year, methodological enhancements were implemented across several Scope 3 categories to improve the accuracy and completeness of

reported emissions. These included increased use of supplier-specific emissions factors, enhanced employee commuting calculations, and broader use

of activity-based data sources, contributing to lower, more precise emissions totals. Prior-year figures have been recalculated and restated on a

consistent basis to support comparability across reporting periods.

5. Vehicles are leased rather than owned; however, as Close Brothers has operational control over their use, the associated emissions are accounted for

as Scope 1 emissions.

6. Where primary data was unavailable, reasonable estimates and assumptions have been applied in accordance with the group's reporting methodology.

Scope 3 emissions will continue to be refined as data and reporting practices improve.

7. These reported emissions have not been subject to external assurance.

Strategic report

Governance report

Financial statements

1,160

790

7.14

5.29

2026

2025

2026

2025

Our financed impacts: Banking2,4

Scope 3

(category 15

– loan book only)

Business loans

5.0

36 %

214,009

0.06

5.0

35 %

181,495

0.05

Commercial real estate

4.3

3 %

13,624

0.05

4.2

2 %

15,526

0.06

Motor vehicle loans

2.8

38 %

706,374

0.19

2.8

36 %

672,777

0.19

Project finance

5.0

19 %

287,958

0.15

5.0

21 %

296,782

0.15

Out of scope

4 %

6 %

2026

2025

Financed emissions in

loan book – Bank

PCAF methodology

PCAF

score3

Proportion

of loan

book

Financed

emissions1,2

tCO2e

Economic

emissions

intensity

ktCO2e/

£ million

PCAF

score3

Proportion of

loan book

Financed

emissions1,2

tCO2e

Economic

emissions

intensity

ktCO2e/

£ million

Scope 3

(category 13

– downstream

leased assets)

Vehicle hire

2.0

122,362

1.0

187,809

Total financed

impacts tCO2e

1,344,327

1,354,389

Business

PCAF

score3

Financed

emissions1,2

tCO2e

PCAF

score3

Financed emissions1,2 tCO2e

Notes on methodology

1. All financed impact figures reflect the current group structure and the latest available calculation methodologies. Where relevant, prior-year figures have

been recalculated and restated on a consistent basis to support comparability across reporting periods.

2. Financed emissions have been calculated in accordance with the Partnership for Carbon Accounting Financials ("PCAF") Global GHG Accounting and

Reporting Standard. Current calculations primarily include Scope 1 and Scope 2 emissions associated with financed assets and businesses. Close

Brothers continues to engage with PCAF and industry peers to support the ongoing development of methodologies, data quality and financed

emissions reporting practices.

3. PCAF data quality scores range from 1 (highest quality) to 5 (lowest quality). Changes in data quality scores between reporting periods may reflect

enhancements to underlying data or methodological refinements. In-year, changes in the vehicle hire data quality score reflect updates to the

calculation approach and reducing size and strategic significance. Data quality remains dependent on the availability of external information across

some asset classes.

4. A small proportion of the group's lending portfolio remains unassessed or out of scope due to the absence of established carbon accounting

methodologies or limitations in available data. Close Brothers continues to support the development of industry approaches in these areas through

engagement with PCAF and other financial institutions.

5. These reported financed emissions have not been subject to external assurance.

Sustainability report continued | Task Force on Climate-related Financial Disclosures report

Close Brothers Group plc Annual Report 2026

Sustainability across our businesses

The distinctive strengths of our business model are enabled by the deep expertise we have in specialist markets, the

consistent and personalised service we provide to customers, and the long-term relationships we build across markets. These

same strengths drive our approach to financing the climate transition, through our deep market knowledge, expertise in green

asset classes and strong customer relationships. Our flexible and prudent approach is focused on striking the right balance

between risk and commercial viability.

Sustainability in action

Strategic report

Governance report

Financial statements

Commercial

The energy team recently provided funding for the construction and

operation of Unibal's latest battery energy storage system ("BESS")

in Kilwinning, Scotland.

The 27-megawatt project can store up to 108MWh of excess

electricity, roughly enough to power 10,000 average homes for an

hour, supplying it back to the grid when required. Battery storage

systems are playing an increasingly important role in the UK’s

energy transition by replacing fossil fuels and helping to balance

renewable generation, improving grid stability and strengthening

resilience.

Kilwinning represents the third BESS project in Unibal's growing

portfolio and builds on a long-standing relationship with Close

Brothers. As Unibal continues to expand its battery storage

capability, the project reflects the growing contribution of firms like

theirs in supporting a more flexible, resilient and sustainable energy

system across the UK.

Retail

Close Brothers Motor Finance is supporting

the transition to electric vehicles through

partnerships such as Pod Point. Through

these partnerships, we provide electric

vehicle training for colleagues and dealer

partners, while also offering access to

discounted home chargers through our

dealer network, helping to make the switch

to electric more affordable for drivers

across the UK.

Property

Close Brothers Property Finance has agreed a £20 million Revolving

Credit Facility with award-winning housebuilder gs8 to support the

development of Medburn Yard, a 52-home residential scheme in

Radlett, Hertfordshire. The site will be transformed into a distinctive

new residential community that combines heritage, sustainability

and modern living.

Designed with sustainability and community at its core, the

development will feature a zero energy bills guarantee for at least

10 years through a partnership with Octopus Energy, alongside

shared amenities including an electric car and bike club, a DIY and

reuse centre, and landscaped communal spaces. The development

incorporates 14 affordable homes.

By supporting Medburn Yard, Close Brothers is helping deliver

energy-efficient homes and demonstrating how sustainable design,

heritage assets and high-quality placemaking can work together to

create thriving communities.

Our policies

We are committed to acting responsibly through all our ways

of working, and have a number of group-wide policies and

procedures in place to ensure we continue to operate in a

socially responsible and compliant manner. Below is a list of

group policies which are relevant to the Sustainability

Report.

Dignity at Work Policy

Our Dignity at Work Policy outlines the type of behaviour that

the company considers to be unacceptable and explains

what solutions there are if any employee has experienced or

believes someone else has experienced any discrimination,

harassment or bullying at work.

We ensure equal opportunities for all, including having a

commitment as part of our Dignity at Work Policy to ensure

no employee is subject to discrimination. This applies to all

work contexts, as well as all employee life cycle events, for

example in recruitment, training, promotion and flexible

working requests.

We strive to create an environment where employees feel

safe and supported to self-identify whether they consider

that they have a disability, to have open conversations with

their managers, raise issues and discuss their specific

workplace adjustment needs, and for the company to

provide the appropriate support to assess and implement

any reasonable adjustments. We also partner with Inclusive

Employers to support our inclusive approach to hiring,

retention, training, career development and promotion of

employees with disabilities.

Whistleblowing Policy

We provide a simple, transparent and secure environment for

our employees, shareholders and other stakeholders to raise

concerns about any potential wrongdoing within the

company.

We encourage our employees to report any activity that may

constitute a violation of laws, regulations or internal policy,

and reporting channels are provided to staff for this purpose

within the framework of a Whistleblowing Policy.

Employee Health and Safety Policy

Our Health and Safety Policy demonstrates our commitment

to ensuring our employees and visitors are safe and sets the

framework for our safety culture. We continue to provide a

safe and healthy working environment for our employees and

visitors in accordance with the Health and Safety at Work

etc. Act 1974 and the Management of Health and Safety at

Work Regulations 1999.

The Health and Safety Committee continues to meet on a

quarterly basis, and we are proud of the ongoing progress in

successfully raising the profile of health and safety across

the business. This year we recorded 25 incidents across all

our sites. We continue to use an online risk assessment tool

to manage site-specific risks as appropriate and our Display

Screen Equipment risk assessment programme. We also

carry out annual audits of all premises and monitor findings

through a live dashboard.

Data Protection Policy

Our Data Protection Policy codifies our approach to protecting

personal data, in line with all relevant data protection

legislation where we operate. It sets out our core principles

on how personal data can be processed, and is supported

by a number of standards which detail controls to ensure

compliant processing of personal data through its life cycle.

We have a nominated Data Protection Officer who is

accountable for the firm’s approach to data protection

management, a Chief Information Security Officer

accountable for our approach to cyber security, and a

broader operating model in which the data protection and

security requirements are embedded in operations

throughout the organisation.

Financial Crime Policy

Our policies and standards are intended to prevent the

group, employees, customers and any other associations or

representatives from being used for the purposes of financial

crime, including, but not limited to, money laundering,

terrorist financing, facilitation of tax evasion and

circumvention of financial sanctions.

We are committed to carrying out business fairly, honestly

and openly, operating a zero-tolerance approach to bribery

and corruption. We are dedicated to ensuring full compliance

with all applicable anti-bribery and corruption laws and

regulations, including the UK Bribery Act 2010.

Board Diversity and Inclusion Policy

The Board is committed to ensuring it collectively possesses

the right balance of skills and diversity to ensure the success

of the group. Our Board Diversity and Inclusion Policy, which

applies to both the Board and its committees, sets out

specific objectives with regard to diversity and inclusion in

the boardroom, the recruitment of new directors, and longer-

term targets, as well as corresponding governance

responsibilities.

The Board fosters an inclusive culture which allows views

from all perspectives to be given due consideration and

enables the Board to consider the needs and expectations of

all its stakeholders.

Human Rights and Modern Slavery Act

The Board gives due regard to human rights considerations,

as defined under the European Convention on Human Rights

and the UK Human Rights Act 1998. We are aware of our

responsibilities and obligations under the Modern Slavery

Act, with the appropriate policies and training in place to

enable compliance across the organisation.

The Banking division has also committed to the CIPS Ethical

Code of Conduct, which supports our commitment to

preventing modern slavery from existing within our supply

chain. Further details of our compliance with the Modern

Slavery Act can be found on our website.

Tax Strategy

We are committed to complying with our tax obligations and

doing so in a manner consistent with the spirit as well as the

letter of tax laws. This includes a transparent and

cooperative relationship with the tax authorities. Our tax

obligations arise mainly in the UK, where our operations and

customers are predominantly based. Our straightforward

business model reduces the complexity of our tax affairs and

helps us maintain a lower risk tax profile. Further details of

our approach to tax can be found on our website.

Sustainability report continued

Close Brothers Group plc Annual Report 2026

Our people

Valuing our people

We are committed to creating an environment where our

colleagues feel motivated, proud to work for us and can

reach their full potential. A key enabler for our overall

business success is our inclusive culture. We create an

environment where colleagues can thrive and, in turn, deliver

excellent outcomes for our customers and partners.

Given the significant transformation activity taking place

across Close Brothers, we have focused on strengthening

our leadership capability to effectively support colleagues

through change. This includes formally establishing our

Senior Leadership Team and delivering a bespoke leadership

development programme, as well as creating an Employee

Engagement Forum to support colleague outreach and

provide a trusted feedback channel.

The “Close Brothers Way” Code of Conduct sets out the

values and behaviours we expect from our people. Our

culture is defined through our cultural attributes. These are

exhibited by our Senior Leadership Team, setting the tone

from the top by which we operate. We continue to run

inclusive leadership training sessions for our managers,

senior managers and group executives, highlighting how

actions and behaviours can shape our inclusive culture.

We recognise that the behaviours of line managers and

leaders, and their role modelling of our values, directly

influence psychological safety, employee engagement,

motivation and satisfaction. This in turn impacts productivity,

retention and customer outcomes.

Whilst we are mindful of the significant transformation

activity taking place across the group, we remain committed

to attracting, developing and retaining diverse talent through

fair, inclusive and accessible recruitment practices. This

includes strengthening inclusive candidate attraction and job

design, aiming for gender-balanced shortlists and diverse

interview panels where possible, using skills-based

assessments to prioritise transferable skills, and proactively

offering reasonable adjustments as part of our Disability

Confident Level 2 commitments. Our approach has also

been formally recognised in the annual Women in Finance

Charter report, helping us to portray a genuine, authentic

view of our culture externally.

We are signatories to a wide range of charters and

commitments across a broad spectrum of inclusion themes,

including: the Women in Finance Charter, Race at Work

Charter, The Valuable 500, Mental Health at Work

Commitment, Disability Confident Employer Scheme and the

Armed Forces Covenant. We partner with leading

organisations and participate in wider membership bodies,

including Stonewall and Inclusive Employers, to help inform

our thinking and subsequent actions.

Engagement

Listening to the views of our colleagues is essential to drive

and maintain employee engagement, ensuring our culture is

one where everyone feels like they belong, can thrive and is

proud to work for us.

Our latest employee opinion survey closed in May 2026 with

a strong response rate of 81% (2025: 89%) giving us the

confidence that our results are reflective of the views of our

colleagues. Our engagement score dropped slightly to 72%

(2025: 78%) but overall, we retained a strong set of results,

particularly around our culture, and our colleagues feeling a

sense of belonging. 93% (2025: 96%) of colleagues believe

our culture encourages them to treat customers and clients

fairly and 92% (2025: 91%) of colleagues feel included.

We partner with an external provider to conduct our

employee opinion survey and this gives us the ability to

assess our scores against external benchmarks,

demonstrating positive comparisons with other UK financial

services firms and other UK firms going through significant

periods of change.

In addition to our group-wide survey, we continue to gather

data at different stages of the employee life cycle in support

of our ongoing employee listening strategy. Our employee

experience team engages directly with colleagues at the

point of joining, returning from parental leave and when

celebrating work anniversaries. Colleagues are asked to

complete short surveys to share their views on company

culture and their personal experiences of working at Close

Brothers. “Inclusive”, “friendly”, “welcoming”, “collaborative”

and “supportive” were some of the most commonly used

words to describe our culture.

Supporting our people

All employees have access to our 24/7 Employee Assistance

Programme, mental health first aiders and the Help@Hand

app that offers articles on a range of topics as well as

educational content and wellbeing tools. Employees can also

book one additional day a year off to focus on their mental

health and wellbeing. Our Wellbeing Network further

supports us with education and awareness-raising initiatives.

Our benefits are regularly reviewed and publicised. We

support everyday flexible working – empowering colleagues

to achieve an optimal work/life balance. We are seeking to

enhance Close Brothers’ reputation as a family-friendly

workplace through the provision of benefits such as

emergency care cover and paid time off for fertility treatment

for both partners.

The group continues to pay all staff at or above the national

living wage. For members of the group’s pension plans, we

contribute between 6% and 10% towards colleagues’

pensions, which is above required levels. We offer both a

Save As You Earn scheme as well as a Buy As You Earn

share incentive plan, which allow employees to acquire

shares on a monthly basis out of pre-tax earnings.

Participation rates in our long-term ownership schemes

remain strong at 41% of all permanent and fixed term

employees who are eligible.

Development programmes

This year, we ran two internship programmes in partnership

with upReach and Variety, the Children's Charity. These

aimed to increase social mobility and disability awareness in

our industry and organisation. We continue to run open

application processes for cross-company mentoring

schemes that are delivered in partnership with Moving

Ahead; these include both Mission Include, supporting those

who identify as being from a minority background, and

Gender Equity, with a focus on supporting women in

progressing to senior roles. In 2026, we were named runner-

up for the Dedicated Programme Partners of the year in the

Inspired by Mentoring Awards for our Mission Include

programme.

Strategic report

Governance report

Financial statements

Developing our people

This year, we have placed strong emphasis on strengthening

senior leadership capability to lead effectively through

change and transformation in support of the group’s

strategic priorities. We formally established our Senior

Leadership Team and delivered a bespoke leadership

development programme, Evolve, to 35 leaders across two

cohorts between November 2025 and March 2026. The

programme was designed to equip leaders with the mindset

and skills required to navigate change effectively.

We also created our Employee Engagement Forum, with its

members playing an important role in future change

initiatives, supporting colleague outreach and acting as a

trusted channel for feedback. This has included the delivery

of bespoke development modules to best support the group

in the context of being a forum member.

In addition, broader development sessions have been

provided to leadership teams prior to change

announcements with a focus on supporting colleagues at

risk. This has been complemented by outplacement support

for impacted colleagues across a series of workshop

webinars on topics such as CV skills, interview techniques

and job search strategies.

We continue to provide a range of training and development

for our people irrespective of where they are in their careers.

From induction through to soft skills, management and

leadership development, we offer opportunities that

encourage continuous growth and learning. This includes

support for professional qualifications and use of the

apprenticeship levy where appropriate. We currently have

over 200 colleagues completing apprenticeships, the

majority across AI or Data Academy programmes.

All colleagues have access to our learning portal where they

can access a broad range of learning offerings including

virtual workshops, e-learning modules and practical tools on

a wide variety of topics. The average number of training

hours across the group was 15.95 per employee during the

year (FY 2025: 16).

We require all employees to complete relevant regulatory

training on an annual basis, with further training offered when

required. This year, we maintained our 100% completion rate

of mandatory training by the last working day of the financial

year.

To support our inclusive culture through further embedding

our Code of Conduct, we continue to ensure all colleagues

receive our “Close Brothers Way” e-learning module,

focusing on our cultural attributes and expected behaviours.

We worked with members of our employee inclusion

networks to update the content this year.

Diversity and inclusion ("D&I")

We are proud of the enthusiasm, passion and hard work of

our group-wide employee inclusion networks and multiple

local D&I forums. Ongoing collaboration across our networks

helps create a deeper level of understanding and supports

our commitment to intersectionality. Each of our networks is

supported by an Executive Sponsor. The Group Executive

Committee members are committed to role modelling

inclusive behaviours by sponsoring events and promoting

D&I across their business areas.

We celebrate National Inclusion Week group-wide, as well as

culture weeks locally in our business areas. Our employee

networks, groups and forums further deliver excellent

sessions and employee engagement opportunities

throughout the year. Examples include South Asian Heritage

Month, Pride Month, Neurodiversity Celebration Week,

multiple awareness days and bring your child to work days.

Throughout the year, we have been recognised for our

efforts through a number of awards.

D&I-related awards and recognition during financial year

2026:

• Times Top 50 Employer for Gender Equality for the second

year running.

• Highly Commended for a “Best Practice Award” around

social mobility and shortlisted for “Best Employee Support

Network” for our Wellbeing Network at the Employers’

Excellence Awards.

• Silver Award winner at the Women and Diversity in Credit

awards – Inclusive workplace initiative category (the Meno

Forum).

• Champion Employer status under the Stonewall Proud

Employers Accreditation programme for LGBTQ inclusive

workplaces.

• Level 2 Disability Confident Employer of the UK

government scheme for hiring and retaining people with

disabilities.

• Number four of all FTSE 250 companies for progress of

women on boards as recognised in the annual FTSE

Women Leaders Review.

• The Gender Balance Network is a finalist at the British

Diversity Awards for Outstanding Women’s Network of the

Year.

• The Gender Balance, Working Parents and Carers, Unity

and Wellbeing Networks are all finalists at the Employee

Network Awards.

• Finalist in the UK Social Mobility Awards for Progression

Programme of the Year.

Diversity and inclusion strategy update

We recognise that, to help the people and businesses we

work with thrive over the long term, we have a responsibility

to help address the social, economic and environmental

challenges facing our business, employees and customers.

Diversity and inclusion are embedded into our values and

culture internally, and we also know that in a changing

external environment, embedding inclusion into our ways of

working with customers and external partners is becoming

increasingly important. In 2024, we designed a three-year

D&I strategy and action plan and by the end of year two of

our strategy implementation, over 90% of our actions have

been completed or embedded as business as usual.

Some key deliverables include:

• Increasing paternity and shared parental leave provision to

six weeks and 22 weeks respectively.

• Strengthening our inclusive recruitment practices.

• Improving the effectiveness of employee networks through

an external governance review and upskilling programme

for network leads.

• Signing the Pregnancy Loss Pledge.

• Publishing dedicated resources on flexible working

arrangements, sabbatical leave and guidance for carers to

better support colleagues.

Our workforce remains diverse, with 47% (2025: 45%)

female employees, and we have a broad age range of

employees, with 16% (2025: 16%) of our employees being

under 30 years old and 25% (2025: 18%) over 50.

Sustainability report continued

Close Brothers Group plc Annual Report 2026

Our Executive-sponsored inclusion networks

Gender diversity

Number of Board Directors1

Number of subsidiary directors2

Number of senior managers other than

Board Directors3

Number of employees other than Board

Directors and senior employees

1,278

1,171

Total

1,336

1,201

31 July 2026

Male

Female

1. Includes Non-executive Directors, excluded from group headcount

calculations.

2. Includes subsidiary directors who are excluded from group headcount

calculations.

3. Following a recent review, we redefined senior management as the

Group Executive Committee and their direct reports, excluding

Executive Assistants. This definition is aligned with our diversity

representation targets for 2025-2027 and industry practice, and reflects

level of seniority and influence across the organisation.

Employees in the community

Creating long-term, lasting value in the communities where

we operate, remains a key priority for the group. We

understand that volunteers are often the driving force behind

many community and charity activities and we are

committed to supporting our employees to get involved in

these wherever possible.

As part of the relationships we have with our charity partners,

we encourage employee engagement through involvement in

the volunteering initiatives offered. For every hour of

volunteered time, we donate £14.80 directly to the charity

under our Matched Giving Scheme, and we also encourage

people to take advantage of one paid volunteering day each

year through our Employee Volunteering Policy.

In the 2026 financial year, over 180 colleagues made use of

their volunteering day to positively impact local communities,

including volunteering at food banks, soup kitchens and local

hospices. Many colleagues continue to claim through our

Matched Giving Scheme to volunteer with charitable youth

groups including Guides, Scouts and children’s sports

teams.

Our partnership with the children’s literacy charity, Bookmark

Reading, continues and, to date, we have now delivered over

1,280 reading sessions to children. This relationship is

managed by our Working Parents and Carers Network which

enthusiastically raises awareness of volunteering

opportunities with colleagues through internal

communications and webinars to encourage more people to

supported Bookmark’s "Mind the Gap" campaign in

recognition of the National Year of Reading. We completed a

book drive where we collected over 350 books and

redistributed them to schools and children across the UK.

Alongside our reading volunteers, we also continue to

engage in team volunteering through Bookmark, with a team

in Brighton completing a library tidy in a local school and our

Working Parents and Carers Network packing boxes of book

club resources for the charity’s partner schools.

Our relationship with Smart Works, a charity supporting

women to get into employment, is proactively managed by

our Gender Balance Network. As well as supporting

fundraising efforts, we have collaborated in a number of

other ways throughout the year. We delivered a panel event

in recognition of International Women’s Day, completed a

clothing drive across our offices with 15 bags of clothes,

shoes and accessories being donated, and also attended a

Smart Works job fair to promote Close Brothers as an

Strategic report

Governance report

Financial statements

Wellbeing Network

Ian Cowie

Recognises the importance of

addressing the needs of all our

colleagues and making our

workplace accessible for all.

Unity Network and

Veterans Network

Rebekah Etherington

Veterans Network: Aims to help

with attraction and recruitment of

those leaving the Armed Forces.

Unity Network: Committed to

creating an LGBTQ+ inclusive

environment at work.

Gender Balance Network

Phil Hooper

Committed to identifying and

challenging imbalances to

improve gender equality at every

level.

Cultural Heritage Network

Naz Kazi

Aims to improve cultural

awareness and understanding so

that regardless of background all

colleagues feel a sense of

belonging and are empowered to

be allies to each other.

Working Parents and

Carers Network

Sarah Peazer-Davies

Formed to ensure that all

colleagues feel supported and

aware of the resources and tools

available to help them find a

work/life balance.

Social Mobility Network

Matt Roper

Aims to support the business in

attracting, developing and

retaining employees from all

socio-economic backgrounds so

that the company can reflect the

communities that we serve.

Intergenerational Network

Robert Sack

Connects colleagues across

multiple age brackets and helps

unlock the collective wisdom of

generations to drive innovation,

success and growth across the

organisation.

employer to women who are unemployed. We also led a

focus group with clients of Smart Works to understand more

about female perceptions of Close Brothers and what we

can do to help encourage women to apply for our vacancies.

We also became a founding member of the Smart Works

Futures programme, which directly reached unemployed

women in London with opportunities for employment.

Our colleagues have also volunteered with our other

corporate charities, including carrying out “Wild at Work”

days with The Wildlife Trusts in both London and Yorkshire,

clearing reed beds for nesting birds and learning more about

the important work completed by the trusts.

Charity

Our two main corporate charity partners are chosen by our

colleagues as part of our employee opinion survey and these

remain Make-A-Wish Foundation, who grant wishes for

children with life-threatening illnesses, and Cancer Research

UK, which we have now supported for 13 consecutive years.

To date, we are delighted to have raised over £703,000 for

Cancer Research UK as well as donating clothing and items

to be sold across their 320 shops, nationwide.

Since the start of our partnership, we have raised over

£280,000 for Make-A-Wish Foundation, enabling them to

grant over 113 magical wishes for critically ill children and

their families.

We have a dedicated committee for charitable and

community activities chaired by our Group Head of Human

Resources and supported by employees from across the

group. This committee meets regularly to discuss and

propose new initiatives, with input from our control functions

when required. We also have several local committees which

plan and run initiatives to raise funds for local charities.

We continue to run many other events throughout the year to

raise funds for charitable causes. During this financial year,

we supported “Bring your dog to work day” raising money

for Dogs for Good and we ran a Christmas jumper day to

raise money for Save the Children.

Several of our employee-led networks have encouraged

charitable giving alongside their events, with our Veterans

Network raising money for The Royal British Legion through

its annual movement challenge and our Unity Network

raising money for the Terrence Higgins Trust.

We match 50% of funds that our colleagues raise for

charities under the Close Brothers Matched Giving Scheme.

We also encourage our employees to collaborate on raising

money for causes that are most meaningful to them by

matching funds raised through locally organised fundraising

events and activities.

This year we have continued to support additional charities

that align with our ESG goals, donating a total of £75,000 to

Bookmark Reading, Smart Works and The Wildlife Trusts. In

response to Hurricane Melissa hitting Jamaica, we also

donated over £3,000 to date, including matching 100% of

colleague donations, to the British Red Cross in support of

their politically neutral Disaster Fund.

Our Payroll Giving Scheme matches charitable contributions

while allowing employee donations to be made directly from

pre-tax salary. In our 16th consecutive year of recognition

from Payroll Giving, this year we have retained the Diamond

Quality Mark for the second year running. This is the highest

level award available and is only given to employers with at

least 30% participation across their employee base.

Our customers

Keeping the customer at the heart of everything we do is

fundamental to our purpose and long-term success.

Through our deep expertise, consistent service and long-

term relationships, we are committed to understanding the

needs of our customers, and delivering good outcomes.

Across the group we are focused on continually improving

the customer experience by identifying opportunities to

simplify processes, enhance service and improve efficiency.

Our Operational Excellence team works closely with

colleagues and subject matter experts to deliver

improvements that benefit customers and partners.

Asset Finance and Invoice Finance: We continued to

simplify and standardise key customer journeys, with a focus

on improving consistency, responsiveness and ease of doing

business across our operations. This included bringing Asset

Finance collections colleagues together into one Customer

Support and Collections team, simplifying and centralising

the operating model, and consolidating operational activity

into shared hubs to create clearer ownership and more

consistent service delivery.

As part of our digital transformation, a simpler and more

transparent operating model is being introduced, with clearer

prioritisation of change initiatives, work organised around

customer journeys, and faster delivery through closer

collaboration across teams. Automated data collection and

credit decisioning capabilities have also been deployed to

reduce manual processing, accelerate approvals and simplify

customer onboarding.

We also improved digital and market-specific journeys by

simplifying and digitising the commission disclosure process,

introducing a single customer-friendly template, automated

document generation and DocuSign integration. The use of

agentic AI in some areas is also helping automate routine

tasks, enabling faster responses and a simpler experience

for customers and brokers.

Motor Finance: During the year, Motor Finance focused on

making key customer journeys simpler, clearer and more

supportive across the UK and Ireland, particularly for existing

customers exploring their next vehicle finance options and

for customers experiencing vulnerability. This included

launching an online self-serve platform, creating a new digital

channel for customers to tell us about their circumstances,

investing in locally responsive support in Ireland, and

developing wider contact forms to help customers access

the right products, services and support more easily.

The self-serve platform enables customers to obtain an early

settlement quote, check their borrowing potential without

affecting their credit score, and apply for a new finance

agreement in minutes. Working with Zuto, the car finance

broker, we have also created a more joined-up journey that

can help customers find their next vehicle, with customer

insight and data being used to continue improving the

experience.

We also introduced a new website channel to make it

quicker and easier for customers in vulnerable

circumstances to tell us about their situation and request

support. The form gives customers another way to engage

with us where they may feel uncomfortable speaking directly

to a financial services provider. Since going live in July 2026,

173 customers have used the form to tell us about a

vulnerability, helping us respond more effectively to their

needs.

Sustainability report continued

Close Brothers Group plc Annual Report 2026

In Ireland, we continued to improve customer access and

understanding through personalised welcome videos,

expanded Dublin-based customer service operations and

digital finance journeys through DoneDeal and CarsIreland.ie.

These initiatives help customers better understand their

finance agreement, begin applications online at a time that

suits them, and access more responsive local support.

Together, these improvements have contributed to strong

customer feedback, with Motor Finance Ireland achieving a

Trustpilot rating of 4.9 out of 5.

Premium Finance: Our new strategic affordability approach

introduces capability to support real-time decisions to

validate customer details and complete our affordability

assessment at the point of insurance sale, whilst the

customer is still engaged with the insurance purchase

journey. For brokers, that means an earlier outcome and for

customers, a clearer answer sooner. Where finance is not

available, brokers can talk to customers about other options

available to meet their needs, before an agreement is

created. This initiative has been an extensive collaboration

with our broker partners and industry software houses.

We delivered a number of initiatives to improve support for

customers in vulnerable circumstances. This included

enhancing customer identification and referral processes,

introducing improved management information and system

flags, and providing additional training to help colleagues

recognise vulnerability and provide appropriate support.

We also introduced more accessible written communication

guidance and strengthened the tools available to frontline

teams, helping to ensure customers are identified sooner and

directed to the right support. These enhancements increased

our capacity to respond to customer needs, reducing

average waiting times for customers seeking specialist

support by 100 seconds in FY 2026, with calls now

answered in just over a minute. We also supported more

than 10,000 customers by providing greater payment

flexibility to help them manage changing circumstances.

In addition, a new initiative to send payment reminders via

SMS to customers in vulnerable circumstances resulted in a

visible reduction in payment defaults within the first two

months of launch.

The Vulnerable Customer team’s work has also been

recognised externally, having recently been shortlisted for

both the Best Vulnerability Team and Vulnerability Champion

awards at the Collaboration Network Awards 2026.

Savings: Customer feedback and behavioural insight

informed a series of improvements across Savings, helping

to make digital services, communications and support more

accessible and easier to use. This included enhancing digital

self-service, introducing an Inclusive Design Framework,

achieving Communication Access UK accreditation and

strengthening support for customers in vulnerable

circumstances. Together, these actions helped to make

communications and resources more accessible and support

more informed decisions.

As a result, 90% of eligible changes to customer details were

completed online, with 86% of customers rating the process

as easy or very easy. Clearer maturity instructions and

enhanced reminders helped customers take action, while

prompts to move funds from lower-interest holding accounts

achieved a 24% conversion rate.

We also improved access to support, reducing average call

answer times from 5 minutes 22 seconds to 1 minute 43

seconds and keeping call abandonment below 1%. These

actions contributed to stronger customer feedback, with Net

Promoter Score increasing from 38 to 55, Customer

Satisfaction rising from 79% to 91%, and the Savings

Trustpilot rating reaching 4.4 out of 5.

Property Finance: Customer-led insights have driven

continuous improvement across our processes. Colleagues

managing customer relationships, alongside those involved

in service delivery, were encouraged through a focused

internal initiative to share ideas that would enhance both the

colleague and customer experience.

The initiative has enabled the business to harness frontline

expertise and translate insight into practical solutions that

improve the way we work, serve customers, and deliver

value.

As a result, a number of improvements have been

implemented, including reduced processing times for key

activities such as security release documentation, as well as

enhancements to customer-facing template documents.

Strategic report

Governance report

Financial statements

Technology and AI

Increasing our use of AI and automation

Our transformation programme is progressing well. A key

enabler of this is our increasing use of AI and automation

across the organisation. We continue to develop our

capabilities in AI and automation, where we see significant

opportunities to improve efficiency, reduce cost, enhance

customer experience, support growth and strengthen risk

management.

Our initial approach focused on establishing the foundations

required to scale AI responsibly. To support this, we have

established a Responsible AI Framework, providing

governance, oversight and accountability for AI use cases

through risk assessment, controls, monitoring and reporting.

This approach enables us to pursue AI opportunities in a

controlled and sustainable way whilst maintaining

appropriate management of associated risks.

Our approach has evolved from selected proof of concept

initiatives to a number of embedded and active uses of AI

across our businesses, supported by a strong pipeline of

new opportunities in exploration or development.

To accelerate adoption and deployment at scale, we have

also established an enterprise-wide "AI & Automation

Practice", which aims to share best practice and consistency

of approach across the organisation.

Sustainability report continued

Close Brothers Group plc Annual Report 2026

Deploying AI and automation across our businesses:

Cost reduction

Automate manual activities,

improve accuracy and reduce

operational effort.

Customer experience

Faster, more personalised

and responsive customer

interactions.

Risk mitigation

Enhance monitoring,

governance, fraud prevention

and operational control.

Business processing

AI automated complaint

processing and triage.

336k complaint cases processed

to date. Significant use of robotic

automation, with more than 200

FTE of workload completed

through robots daily.

DSAR automation

Using AI-assisted document

review and extraction.

Reduces manual effort,

accelerating regulatory response

times and improving compliance

outcomes.

Commercial

(Broker Solutions)

Deployment of agentic AI solution

automating the upload of broker

proposals. Accelerates decision-

making, improves broker

experience and increases

efficiency.

Credit proposal generation

in Wholesale Finance

Using AI to simplify and automate

credit proposals.

Significantly improved cycle time,

reduces rework and enables more

tailored customer solutions.

AI-powered fraud

detection

Launched a third-party solution

in Motor Finance to identify

suspicious activity and

reduce risk.

Responsible AI Framework

Implementation of a

comprehensive framework and

AI risk review process.

Enables faster and more confident

adoption of AI technologies while

ensuring regulatory compliance

and operational resilience.

Operational efficiency

Improve colleague productivity and

streamline internal processes.

Innovation and growth

Create new capabilities, insights

and digital experiences.

Personal productivity

Group-wide rollout of Microsoft Copilot, supported

by training and enablement at all levels, enabling

employees to unlock productivity gains.

Software development

Adoption of GitHub Copilot is accelerating software

delivery and improving code quality, delivering

significant engineering productivity improvements.

Early adoption has demonstrated measurable

productivity benefits.

Sales support

Empowering sales team with AI-based customer

and demand segmentation.

Citizen development and

business-built AI agents

Implemented agent development platforms for

business users, to rapidly automate tasks

undertaken by colleagues.

Our use of the cloud

Our cloud investment provides the strategic foundation to

support future innovation, accelerate digital delivery,

strengthen operational resilience, and improve organisational

agility.

• Cloud as a strategic enabler – As a core pillar of our

technology transformation programme, our cloud platform

is modernising our technology estate and providing the

foundation for future growth. Our ongoing investment is

enhancing operational resilience, enabling greater

organisational agility, and accelerating innovation.

• Strengthening operational resilience – During a recent

incident affecting a third-party connectivity provider, our

cloud architecture enabled us to rapidly re-route critical

services and maintain connectivity to an external credit

agency. This ensured continuity of key business

operations.

• Supporting a scalable operating model – Our cloud

strategy is supporting the evolution of our operating

model. Together with the capabilities of key strategic

partners, we are creating a secure, scalable technology

foundation while maintaining appropriate levels of control,

resilience, and security.

• Accelerating digital transformation – We have established

a modern, secure, highly automated cloud platform with

our strategic partner, significantly improving the speed and

flexibility with which technology services can be delivered.

Strategic report

Governance report

Financial statements

Automated due-diligence

analysis workflow

Streamlining a previously manual weekly

process in Credit Risk

AI, equity and the future workforce

We recognise that as AI continues to evolve, the future

of work will depend not only on technological

innovation but also on ensuring people can access,

influence and benefit from it. As part of our

commitment to social mobility, ethnic diversity and

equitable opportunity, we bring colleagues and young

people together through debate-led events delivered in

partnership with a social enterprise focused on

education and social mobility.

In February 2026, we hosted a debate exploring

whether AI has the potential to increase social mobility

and reduce inequalities. Chaired by our Group Chief

Technology Officer and featuring colleagues from our

Social Mobility Network, the event examined the

opportunities and challenges AI presents for individuals

from different socioeconomic and ethnic backgrounds.

Participants considered how AI could broaden access

to information and learning, while also discussing risks

such as unequal access to technology and the potential

for bias within AI systems. Bringing together students

and employees created an opportunity for constructive

discussion, challenging assumptions and encouraging

participants to consider different perspectives.

By creating forums for open dialogue, we continue to

promote learning, inclusion and collaboration, helping

to ensure diverse perspectives inform conversations

about the future of work and the responsible use of

emerging technologies.

AI and data apprenticeships

Close Brothers has partnered with Multiverse to offer colleagues digital, data and AI apprenticeships.

Through a combination of structured online learning and 1:1 coaching, participants focus on building skills

that are applicable to their day-to-day roles through learning to improve processes, productivity and enable

better decision-making.

28 colleagues have already graduated from the programme, with a further 169 active participants.

Business impacts that have been considered through the apprenticeships include:

Streamlined complaints data

system

Saving over 30 hours a month and speeding

up senior decision-making in Retail

AI tool built to assess funding

eligibility

Assesses client paperwork for invoice

funding eligibility, saving an estimated 20

hours a week

Automated post-incident report

analysis

Implemented in Retail, cutting review time

from 20 hours to 5 minutes

Powering growth through

long-term relationships

Close Brothers Property Finance has worked with

Westpoint Homes for 13 years, during which time we

have supported the delivery of more than 900 new

homes with a total development value of £377 million.

That sustained partnership is now helping the Scottish

housebuilder move into its next phase of growth; to

deliver another 750 new properties over the next five

years. By taking the time to understand Westpoint

Homes’ business, ambitions and track record, our

team has been able to provide facilities that give the

developer greater certainty in an uncertain market.

The relationship also demonstrates how our support

can evolve with customers. From helping unlock equity

in completed schemes to supporting larger and more

complex developments, including the Finnieston site in

Glasgow, Close Brothers Property Finance continues

to back Westpoint Homes as its ambitions grow.

“Our long-standing relationship with

Close Brothers has helped us

scale with confidence.”

Ian Rigby

Managing Director, Westpoint Homes

Close Brothers Group plc Annual Report 2026

Non-financial and sustainability

information statement

In line with the non-financial reporting requirements contained in sections 414CA and 414CB of the

Companies Act 2006, the table below contains references to non-financial information intended to

help our stakeholders understand the impact of our policies and activities.

Environmental

matters

• Group Credit Risk Policy and Bank Credit Risk

Standards

• Environmental Policy

• Our businesses: Our operating environment,

pages 16 to 21

• Stakeholder engagement, pages 23 to 26

• Our strategy, pages 10 to 11

• Sustainability Report, pages 28 to 45

• Climate-related disclosures, pages 30 to 36

Employees

• Health and Safety Policy

• Whistleblowing Policy

• Key Customer Principles

• Equal Opportunity and Dignity at Work Policy

• Business model, pages 8 to 9

• Stakeholder engagement, pages 23 to 26

• Our strategy, pages 10 to 11

• Sustainability Report, pages 28 to 45

• Corporate Governance Report, pages 112 to

121

Social matters

• Key Customer Principles

• Group Credit Risk Policy and Bank Credit

Risk Standards

• Volunteering Standards

• Matched Giving Guidelines

• Dignity at Work Policy

• Stakeholder engagement, pages 23 to 26

• Our strategy, pages 10 to 11

• Sustainability Report, pages 28 to 45

• Corporate Governance Report, pages 112 to

121

Respect for human

rights

• Human Rights and Modern Slavery Act

• Data Protection Policy

• Cyber Security Policy

• Information Security Policy

• Third Party Management Policy

• Sustainability Report, page 28 to 45

• Risk Report, pages 60 to 100

Anti-corruption

and anti‑bribery

• Financial Crime Compliance Policy

• Anti-Bribery and Corruption Policy Statement

• External and Internal Fraud Policy Statement

• Cyber Security Policy

• Sustainability Report, pages 28 to 45

Stakeholders

• Environmental Policy

• Key Customer Principles

• Third Party Management Policy

• Stakeholder engagement, pages 23 to 26

• Sustainability Report, pages 28 to 45

Description of the

business model

• At a glance, pages 2 to 3

• Our strategy, pages 10 to 11

• Investment case, pages 12 to 13

• Business model, pages 8 to 9

Description of

principal risks and

impact of business

activity

• Enterprise Risk Management Framework

• Principal risks, pages 67 to 100

• Emerging risks and uncertainties, page 70

• Risk Committee report, pages 134 to 136

Non-financial key

performance

indicators

• Our strategy, pages 10 to 11

• Key performance indicators, pages 14 to 15

• Sustainability Report, pages 28 to 45

Climate-related

disclosures

• Enterprise Risk Management Framework

• Task Force on Climate-Related Financial

Disclosures – Climate-related disclosures,

pages 30 to 36

Reporting requirement

Policies and standards

Information necessary to understand our impact and

outcomes

Strategic report

Governance report

Financial statements

Financial overview

Summary group income statement1

Adjusted operating income

642.9

681.2

(6)

Adjusted operating expenses

(430.9)

(445.1)

(3)

Adjusted impairment losses on financial assets

(91.7)

(91.8)

—

Adjusted operating profit

120.3

144.3

(17)

Commercial

90.9

112.2

(19)

Retail

17.4

18.9

(8)

Property

49.0

67.2

(27)

Group (central functions)

(37.0)

(54.0)

(31)

Adjusting items:

Provision in relation to motor finance commissions

(164.7)

(165.0)

—

Other motor finance commissions related costs2

(7.7)

(18.7)

(59)

Provision in relation to early settlements in Motor Finance

(1.3)

(33.0)

(96)

Restructuring costs

(14.3)

(2.3)

n/a

Amortisation of intangible assets on acquisition

(0.2)

—

Operating profit/(loss) from Close Brewery Rentals Limited3

6.8

(4.1)

(266)

Operating profit/(loss) from Close Brothers Vehicle Hire4

0.8

(43.4)

(102)

Operating loss before tax

(60.3)

(122.4)

(51)

Tax

(5.1)

(4.7)

Loss after tax from continuing operations

(65.4)

(127.1)

(49)

Discontinued operations5:

Close Brothers Asset Management

1.1

63.9

(98)

Winterflood

0.9

(14.7)

(106)

Loss after tax (continuing and discontinued operations)

(63.4)

(77.9)

(19)

Attributable to:

Shareholders

(85.7)

(100.2)

(14)

Other equity owners

22.3

—

Loss after tax attributable to shareholders and other equity owners

(63.4)

(77.9)

(19)

Adjusted basic earnings per share (continuing operations)1,6

47.5p

59.3p

Basic (loss)/earnings per share (continuing operations)6

(58.5)p

(99.8)p

Basic (loss)/earnings per share (continuing and discontinued operations)5,6

(57.1)p

(66.9)p

Ordinary dividend per share

—

Return on opening equity

4.9%

6.2%

Return on average tangible equity7

5.5%

7.1%

2026

£ million

2025

£ million

Change

Income Statement presented includes continuing and discontinued operations. Adjusted measures are presented on a basis consistent with prior

periods and exclude any exceptional and adjusting items which do not reflect underlying trading performance. Current adjusting items include:

customer remediation provisions, unwind of the time value discount, and operational or legal costs incurred in relation to an event that is deemed to

be adjusting, CBRL which was sold in the year, CBVH which is in wind-down, restructuring costs and amortisation of intangible assets on acquisition.

There are no exceptional items presented in these financial results. Please refer to the Basis of presentation and the tables on page 49 for details on

the reconciliation between adjusted and statutory measures.

Motor finance commissions related complaints handling, operational and legal costs, and unwind of the time value discount, partially offset by

insurance recoveries.

The sale of CBRL completed on 31 August 2025 and a gain of £6.4 million has been recognised. Please refer to Note 26 "Discontinued operations

and assets and liabilities classified as held for sale".

CBVH business is in wind-down.

Discontinued operations relate to Close Brothers Asset Management and Winterflood, which have been classified as "discontinued operations" in the

group’s income statement for the 2025 and 2026 financial years in line with the requirements of IFRS 5. The related assets and liabilities were

classified as held for sale on the group’s balance sheet at 31 July 2025. Please refer to Note 26 "Discontinued operations and assets and liabilities

classified as held for sale".

Refer to Note 7 “Earnings per share” for the calculation of basic and adjusted basic earnings per share.

Return on average tangible equity uses adjusted operating profit after tax from continuing operations, less AT1 coupons (2026: £71.3 million, 2025:

£88.7 million). Average tangible equity excludes discontinued operations. Average tangible equity is calculated based on closing equity per the

balance sheet (2026: £1,651.6 million, 2025: £1,735.5 million), less AT1 (2026 and 2025: £197.6 million), less intangibles (2026: £155.0 million, 2025:

£166.3 million), less CBAM and WINS tangible equity (2026: £nil, 2025: £90.6 million).

Close Brothers Group plc Annual Report 2026

Basis of presentation

Results are presented both on a statutory and an adjusted

basis to aid comparability between periods. Adjusted

measures are presented on a basis consistent with prior

periods and exclude any exceptional and adjusting items

which do not reflect underlying trading performance. Current

adjusting items include customer remediation provisions,

unwind of the time value discount, and operational or legal

costs incurred in relation to an event that is deemed to be

adjusting, Close Brewery Rentals Limited ("CBRL") which

was sold in the year, Close Brothers Vehicle Hire ("CBVH")

which is in wind-down, restructuring costs and amortisation

of intangible assets on acquisition. There are no exceptional

items presented in these financial results.

Discontinued operations relate to Close Brothers Asset

Management ("CBAM") and Winterflood Securities

("Winterflood"), which were classified as discontinued

operations in the group’s income statement in the 2025 and

2026 full year results. Winterflood’s assets and liabilities were

classified as held for sale on the group balance sheet at 31

July 2025. The sale of CBAM completed on

28 February 2025, and the sale of Winterflood completed on

1 December 2025; therefore no assets or liabilities in respect

of these businesses remain on the balance sheet at

31 July 2026. The sale of CBRL completed on

31 August 2025. The assets and liabilities of this business

were classified as held for sale on the group balance sheet at

31 July 2025. No assets or liabilities in respect of this

business remain on the balance sheet at 31 July 2026.

Reconciliation from adjusted to statutory income statement

Adjusting items reconciling adjusted to statutory performance

Summary income

statement for the

year ended 31 July

2026

Adjusted

£ million

Provision in

relation to

motor finance

commissions

£ million

Other motor

finance

commissions

related costs

£ million

Provision in

relation to

early

settlements

in Motor

Finance

£ million

Restructuring

costs

£ million

Amortisation

of intangible

assets on

acquisition

£ million

Brewery

Rentals

Limited (sold)

£ million

Brothers

Vehicle Hire

(in wind-

down)

£ million

Total

adjusting

items

£ million

Statutory

£ million

Operating

income

642.9

–

(10.7)

(1.3)

–

7.2

12.9

8.1

651.0

Operating

expenses

(430.9)

(164.7)

3.0

–

(14.3)

(0.2)

(0.4)

(12.0)

(188.6)

(619.5)

Impairment

losses on

financial assets

(91.7)

–

(0.1)

(91.8)

Operating

profit/(loss)

before tax

120.3

(164.7)

(7.7)

(1.3)

(14.3)

(0.2)

6.8

0.8

(180.6)

(60.3)

Adjusting items reconciling adjusted to statutory performance

Summary income

statement for the

year ended 31 July

2025

Adjusted

£ million

Provision in

relation to

motor finance

commissions

£ million

Other motor

finance

commissions

related costs

£ million

Provision in

relation to

early

settlements

in Motor

Finance

£ million

Restructuring

costs

£ million

Amortisation

of intangible

assets on

acquisition

£ million

Brewery

Rentals

Limited loss

(sold)

£ million

Brothers

Vehicle Hire

loss (in wind-

down)

£ million

Total

adjusting

items

£ million

Statutory

£ million

Operating

income

681.2

–

5.9

(27.6)

(21.7)

659.5

Operating

expenses

(445.1)

(165.0)

(18.7)

(33.0)

(2.3)

(0.2)

(9.8)

(15.0)

(244.0)

(689.1)

Impairment

losses on

financial assets

(91.8)

–

(0.2)

(0.8)

(1.0)

(92.8)

Operating

profit/(loss)

before tax

144.3

(165.0)

(18.7)

(33.0)

(2.3)

(0.2)

(4.1)

(43.4)

(266.7)

(122.4)

Statutory operating loss

The group reported a statutory operating loss before tax of

£60.3 million (2025: £122.4 million). Underlying operating

profit was more than offset by £180.6 million of adjusting

items, predominantly the £164.7 million increase in provision

in relation to motor finance commissions during the year.

Adjusted operating profit

Adjusted operating profit decreased 17% to £120.3 million

(2025: £144.3 million), reflecting the reduction in income from

the repositioning of our business and prevailing market

conditions. The operating loss in Group (central functions),

which includes the central functions such as finance, legal

and compliance, risk and human resources, reduced to

£37.0 million (2025: £54.0 million), primarily driven by a

reduction in legal and professional costs.

Return on opening equity reduced to 4.9% (2025: 6.2%) and

return on average tangible equity reduced to 5.5% (2025:

7.1%) primarily reflecting the reduction in adjusted operating

profit. We remain committed to achieving our target of

double-digit RoTE by the 2028 financial year, rising

thereafter.

Adjusted operating income

Adjusted operating income decreased 6% to £642.9 million

(2025: £681.2 million), driven by the repositioning of our

businesses, including the wind-down of Novitas and the

planned reduction of personal lines in Premium Finance.

Income also reflects a lower underlying net interest margin

and average loan book, reflecting the impact of prevailing

market conditions, particularly on our Property Finance book.

Strategic report

Governance report

Financial statements

The net interest margin across the lending divisions declined

to 6.9% (2025: 7.2%), in line with guidance, with the

reduction primarily reflecting the repositioning of the

business and changes in mix, including the wind-down of

Novitas, repositioning of Premium Finance and the focus on

larger deals with attractive risk-adjusted returns. All else

equal, we expect the net interest margin in the 2027 financial

year to be slightly below FY 2026 reflecting further c.0.1%

impact from mix, including Premium Finance repositioning.

Group (central functions) reported income of £(8.2) million

(2025: £(11.7) million), representing the net cost of group

funding, which was lower than the prior year due to higher

interest earned on cash balances.

Adjusted operating expenses

Adjusted operating expenses reduced 3% to £430.9 million

(2025: £445.1 million), better than guidance of c.£450 million,

reflecting strong cost discipline and the acceleration of cost-

saving initiatives. Through our transformation programme,

we have delivered c.£36 million of annualised cost savings,

substantially ahead of our c.£25 million target, through lower

staff costs, which include the benefits of offshoring, a

reduction in adviser costs, lower third-party spend and a

reduced property footprint.

Expenses in Group (central functions) reduced 32% to £28.8

million (2025: £42.3 million) primarily reflecting lower legal

and professional fees.

Overall, the group’s expense/income ratio increased to 67%

(2025: 65%), reflecting the lower income in the period. The

compensation ratio marginally increased to 35% (2025:

34%), notwithstanding a reduction in variable compensation.

We now expect to exceed £60 million of annualised savings

by the end of the 2027 financial year, primarily through

streamlining of businesses and functions, increased use of

outsourcing and offshoring, and reduction in our property

footprint and third-party spend. In addition, we are now well

into planning for the next stage of restructuring activity, with

a focus on developing shared enterprise-wide services and

further deployment of AI, automation and digital solutions.

We expect the group's adjusted operating expenses to be

c.£430 million in the 2027 financial year, with cost savings

broadly offsetting inflation and selective investment to

support growth, and at the lower end of the £410-430

million range in the 2028 financial year.

Adjusted impairment charges and IFRS 9

provisioning

Adjusted impairment charges remained stable at £91.7

million (2025: £91.8 million), equivalent to a bad debt ratio of

1.0% (2025: 1.0%). The impairment charge reflects an

increase in individually assessed provisions in Property on a

small number of facilities, including legacy cases, which was

partially offset by the implementation of an updated IFRS 9

model which recognises the evolving composition and

behaviour of the Motor Finance book. The bad debt ratio

remains comfortably below our long-term average of 1.2%.

Overall, provision coverage was broadly unchanged at 2.7%

(31 July 2025: 2.6%).

Since the 2025 financial year end, we have updated the

macroeconomic scenarios we source from Moody’s

Analytics to reflect the latest available information. The

weightings assigned to the scenarios remain unchanged.

Whilst we have not seen a significant impact on credit

performance outside of a small number of facilities in

Property, we continue to monitor closely the evolving

impacts of inflation and cost of living on our customers.

We remain confident in the quality of our loan book, which is

predominantly secured or structurally protected, prudently

underwritten, diverse, and supported by the deep expertise

of our people. We expect the bad debt ratio for the 2027

financial year to remain below our long-term average of

1.2%.

Adjusting items

We recognised £180.6 million of adjusting items in 2026

(2025: £266.7 million).

During the year, we increased our provision in relation to

motor finance commissions by c.£135 million in October

2025 and c.£30 million in April 2026, resulting in an income

statement charge of £164.7 million, bringing the total

provision to c.£320 million. At 31 July 2026, the provision

decreased slightly to £318.5 million, reflecting further cost

utilisation, partially offset by an unwinding of the discount

relating to the time value of money.

Our provisioning approach reflects the rules outlined in FCA

Policy Statement PS26/3: Motor Finance Consumer Redress

Scheme (the "scheme”), which was published on 30 March

2026. While there are aspects of the scheme that we

disagree with, in order to provide an orderly resolution for all

parties, Close Brothers decided not to challenge the scheme.

There have been four legal challenges, with parts of the

scheme currently suspended by the Upper Tribunal on terms

agreed between the FCA and the challengers, and therefore

delaying calculation or payment of redress owed under the

scheme. Notwithstanding this, we continue to gather

additional data, progress complaints and prepare

operationally as we await the outcome of the challenges. The

ultimate cost to the group remains subject to the outcome of

the legal challenges to the scheme and any further legal,

regulatory or industry developments, including court claims

and complaints from consumers.

In addition, we have incurred a charge of £7.7 million largely

reflecting the unwind of the time value discount and other

legal costs, partially offset by insurance recoveries.

We recognised £7.6 million of operating profit from the

group’s rentals businesses, Close Brewery Rentals Limited

("CBRL") (sold 31 August 2025), and Close Brothers Vehicle

Hire ("CBVH") (in wind-down), primarily reflecting the £6.4

million gain on disposal of CBRL.

We incurred £14.3 million (2025: £2.3million) of restructuring

costs, primarily relating to redundancy and associated costs.

We expect to incur c.£30-40 million in the 2027 financial

year.

The charge of £1.3 million (2025: £33.0 million) in respect of

the provision in relation to early settlements in Motor Finance

is the unwind of the time value discount in the year.

Tax

The tax expense in 2026 was £5.1 million (2025: £4.7 million).

The effective tax rate for the period was (8.5)% (2025:

(3.8)%), including the £164.7 million provision charge (£147.0

million net of tax) in relation to motor finance commissions

(2025: including the £165.0 million provision charge (£155.7

million net of tax) in relation to motor finance commissions

and the £33.0 million (£30.3 million net of tax) provision for

the proactive customer remediation programme in relation to

early settlement of loans in Motor Finance). Excluding the

provisions, the effective tax rate would have been

approximately 22% (2025: approximately 22%). Please refer

to Note 6 “Tax” for further details on the group’s taxation.

Financial overview continued

Close Brothers Group plc Annual Report 2026

Discontinued operations

On 1 December 2025, we completed the sale of Winterflood

Securities to Marex Group plc.

Following completion of the disposal of Winterflood, there

are no assets or liabilities classified as held for sale on the

balance sheet at 31 July 2026, and minimal impact through

the income statement.

Winterflood delivered total profit after tax of £0.9 million

(2025: loss after tax of £14.7 million).

For further information on the discontinued operations, refer

to Note 26 “Discontinued operations and assets and

liabilities classified as held for sale”.

Earnings per share

Adjusted basic earnings per share (“AEPS”) for continuing

operations decreased to 47.5p (2025: 59.3p) and basic

earnings per share (“EPS”) for continuing operations

increased to (58.5)p (2025: (99.8)p).

Basic earnings per share for continuing and discontinued

operations increased to (57.1)p (2025: (66.9)p).

Both the adjusted and basic EPS calculations include the

payment of the coupon related to the Fixed Rate Resetting

Additional Tier 1 Perpetual Subordinated Contingent

Convertible Securities (“AT1”), at an annual rate of 11.125%,

in December 2025 and May 2026, amounting to £22.3

million. The associated coupon is deducted from retained

earnings, reducing the profit attributable to ordinary

shareholders.

Dividend

Given the continued uncertainty regarding the outcome of

the legal challenges to the FCA’s motor finance consumer

redress scheme and any potential financial impact, the group

will not pay a final dividend on its ordinary shares for the

2026 financial year. We remain committed to the resumption

of shareholder distributions at an appropriate time and will

reassess our options as greater certainty emerges regarding

motor finance commissions, taking into account the group's

future capital needs and shareholder feedback.

Summary group balance sheet

31 July

2026

£ million

31 July

2025

£ million

Loans and advances to customers and operating lease assets1

9,594.3

9,625.7

Treasury assets2

1,758.7

2,770.4

Assets classified as held for sale3

–

934.0

Other assets

705.4

741.8

Total assets

12,058.4

14,071.9

Deposits by customers

7,876.2

8,799.3

Borrowings4

1,886.7

2,188.3

Liabilities classified as held for sale3

–

773.4

Other liabilities

643.9

575.4

Total liabilities

10,406.8

12,336.4

Equity5

1,651.6

1,735.5

Total liabilities and equity

12,058.4

14,071.9

Includes operating lease assets of £131.1 million (31 July 2025: £166.3 million).

Treasury assets comprise cash and balances at central banks and non-cash high quality liquid assets ("HQLAs") held to support the group.

Assets and liabilities relating to CBRL and discontinued operation Winterflood were classified as held for sale on the group’s balance sheet at 31 July

2025. Please refer to Note 26 "Discontinued operations and assets and liabilities classified as held for sale".

Borrowings comprise debt securities in issue, loans and overdrafts from banks and subordinated loan capital.

Equity includes the group’s £200.0 million Fixed Rate Reset Perpetual Subordinated Contingent Convertible Securities (AT1 securities), net of £2.4

million transaction costs, which are classified as an equity instrument under IAS 32.

The group maintained a strong balance sheet and continues

to take a prudent approach to managing its financial

resources. The fundamental structure of the balance sheet

remains unchanged, with most of the assets and liabilities

relating to our lending divisions. Loans and advances to

customers and operating lease assets make up the majority

of assets. Other items on the group's balance sheet include

treasury assets, with intangibles, property, plant and

equipment, and prepayments included as other assets.

Liabilities are predominantly made up of customer deposits

and both secured and unsecured borrowings to fund the

loan book.

Total assets reduced to £12.1 billion (31 July 2025: £14.1

billion), primarily due to a 37% reduction in treasury assets

reflecting a planned reduction in excess liquidity and the

completion of the sales of Winterflood and CBRL, which no

longer feature on the group balance sheet.

Total liabilities reduced to £10.4 billion (31 July 2025: £12.3

billion), due to a 10% decrease in customer deposits

reflecting our lower funding requirement in the 2026 financial

year, and the completion of the sales of Winterflood and

CBRL.

Total equity was broadly flat at £1.7 billion at 31 July 2026

(31 July 2025: £1.7 billion).

The group’s return on assets excluding discontinued

operations was 0.6% (31 July 2025: 0.7%).

Strategic report

Governance report

Financial statements

Group Capital

31 July

2026

£ million

31 July

2025

£ million

Common Equity Tier 1 capital

1,266.1

1,348.1

Tier 1 capital

1,466.1

1,548.1

Total capital

1,716.1

1,748.1

Risk weighted assets

8,971.8

9,798.5

Common Equity Tier 1 capital ratio1

14.1%

13.8%

Tier 1 capital ratio1

16.3%

15.8%

Total capital ratio1

19.1%

17.8%

Leverage ratio2

13.5%

12.9%

IFRS 9 transitional arrangements ceased to apply and therefore had no impact on regulatory capital at 31 July 2026. Capital ratios at 31 July 2025

shown after applying IFRS 9 transitional arrangements and the Capital Requirements Regulation ("CRR") transitional and qualifying own funds

arrangements in force at the time. Without their application, at 31 July 2025 the CET1 capital ratio would be 13.7%, tier 1 capital ratio 15.7% and

total capital ratio 17.8%.

The leverage ratio is calculated as tier 1 capital as a percentage of non-risk-weighted total exposures, adjusted for certain capital deductions,

including intangible assets, and off-balance sheet exposures.

Movements in capital and other regulatory

metrics

The CET1 capital ratio increased from 13.8% to 14.1%,

mainly driven by the recognition of other profits attributable to

shareholders (c.80bps), and total credit risk RWA reduction

(c.70bps), predominately related to loan book RWA reduction

(c.50bps). The sale of Winterflood contributed c.50bps. These

benefits were partially offset by the additional provision in

relation to motor finance commissions (-c.150bps) and AT1

coupon payments in the year (-c.20bps).

CET1 capital decreased 6% to £1,266.1 million (31 July

2025: £1,348.1 million), primarily driven by the £147.0 million

net of tax provision in relation to motor finance commissions,

AT1 coupon payments of £22.3 million, partially offset by the

recognition of the group’s other profits attributable to

shareholders in the year of £82.5 million.

Tier 1 capital decreased by 5% and total capital decreased

by 2% to £1,466.1 million and £1,716.1 million respectively

(31 July 2025: £1,548.1 million and £1,748.1 million

respectively), reflecting the same movements in relation to

CET1 capital. Total capital also reflects a £50 million increase

in Tier 2 capital as the group issued £250 million Fixed Rate

Subordinated Tier 2 Notes and conducted a tender offer for

£200 million Fixed Rate Subordinated Notes.

RWAs decreased 8% to £9.0 billion (31 July 2025: £9.8

billion), driven by a reduction in credit risk RWAs (£568.5

million), operational risk RWAs (£158.1 million) and market

risk RWAs (£114.0 million).

The decline in credit risk RWAs was driven by a £350.3

million decrease in loan book RWAs across the Property and

Premium Finance businesses mainly due to lower loan book

balances and also reflecting the beneficial impact of the

ENABLE Build Guarantee Scheme within the Property

business. In addition, other credit risk RWAs decreased by

£204.3 million, largely due to reductions in Novitas

receivables, operating lease exposures, and prepayments

together with the disposals of Winterflood and Brewery

Rentals.

The reduction in operational risk and market risk RWAs was

primarily driven by the Winterflood disposal.

As a result, CET1, tier 1 and total capital ratios were 14.1%

(31 July 2025: 13.8%), 16.3% (31 July 2025: 15.8%) and

19.1% (31 July 2025: 17.8%), respectively.

The applicable CET1, tier 1 and total capital ratio

requirements, including capital requirements directive

("CRD") buffers but excluding any applicable PRA buffer,

were 10.3%, 12.3% and 14.9%, respectively, at 31 July

2026, following the regular periodic review of our capital

requirements. Accordingly, our CET1 capital headroom of

c.380bps is significantly above the applicable requirements,

despite the impact of the post-tax £147.0 million provision

charge in relation to motor finance commissions.

The leverage ratio, which is a transparent measure of capital

strength not affected by risk weightings, increased to 13.5%

(31 July 2025: 12.9%).

Capital outlook

We currently estimate that the implementation of Basel 3.1

on 1 January 2027 will result in a reduction in the group's

CET1 capital ratio of approximately 80bps with the minimum

CET1 capital requirement reducing by c.40bps, reflecting the

PRA’s Pillar 2a SME Lending Adjustment, which was

introduced to mitigate the impact of the removal of the Pillar

1 SME support factor under the Basel 3.1 framework. On a

pro forma basis, this would reduce the group's CET1 capital

ratio as at 31 July 2026 to 13.3%, against the minimum

CET1 capital requirement of 9.9%, resulting in overall CET1

capital headroom of c.340bps.

In monetary terms, the impact on the group’s overall CET1

capital headroom is minimal.

In the medium-term, we expect to operate within our

guidance range of 12-13%, as we generate capital, target

balance sheet growth and resume shareholder distributions,

at an appropriate time.

We continue to make positive progress in our preparations

for a transition to the IRB approach. Following the

submission of our initial application to the PRA in December

2020, the firm received positive feedback from the PRA on

Phase II of its application in December 2025, which is

currently being progressed by management.

Financial overview continued

Close Brothers Group plc Annual Report 2026

Group funding1

31 July

2026

£ million

31 July

2025

£ million

Customer deposits

7,876.2

8,799.3

Secured funding

479.0

1,077.4

Unsecured funding2,3

1,406.8

1,109.4

Equity

1,651.6

1,735.5

Total available funding

11,413.6

12,721.6

Total available funding as a percentage of loan book4

119%

132%

Average maturity of funding allocated to loan book5

20 months

18 months

Numbers relate to core funding and exclude working capital facilities at the business level.

Unsecured funding excludes £0.9 million (31 July 2025: £1.5 million) of non-facility overdrafts included in borrowings.

Includes £250.0 million of funds raised via a senior unsecured bond with a five-year tenor by Close Brothers Group plc, the group’s holding company,

in June 2023, with proceeds currently used for general corporate purposes.

Total funding as a percentage of loan book includes £131.1 million (31 July 2025: £207.3 million, of which £41.0 million for CBRL were classified as

held for sale) of operating lease assets in the loan book figure.

Simple weighted average of the applicable funding allocated to the loan book. The applicable funding excludes equity (except AT1 instruments) and

deducts funding held for liquidity purposes.

The Treasury function is focused on managing funding and

liquidity to support the lending divisions, as well as managing

interest rate risk. Our funding draws on a wide range of

wholesale and deposit markets including several public debt

securities at both group and operating company level, as

well as public and private secured funding programmes and

a diverse mix of customer deposits. This broad funding base

reduces concentration risk and ensures we can adapt our

position through the cycle.

We have maintained a prudent maturity profile, with the

average maturity of funding allocated to the loan book at 20

months (31 July 2025: 18 months), ahead of the average loan

book maturity at 16 months (31 July 2025: 15 months). The

increase in the average maturity of funding allocated to the

loan book reflects our access to unsecured funding markets

with the issuance of a £250 million Tier 2 bond in February

2026 and a £250 million senior unsecured bond in June

2026.

Total funding decreased 10% to £11.4 billion (31 July 2025:

£12.7 billion), which accounted for 119% (31 July 2025:

132%) of the loan book at the balance sheet date, as we

sought to optimise funding and reduce liquidity from the

elevated levels held during the recent period of uncertainty.

The average cost of funding1 across our lending divisions

reduced to 4.6% (2025: 5.4%) primarily reflecting the lower

base rate in the year and active management of our funding

base.

The ongoing investment in our Savings capability, franchise

and product offering has allowed us to significantly grow and

diversify our retail deposit base in recent years. We have a

suite of savings products available, providing us with

optionality to access segments of the deposit market as

needed, whilst providing a platform for future growth. As a

proportion of total funding, our retail deposits have grown

from 27% at the end of the 2022 financial year to account for

57% in 2026 (31 July 2025: 54%). Continued growth and

diversification of our offering creates opportunity to further

optimise funding cost and maturity in future years.

Over the year, customer deposits decreased 10% to £7.9

billion (31 July 2025: £8.8 billion) as we sought to optimise

the pricing and level of deposit funding following strong

growth in recent years, and reflect our lower funding

requirements. Retail customer deposits decreased 4% to

£6.6 billion (31 July 2025: £6.8 billion), with non-retail

deposits reducing 32% to £1.3 billion (31 July 2025: £2.0

billion), in line with our funding plan. Across our funding

base, only 10% of total deposits are available on demand

and 56% have at least three months to maturity. At 31 July

2026 approximately 92% of retail deposits were protected by

the Financial Services Compensation Scheme.

Secured funding decreased 56% to £0.5 billion (31 July

2025: £1.1 billion) following the repayment of an existing

Motor Finance securitisation facility and a reduction on

renewal of our Premium Finance securitisation facility,

reflecting lower funding requirements and actions taken to

optimise the liquidity position. Concurrently, the bank issued

and retained a listed motor securitisation transaction, Orbita

2026-1. This resulted in the creation of £744 million Class A

notes, which provide a significant increase to the group's

contingent collateral pool, providing scope for further

balance sheet optimisation.

Unsecured funding, which includes senior unsecured and

subordinated bonds, increased 27% to £1.4 billion (31 July

2025: £1.1 billion), primarily reflecting the £250 million

unsecured bond issuance in June 2026.

Moody’s ratings for the group and CBL (Bank deposit rating),

affirmed on 17 April 2026, are Baa2/P2 and A3/P2

respectively, with a negative outlook. Fitch Ratings (“Fitch”)

for both the group and CBL are BBB/F3, affirmed on 15

December 2025, with a negative outlook. Our credit ratings

remain robust, and we retain strong access to funding

markets.

The cost of funding across our lending divisions interest expense (excluding relevant allocations to CBRL and CBVH) for the 2026 financial year was

£436.1 million (31 July 2025: £520.8 million).

Strategic report

Governance report

Financial statements

Group liquidity

31 July

2026

£ million

31 July

2025

£ million

Cash and balances at central banks

1,190.7

1,917.0

Sovereign and central bank debt

340.1

601.6

Supranational, sub-sovereigns and agency (“SSA”) bonds

144.0

146.2

Covered bonds

83.9

105.6

Treasury assets

1,758.7

2,770.4

The group continues to ensure it is comfortably ahead of

both internal risk appetite and regulatory requirements.

During the initial uncertainty regarding the outcome of the

FCA’s review of historical motor finance commission

arrangements, we had deliberately maintained an elevated

level of liquidity, which we have reduced to a more normal

level over the year. Accordingly, treasury assets reduced

37% to £1.8 billion (31 July 2025: £2.8 billion). The majority

of our treasury assets continue to be held on deposit with

the Bank of England.

We have significantly increased our contingent collateral

portfolio to £1.2 billion (31 July 2025: £0.2 billion)1 driven

principally by the issuance of a public motor finance

securitisation, Orbita 2026-1, which we retained in full, and

we continue to maintain drawdown capacity at the Bank of

England via pre-positioned loans.

We regularly assess and stress test the group’s liquidity

requirements and continue to materially exceed the liquidity

coverage ratio (“LCR”) regulatory requirements, with a 12-

month average LCR to 31 July 2026 of 1,113% (31 July

2025: 1,012%). In addition to internal measures, we monitor

funding risk based on the CRR rules for the net stable

funding ratio (“NSFR”). The four-quarter average NSFR to 31

July 2026 was 144.0% (31 July 2025: 145.9%), well above

regulatory requirements and internal risk appetite.

Contingent collateral portfolios are reported as gross values and exclude any applicable funding haircuts.

Commercial lends to more than 28,000 small and medium-

sized enterprises through our in-house teams, where loans

are originated via our direct sales force or introduced by

third-party distribution channels. Asset Finance provides

commercial asset financing, hire purchase and leasing

solutions for a diverse range of assets and sectors. Invoice

Finance provides debt factoring, invoice discounting and

asset-based lending to SMEs and corporates.

The Commercial division has made good strategic progress

during the year and is carrying healthy momentum into the 2027

financial year. Simplification activities are now largely complete

through the winding down of Novitas, the sale of CBRL, winding

down CBVH and other sub-scale products and a simplification

of the federated divisional structure. Considerable progress has

been made on the optimisation initiatives, with restructuring

activity and an increased focus on harnessing automation and

AI to both enhance efficiency and enable further growth.

The Commercial loan book grew 3% over the year, with 6%

growth in the second half. We are benefiting from diversification

across the division, with some areas including Asset Finance

Ireland and Invoice Finance already delivering in line with our

5-10% target range. Our diversified business model and

growing presence in Ireland provide additional avenues for

sustainable expansion and we remain focused on growing

selectively through disciplined execution and differentiated

customer service.

Adjusted operating profit for Commercial decreased to £90.9

million (2025: £112.2 million), mainly driven by lower income

and an increase in impairment charges, as well as the impact

of Novitas on the prior year.

On a statutory basis, operating profit increased to £91.3

million (2025: £63.3 million), benefiting from the gain on sale

of CBRL and non-recurrence of the CBVH impairment

charge in the prior year, partially offset by restructuring

costs.

Financial overview continued

Close Brothers Group plc Annual Report 2026

Banking: Commercial

Asset Finance

Loan book

£3.6 billion

Average loan size

c.£49,000

Typical loan maturity

3-4 years

Invoice and Speciality Finance1

Loan book

£1.2 billion

Average loan size2

c.£684,000

Typical loan maturity

3 months

1. Invoice and Speciality Finance comprises Invoice UK and

GmbH and Novitas.

2. This figure represents Invoice Finance only.

Adjusted operating income decreased to £307.0 million

(2025: £315.6 million) reflecting the wind-down of the Novitas

book and lower behavioural fees in Asset Finance, as well as

a decrease in net interest income in Invoice Finance. The net

interest margin reduced marginally to 6.4% (2025: 6.6%)

driven by Invoice Finance, reflecting a competitive market

environment and lower average base rates during the year.

Adjusted operating expenses increased 2% to £189.2 million

(2025: £185.6 million), as continued investment in technology

was partially offset by the non-recurrence of Novitas

expenses and lower staff costs in Asset Finance. The

Commercial expense/income ratio increased to 62% (2025:

59%).

Adjusted impairment charges increased to £26.9 million

(2025: £17.8 million), with the prior year benefiting from an

impairment credit in respect of Novitas. This corresponded

to a bad debt ratio of 0.6% (2025: 0.4%) and a stable

provision coverage ratio of 1.5% (31 July 2025: 1.5%).

Excluding Novitas, impairment charges increased to £27.7

million (2025: £24.6 million) reflecting loan book growth, with

overall credit performance stable.

We expect the impact from Novitas to be minimal in the 2027

financial year.

Commercial

2026

£ million

2025

£ million

Change

Adjusted operating income

307.0

315.6

(3)

Adjusted operating expenses

(189.2)

(185.6)

Adjusted impairment losses on financial assets

(26.9)

(17.8)

Adjusted operating profit

90.9

112.2

(19)

Adjusted operating profit, pre provisions for impairment losses

117.8

130.0

(9)

Adjusting items:

Restructuring costs

(7.2)

(1.4)

n/a

Operating profit/(loss) from Close Brewery Rentals Limited1

6.8

(4.1)

(266)

Operating profit/(loss) from Close Brothers Vehicle Hire

0.8

(43.4)

(102)

Statutory operating profit

91.3

63.3

Net interest margin

6.4%

6.6%

Expense/income ratio

62%

59%

Bad debt ratio

0.6%

0.4%

Closing loan book and operating lease assets2

4,886.2

4,729.3

The sale of CBRL completed on 31 August 2025 and a gain of £6.4 million has been recognised. Please refer to Note 26 "Discontinued operations

and assets and liabilities classified as held for sale".

Operating lease assets of £1.1 million (31 July 2025: £1.3 million).

Strategic report

Governance report

Financial statements

Retail provides finance to individuals and businesses through

a network of intermediaries. Motor Finance provides several

products at point of sale in a dealership, or online via a

broker, which allow consumers to buy vehicles from over

3,500 retailers in the UK and Ireland. Premium Finance works

with c.1,100 insurance brokers in the UK and Ireland and

helps make insurance payments more manageable for

individuals and businesses, by allowing them to spread the

cost over fixed instalments. The Savings business provides

simple and straightforward savings products to businesses

and individuals.

We continue to make significant progress delivering our

strategic pillars in Retail. In 2025, we announced a

repositioning to focus the growth of our Premium Finance

business towards commercial lines insurance premium

finance where we see strongest risk-adjusted returns and

long-term growth potential, and to reduce our emphasis on

personal lines insurance premium finance. The repositioning

is in its final stages with an associated remaining portfolio of

c.£100 million to be substantially run-off by the end of the

2027 financial year. The run-off of our legacy Republic of

Ireland Motor Finance business is now largely complete.

Our Optimise initiatives have encompassed offshoring select

non-specialist customer activities and implementing

programmes focused on automation and digitisation,

allowing for a more efficient approach to service delivery.

We are seeing good growth in Motor Finance with the loan

book increasing 9% in the year. We have seen particularly

strong growth in the Irish business and have launched dealer

forecourt funding during the year, broadening our product

offering and supporting future growth opportunities.

Premium Finance continued to focus on growth in the

commercial market including a strategic partnership with

JMG, a top 30 UK insurance broker. While competition

remains strong, favourable market dynamics and emerging

opportunities provide confidence for continued progress into

the 2027 financial year and beyond.

We welcomed the publication of the FCA Premium Finance

Market Study and its conclusions in February 2026, which

align with our existing approach and bring clarity and stability

to the premium finance market.

Adjusted operating profit for Retail modestly reduced to

£17.4 million (2025: £18.9 million) as a reduction in income,

partly due to the planned withdrawal from selected personal

lines business in Premium Finance, was largely offset by a

Motor Finance impairment provision release.

We recognised adjusting items of £179.5 million (2025:

£217.5 million) during the year, largely driven by the increase

in provision in relation to motor finance commissions. Please

refer to Note 15 “Other assets and liabilities” for further

details on the group’s provisioning assessment.

On a statutory basis, Retail delivered an operating loss of

£162.1 million (2025: £198.6 million) reflecting the additional

provision in respect of motor finance commissions.

Adjusted operating income decreased 8% to £226.4 million

(2025: £246.7 million), reflecting the planned withdrawal from

selected personal lines relationships in Premium Finance as

well as deflation of insurance premiums, partly offset by

strong growth in the Irish Motor Finance business. The net

interest margin decreased to 7.9% (2025: 8.3%), primarily

reflecting the change in mix towards Motor Finance as a

result of the repositioning of the Premium Finance business.

Adjusted operating expenses reduced 2% to £179.8 million

(2025: £183.3 million) driven by offshoring benefits including

lower staff costs, partly offset by increased costs in Ireland

as we scale the business. The expense/income ratio

increased to 79% (2025: 74%) reflecting the reduction in

income.

Impairment charges decreased to £29.2 million (2025: £44.5

million), primarily driven by the implementation of an updated

IFRS 9 model which recognises the evolving composition

and behaviour of the Motor Finance book1, and improved

credit performance in Premium Finance. The bad debt ratio

reduced to 1.0% (2025: 1.5%), with the provision coverage

ratio decreasing to 3.0% (31 July 2025: 3.2%).

For further information please refer to the basis of preparation in Note 1 "Material accounting policies".

Financial overview continued

Close Brothers Group plc Annual Report 2026

Banking: Retail

Motor Finance

Loan book

£2.2 billion

Average loan size

c.£7,400

Typical loan maturity

4 years

Premium Finance

Loan book1

£0.7 billion

Average loan size

c.£700

Typical loan maturity

11 months

1. Includes £105.5 million (31 July 2025: £288.8 million) of

brokers within the exit cohort as part of the planned

reduction in the personal lines book.

Retail

2026

£ million

2025

£ million

Change

Adjusted operating income

226.4

246.7

(8)

Adjusted operating expenses

(179.8)

(183.3)

(2)

Impairment losses on financial assets

(29.2)

(44.5)

(34)

Adjusted operating profit

17.4

18.9

(8)

Adjusted operating profit, pre provisions for impairment losses

46.6

63.4

(26)

Adjusting items:

Provision in relation to motor finance commissions

(164.7)

(165.0)

—

Other motor finance commissions related costs1

(7.7)

(18.7)

(59)

Provision in relation to early settlements in Motor Finance

(1.3)

(33.0)

(96)

Restructuring costs

(5.6)

(0.6)

n/a

Amortisation of intangible assets on acquisition

(0.2)

—

Statutory operating loss

(162.1)

(198.6)

(18)

Net interest margin

7.9%

8.3%

Expense/income ratio

79%

74%

Bad debt ratio

1.0%

1.5%

Closing loan book2

2,820.8

2,878.9

(2)

Motor finance commissions-related complaints handling, operational and legal costs, and unwind of the time value discount, partially offset by

insurance recoveries.

The Motor Finance loan book includes £7.7 million (31 July 2025: £32.1 million) relating to the legacy Republic of Ireland Motor Finance business,

which is in run-off following the cessation of our previous partnership in the Republic of Ireland from 30 June 2022.

Property provides residential development finance, bridging

finance and investment loans to experienced property

developers and investors across mainland UK and Northern

Ireland, through its two brands, Close Brothers Property

Finance and Commercial Acceptances. Property Finance

lends to over 500 professional property developers with a

focus on small to medium-sized residential developments,

with Commercial Acceptances lending to c.400 developers,

investors and traders.

Property delivered a resilient performance in what remained a

transitional year for the business, as we continued to broaden

our proposition and position the franchise for sustainable

growth. While our core Build-to-Sell market faces challenges,

including planning system complexity, elevated construction

costs and lower purchaser demand, the business continues

to be supported by strong customer relationships, disciplined

underwriting and deep market expertise, including a strong

performance from Commercial Acceptances in a highly

competitive market.

Alongside this, we made good strategic progress in

diversifying the business and building new growth

opportunities. We increased our focus on larger corporate

borrowers within Build-to-Sell, expanded our Structured

Finance offering and continued to strengthen our regional

presence through targeted hires. We also launched new

lending propositions, including Revolving Credit Facility and

CA Revolve products, designed to meet evolving customer

needs and broaden our addressable market.

Our diversification strategy is beginning to generate

encouraging momentum taking us into the 2027 financial

year. In Build-to-Rent, just after the year end, we completed

our largest transaction to date, valued at £67.2 million. Our

Build-to-Rent pipeline across single-family and multi-family

housing remains healthy, with a number of opportunities

expected to convert in the coming months. Although the

Build-to-Sell loan book is expected to remain broadly stable

in the near term, growth across our diversified business

initiatives and increasing demand from larger, well-

capitalised partners provide confidence in our ability to

deliver sustainable growth over the medium term.

Adjusted operating profit declined 27% to £49.0 million

(2025: £67.2 million), as challenging conditions in the Build-

to-Sell market have led to softer demand and lower loan

balances, and reflecting increased impairment charges on a

small number of facilities. Before provisions for impairment

losses, adjusted operating profit reduced 13% to £84.6

million (2025: £96.7 million).

On a statutory basis, Property delivered an operating profit of

£47.6 million (2025: £66.9 million).

Operating income declined 10% to £117.7 million (2025:

£130.6 million), driven by the reduction in the loan book, as

low drawdowns were more than offset by repayments levels,

alongside reduced fee yields. The net interest margin

reduced to 6.5% (2025: 6.9%), reflecting the change in

business mix towards larger, lower-margin lending at

attractive returns, as well as reduced fee yields and lower

average base rates during the year.

Strategic report

Governance report

Financial statements

Loan book

£1.8 billion

Average loan size

c.£2.4 million

Typical development loan maturity

12-24 months

Banking: Property

Adjusted operating expenses decreased 2% to £33.1 million

(2025: £33.9 million), reflecting lower staff costs. The

expense/income ratio increased to 28% (2025: 26%).

Impairment charges increased to £35.6 million (2025: £29.5

million), primarily due to increased individually assessed

provisions on a small number of facilities, including legacy

cases, driven by development specific issues, build cost

inflation and a subdued sales market. As a result, the bad

debt ratio increased to 2.0% (2025: 1.5%) and the provision

coverage ratio rose to 5.6% (31 July 2025: 4.2%). The

Property book is predominantly secured, with conservative

loan-to-value ratios. 72% of loans are to repeat customers.

Property

2026

£ million

2025

£ million

Change

Operating income

117.7

130.6

(10)

Adjusted operating expenses

(33.1)

(33.9)

(2)

Impairment losses on financial assets

(35.6)

(29.5)

Adjusted operating profit

49.0

67.2

(27)

Adjusted operating profit, pre provisions for impairment losses

84.6

96.7

(13)

Adjusting items:

Restructuring costs

(1.4)

(0.3)

n/a

Statutory operating profit

47.6

66.9

(29)

Net interest margin

6.5%

6.9%

Expense/income ratio

28%

26%

Bad debt ratio

2.0%

1.5%

Closing loan book

1,757.3

1,852.5

(5)

Group (central functions)

2026

£ million

2025

£ million

Change

Operating income

(8.2)

(11.7)

(30)

Operating expenses

(28.8)

(42.3)

(32)

Operating loss

(37.0)

(54.0)

(31)

Adjusting items:

Restructuring costs

(0.1)

—

n/a

Statutory operating loss

(37.1)

(54.0)

(31)

The operating loss from Group (central functions), which includes the central functions such as finance, legal and compliance,

risk and human resources, reduced to £37.0 million (2025: £54.0 million), better than guidance of c.£45-50 million. The negative

income represents the net cost of group funding, which was lower in the year, reflecting higher interest earned on group cash

balances. The reduction in operating expenses primarily reflects the non-recurrence of legal and professional fees associated

with the impact of the FCA’s review of motor finance commissions.

Loan book analysis

31 July

2026

£ million

31 July

2025

£ million

Change

Commercial

4,886.2

4,729.3

Asset Finance1

3,642.2

3,580.4

Invoice Finance

1,244.0

1,148.9

Retail

2,820.8

2,878.9

(2)

Motor Finance2

2,169.7

1,993.5

Premium Finance3

651.1

885.4

(26)

Property

1,757.3

1,852.5

(5)

Closing loan book and operating lease assets4

9,464.3

9,460.7

—

Asset Finance totals exclude £130.0 million (31 July 2025: £165.0 million) of operating lease assets related to CBVH which is in wind-down, and £nil

(31 July 2025: £41.0 million) of operating lease assets related to CBRL which was sold in the year.

Asset Finance includes £312.2 million (31 July 2025: £289.4 million) of loans in relation to Asset Ireland, previously reported within Invoice Finance.

The Motor Finance loan book includes £7.7 million (31 July 2025: £32.1 million) relating to the Republic of Ireland Motor Finance business, which is in

run-off following the cessation of our previous partnership in the Republic of Ireland from 30 June 2022.

The Premium Finance loan book includes £105.5 million (31 July 2025: £288.8 million) of brokers within the exit cohort as part of the planned

reduction in the personal lines book of Premium Finance.

Includes operating lease assets of £1.1 million (31 July 2025: £1.3 million).

Financial overview continued

Close Brothers Group plc Annual Report 2026

The loan book was flat in the year at £9.5 billion (31 July

2025: £9.5 billion), although growth accelerated in the

second half (2% decline in the loan book in H1 2026 versus

2% growth in H2 2026), reflecting the strategic actions we

have taken to reposition our business.

On an underlying basis, excluding the planned reduction in

the personal lines book of Premium Finance and run-off of

the legacy Republic of Ireland Motor Finance business, the

loan book increased 2% in the year, and grew 4% in the

second half, building good momentum as we enter 2027. All

of our divisions grew in the final quarter, notwithstanding the

prevailing market conditions in some of our markets.

Through our simplification actions, we have repositioned the

business to focus on core markets where we see a strong

and sustainable market opportunity. We continue to target

5-10% p.a. growth through the cycle through a combination

of overall market growth, share gains and new business

initiatives.

The Commercial loan book increased 3% to £4.9 billion (31

July 2025: £4.7 billion), with good growth across both Asset

Finance and Invoice Finance. Invoice Finance grew 8%, with

strong new business volumes, particularly in the second half

of the year. Asset Finance grew 2%, with both the Irish and

Wholesale Finance portfolios performing particularly well. In

the Commercial division, we continue to pursue organic

growth in our core markets where we have developed strong

relationships and expertise, for example in emerging clean-

energy markets. We are also targeting new products and

sectors such as commercial mortgages and through our

repositioned intermediated Asset Finance business.

The Retail loan book declined to £2.8 billion (31 July 2025:

£2.9 billion) on a reported basis, although the underlying loan

book grew 6%. The Motor Finance loan book grew strongly,

up 9%, with good new business volumes across the

business and particularly strong growth in Ireland. The

Premium Finance loan book reduced 26% reflecting the

planned reduction of a number of personal lines broker

relationships in line with our strategic repositioning of the

business. Excluding the exiting brokers, Premium Finance

declined 9%, driven by market-wide insurance premium

deflation. At 31 July 2026, the Premium Finance loan book

included £105.5 million (31 July 2025: £288.8 million) of

brokers within the exit cohort as part of the planned

reduction in the personal lines book, with these exiting

brokers expected to substantially run-off during the course

of the 2027 financial year.

In Retail, we are renewing our focus on growing in the

commercial lines market and supporting our brokers to write

larger and more complex business in Premium Finance,

while in Motor Finance, we are expanding our reach and

distribution of Motor Finance, particularly in Ireland.

The Property loan book decreased 5% to £1.8 billion (31 July

2025: £1.9 billion) as low drawdowns were more than offset

by repayment levels, reflecting industry-wide challenges in

the Build-to-Sell market as housing delivery across the UK

remains constrained due to planning delays, build cost

pressures and labour shortages, whilst demand continues to

be limited by cost-of-living pressures. We have expanded

our regional presence and launched a new cash flow-led

product in our bridging business, whilst also now offering a

Revolving Credit Facility to our larger customers. We

continue to see significant opportunities for providing

development loans for the delivery of Build-to-Rent and

Purpose-Built Student Accommodation, and are further

building our market position in these sectors, with a £67.2

million Build-to-Rent facility already completed in the 2027

financial year.

Strategic report

Governance report

Financial statements

Risk report

Effective management of the risks we face is

central to everything we do

The group faces a number of risks in the normal course of its

business, primarily arising from its lending and deposit-

taking activities. To manage these effectively, a consistent

approach is adopted based on a set of overarching

principles, namely:

• adhering to our established and proven business model,

as outlined on pages 8 to 9.

• implementing an integrated risk management approach

based on the concept of three lines of defence; and

• setting and operating within clearly defined risk appetites,

monitored with defined metrics and limits.

This risk report provides a summary of our approach to risk

management, covering each of the key aspects of the

group’s Enterprise Risk Management Framework.

Information on each of the group’s principal risks, including

an overview of the frameworks in place to manage them, is

also included, together with an overview of current emerging

risks and uncertainties.

All disclosures in the risk report are unaudited unless

otherwise stated.

Enterprise risk management

An enterprise-wide framework designed to provide the

Board and senior management with oversight of the

group’s financial position as well as the risks that might

adversely affect it.

The framework details the core risk management

components and structures used across the group, and

defines a consistent and measurable approach to identifying,

assessing, controlling and mitigating, reviewing and

monitoring, and reporting risk – the risk process life cycle.

This sets out the activities, tools, techniques and

organisational arrangements designed to identify the

principal and emerging risks facing the group, and that

appropriate responses are in place to mitigate these risks

and prevent detriment to its customers and colleagues.

This is an enabler for the group to meet its goals and

enhance its ability to respond to new opportunities.

The framework is purposely designed to allow the capture of

business opportunities whilst maintaining an appropriate

balance of risk and reward within the group’s agreed risk

appetite.

Enterprise Risk Management Framework

Risk culture and awareness

An effective risk culture is embedded throughout

the group.

Maintenance of an effective risk management culture is

integral to the group in meeting its regulatory conduct

requirements and assisting the accomplishment of key

strategic goals.

The risk culture:

• supports the group and its Directors in meeting their legal

and regulatory obligations, particularly with respect to the

identification and management of risks and the need for a

robust control environment;

• underpins the group’s purpose, strategy, cultural attributes

and values;

• provides enhanced awareness of risk in business

operations by highlighting strengths and weaknesses and

their materiality to the business and, in turn, facilitating

informed decision-making;

• optimises business performance by facilitating challenge

of ineffective controls and improving the allocation of

resources;

• improves the group’s control environment; and

• assists in the planning and prioritisation of key projects

and initiatives.

Close Brothers Group plc Annual Report 2026

Risk management culture

Locally embedded

While risk management is led centrally, it is embedded

locally within our businesses. Managers actively promote a

culture in which risks are identified, assessed, managed and

reported in an open, transparent and objective manner, and

staff conduct is viewed as critical.

Independent second line

The group risk management function operates independently

of the business, providing oversight and advice on the

operation of the risk framework, assurance that agreed

processes operate effectively and that a risk and conduct

culture is embedded within the business.

Open escalation channels

All colleagues are responsible for risk identification and

reporting within their area of responsibility and are

encouraged to escalate risks and concerns where necessary,

either through line or business management or by following

the provisions of the group Whistleblowing Policy.

Risk and reward

The relationship between risk and reward is a key

consideration in all risk management decisions. Additionally,

all staff are evaluated against both agreed objectives (the

“what”) and desired behaviours (the “how”). This encourages

long-term stewardship behaviours together with a strong and

appropriate risk and conduct culture.

For further information on our approach to remuneration for

the group’s Directors see pages 137 to 151.

Risk governance

Role of the Board

The Board retains overall responsibility for overseeing the

maintenance of the group's system of internal control and

the effective operation of the risk management framework

and associated oversight processes. The risk management

framework and its governance arrangements are designed to

provide a clear organisational structure with distinct,

transparent and consistent lines of responsibility and

effective processes to identify, manage, monitor and report

the risks to which the group is, or may become, exposed. On

an annual basis, the Board reviews the effectiveness of the

group’s risk management and internal control systems.

Further details on the Board review of risk management and

internal controls are provided on pages 112 to 121.

Risk management across the group is overseen by the

Risk Committee. The committee is responsible for reviewing

risk appetite, monitoring the group’s risk profile against this

and reviewing the day-to-day effectiveness of the risk

management framework. In addition, the committee is

responsible for overseeing the maintenance and

development of an appropriate and supportive risk culture

and for providing risk input into the alignment of

remuneration with performance against risk appetite.

The committee’s key areas of focus over the last financial

year are set out on pages 134 to 136.

The group closely monitors its risk profile to ensure that it

continues to align with its strategic objectives as

documented on pages 10 to 11. The Board considers that

the group’s current risk profile remains consistent with its

strategic objectives.

The Risk Committee is supported by a number of executive,

risk-specific and divisional committees. Together, these

committees facilitate an effective flow of key risk information,

as well as functioning to support appropriate risk

management at each stage of the risk life cycle. They also

provide an escalation channel for any risks or concerns,

supporting the maintenance of an effective risk culture. The

group’s risk governance framework is designed to enable the

group to respond to changes in the risk and the broader

regulatory environment in a considered and effective manner,

with oversight from the Board, and during the year the

committees have operated where needed in an agile manner,

convening on an ad-hoc basis where required in addition to

regular scheduled sessions. During the year the effectiveness

of these committees and their terms of reference were

reviewed to confirm they remain fit for purpose and all

committees continue to work efficiently and effectively.

Strategic report

Governance report

Financial statements

Locally

embedded

Independent

second line

Open

escalation

channels

Risk and

reward

Risk committee structure

Risk committee overview

The governance framework operates through various delegations of authority from the Board downwards, with a number of

committees focused on risk management. The delegations of authority cover both individual authorities as well as authorities

exercised via the group’s risk committee structure.

Group Risk and Compliance

Committee

Provides oversight of the group’s risk profile, alignment to risk appetite and effectiveness of

the risk management and compliance framework.

Model Governance

Committee

Provides oversight of the group’s exposure to model risk through the review, approval and

monitoring of all high-materiality models.

Capital Adequacy

Committee

Monitors group and bank capital adequacy, incorporating capital planning, stress testing,

governance, processes and controls.

Bank Asset and Liability

Committee

Provides oversight of the bank's risk management and internal controls across liquidity,

funding and market risk.

Group Asset and Liability

Committee

Provides oversight of the company and wider group’s risk management and internal controls

across liquidity, funding and market risk.

Credit Risk Management

Committee

Monitors the group’s credit risk profile, examining current performance and key portfolio

trends, ensuring compliance with risk appetite.

Group Credit Committee

Reviews material credit transactions and exposures from a credit, reputational, funding

structure and business risk perspective.

Impairment Adequacy

Committee

Governs the group’s impairment process, reviewing the financial position relating to

impairment and ensuring adequate coverage is held across the portfolio.

Operations and Technology

Risk Committee

Monitors and oversees group-wide operational resilience, including technology, security,

supplier and operational risk appetite, examining industry, regulatory and technical risks.

Divisional risk and

compliance committees

Provide oversight of risk profile, alignment to risk appetite and effectiveness of the risk

management and compliance framework at a divisional or business level.

Three lines of defence

The group’s risk management approach is underpinned by a strong governance framework founded on a three lines of defence

model.

The governance framework is considered appropriate to both the size and strategic intentions of the group. The key principles

underlying this approach are that:

• business management owns all the risks assumed throughout the group and is responsible and accountable for their day-to-

day management;

• the Board and business management together promote a culture in which risks are identified, assessed and reported in an

open, transparent and objective manner;

• the overriding priority is to protect the group’s long-term viability and produce sustainable medium to long-term revenue

streams;

• risk functions are independent of the businesses and provide oversight of and advice on the management of risk across the

group;

• risk management activities across the group are proportionate to the scale and complexity of the group’s individual

businesses;

• risk mitigation and control activities are commensurate with the degree of risk; and

• risk management and control supports decision-making.

Risk report continued

Close Brothers Group plc Annual Report 2026

Executive committees

Group Risk and

Compliance Committee

Model Governance Committee

Capital Adequacy Committee

Bank Asset and

Liability Committee

Group Asset and

Liability Committee

Risk-specific committees

Credit Risk Management

Committee

Group Credit Committee

Impairment Adequacy

Committee

Operations and Technology

Risk Committee

Divisional committees

Divisional risk and

compliance committees

Risk Committee

The Board

Three lines of defence

First line of defence

The businesses

Group Risk and Compliance Committee

(reports to the Risk Committee)

The Chief Executive delegates to divisional and operating

business Chief Executives the day-to-day responsibility for

risk management, regulatory compliance, internal control

and conduct in running their divisions or businesses.

Business management has day-to-day ownership,

responsibility and accountability for:

• identifying and assessing risks;

• managing and controlling risks;

• measuring risk (key risk indicators / early warning

indicators);

• mitigating risks, including controls framework and

effectiveness;

• reporting risks;

• committee structure and reporting; and

• management and self-assessment of operational

resilience capabilities.

Second line of defence

Risk and compliance

Risk Committee (reports to the Board)

The Risk Committee delegates day-to-day responsibility for

oversight and challenge on risk-related issues to the Group

Chief Risk Officer.

Risk functions (including compliance) provide support,

assurance and independent challenge on:

• the design and operation of the risk framework and

methodologies;

• risk assessment;

• risk appetite and strategy;

• risk reporting;

• adequacy of mitigation plans and effectiveness of risk

decisions taken by business management;

• group risk profile; and

• committee governance and challenge.

Third line of defence

Internal audit

Audit Committee (reports to the Board)

The Audit Committee mandates the Group Head of Internal

Audit with day-to-day responsibility for independent

assurance.

Internal audit provides independent assurance on:

• first and second lines of defence;

• appropriateness/effectiveness of internal controls; and

• effectiveness of policy implementation.

Strategic report

Governance report

Financial statements

Key features

• Promotes a strong risk culture and focus on

sustainable risk-adjusted returns.

• Implements the risk framework.

• Promotes a culture of adhering to limits and

managing risk exposures and ongoing self-

assessment.

• Promotes a culture of focus on good

customer outcomes.

• Promotes responsibility for ongoing

monitoring of positions and management and

control of risks and controls effectiveness,

including testing of controls, alongside

portfolio optimisation.

Key features

• Oversees embedding of the risk framework

and supporting methodologies, taking an

integrated approach to risk and compliance

(qualitative and quantitative).

• Promotes a strong and effective risk and

control culture across the group.

• Undertakes compliance monitoring and risk

assurance activities.

• Supports through developing and advising on

risk and compliance strategies.

• Facilitates constructive check and challenge.

• Oversight of business conduct and customer

outcomes.

Key features

• Draws on deep knowledge of the group and

its businesses.

• Provides independent assurance on the

activities of the group, including the risk

management framework.

• Assesses the appropriateness and

effectiveness of internal controls.

• Incorporates review of culture, conduct and

customer outcomes.

Risk management and internal controls

Supporting the foundation of a strong risk management

structure

Aligned to the risk governance framework, oversight across

the group is supported by the maintenance of a range of

internal controls. These cover risk, compliance, and financial

management and reporting, and control processes. The

controls are designed to enable accuracy and reliability of

the group’s financial information and financial and regulatory

reporting.

The main features of these controls with respect to financial

reporting include consistently applied accounting policies,

clearly defined lines of responsibility and processes for the

review and oversight of disclosures within the Annual Report.

These controls are overseen by the Audit Committee.

The group policy framework, overseen by the Board, is a key

component of the group’s Enterprise Risk Management

Framework, supporting the foundation of a strong risk

management structure. Group policies are supported by

group standards, and by divisional/business-level policies

and procedures which, together, outline the way in which

policy is implemented and detail the process controls in

place to ensure compliance. The accounting policies form

part of this broader policy framework, alongside policies and

standards relating to the group’s principal risks.

This structure establishes a link between group strategy and

day-to-day operations in a manner consistent with agreed

risk appetite. Simultaneously they facilitate Board and

executive-level oversight and assurance as to the application

of the strategy via conformance with underlying policy and

standard requirements.

Review of effectiveness of risk management and

internal control systems

The Board is responsible for establishing and maintaining the

group’s risk management and internal control framework.

Throughout the year, the Board, assisted by the Risk

Committee and the Audit Committee, actively monitors the

group’s risk management and internal control systems and

reviews their effectiveness. A review of the effectiveness has

been performed, covering all material controls, including

financial, operational and compliance controls. Further detail

on the Board review of the risk management and internal

controls is provided on page 112.

Group policy framework

Risk appetite

Enabling key risk decisions in delivering the group’s

strategic objectives

Risk appetite forms a key component of the group’s risk

management framework and refers to the sources and levels

of risk that the group is willing to assume in order to achieve

its strategic objectives and business plan. It is managed via

an established framework that facilitates ongoing

communication between the Board and management with

respect to the group’s evolving risk profile. This enables key

decisions concerning the allocation of group resources to be

made on an informed basis.

Risk appetite is set on a top-down basis by the Board with

consideration to business requests and executive

recommendation. Appetite measures, both qualitative and

quantitative, are applied to inform both decision-making and

monitoring and reporting processes. Early-warning triggers

are also employed to drive required corrective action before

overall tolerance levels are reached.

The group conducts a formal review of its risk appetites

annually to align risk-taking with the achievement of strategic

objectives. Adherence is monitored through the group’s risk

committees on an ongoing basis, with interim updates to

individual risk appetites considered as appropriate through

the year.

Stress testing

Assessing and understanding future levels of risk

Stress testing represents another core component of the risk

management framework and is employed, alongside

scenario analysis, to support assessment and understanding

of the risks to which the group might be exposed in the

future. As such, it provides valuable insight to the Board and

senior management, playing an important role in the

formulation and pursuit of the group’s strategic objectives.

All regulatory stress testing activities, such as the Internal

Capital Adequacy Assessment Process (“ICAAP”), are

overseen by the Scenario Planning Forum, which considers

the various risks impacting the business and recommends

how the potential impact on both capital and liquidity should

be considered from a stress testing perspective.

Stress testing provides valuable insight to the Board and

senior management, helping to inform key decisions

regarding both the direction and management of the group.

Accordingly, stress testing activity is broadly designed to

meet two principal objectives:

1. inform capital and liquidity planning – including liquidity

and funding risk assessment, contingency planning and

recovery planning; and

2. support ongoing risk and portfolio management –

including risk appetite calibration, strategic decisioning

and planning, risk/reward optimisation and business

resilience planning.

To support these objectives, stress testing is designed to

cover the group’s most material risks, with activity

conducted at various levels, ranging from extensive group-

wide scenario analysis to simple portfolio sensitivity analysis.

Stress testing also represents a critical component of both

the group’s ICAAP and Internal Liquidity Adequacy

Assessment Process (“ILAAP”), with scenario analysis

additionally employed as part of the group’s Recovery Plan.

Risk report continued

Close Brothers Group plc Annual Report 2026

Enterprise Risk Management Framework

Group policies

Group standards

Divisional and business policies

Procedures

Principal and emerging risks

Principal risks

At the core of the Enterprise Risk Management Framework

and risk process life cycle sits the group’s suite of principal

risks.

These are the risks which have been identified as those most

material in the delivery of the group’s strategic objectives.

This suite is subject to ongoing review to align the framework

to the prevailing risk environment.

Following review and challenge, it has been determined that

the existing suite of principal risks detailed in our prior year’s

report remains broadly reflective of those faced currently.

However, as part of our continual review of the prevailing risk

landscape, it is recognised that underlying risk drivers may

have changed and our approach to managing them has in

turn evolved in step with them. Following the sale of

Winterflood Securities, the group no longer has a trading

book, and market risk only arises from our non-trading

(banking) book. As a result, traded market risk has been

removed from the suite of principal risks and non-traded

market risk has been renamed to market risk.

The table on pages 67 to 69 gives an overview of these

principal risks and possible impacts, as well as the outlook

pertaining to these. More detailed information on each of

these follows on pages 71 to 100 which set out the

frameworks in place to manage these risks.

This should not be regarded as a complete and

comprehensive statement of all potential risks faced by the

group but reflects those which the group currently believes

could have a significant impact on its future performance.

Climate risk

Running alongside the suite of principal risks is climate risk,

which the group categorises as a cross-cutting risk, as the

impacts arising from climate change have the ability to

impact across the spectrum of principal risks. In addition,

transitional risks from climate change which may have a

medium to longer-term impact on the group’s product

offering, operations and strategic direction are captured in

the group’s emerging risks. For further information on the

group’s climate risk response, see the Sustainability Report

on pages 28 to 47.

Climate risk represents an ongoing area of focus, and the

group continues to monitor government and regulatory

developments closely. Throughout 2026 the group has re-

evaluated its exposure to climate risks, as well as the

associated materiality, in response to the PRA's publication

of Supervisory Statement 5/25. The short‑dated tenor and

UK focus of the lending book, together with the resilience of

the business model, mitigate exposure to climate risks.

Ongoing embedding of the climate risk framework will further

support continuous review of the evolving risk landscape.

Emerging risks

The group’s suite of principal risks is accompanied by a

portfolio of emerging risks reflecting broader market

uncertainties. The group defines an emerging risk as a risk

that may potentially become material in the delivery of the

group’s strategic objectives but the risk and its applicability

to the group may not yet be fully understood or assessed.

This incorporates input and insight from both a top-down

and bottom-up perspective:

Top-down: identified by Directors and executives at a group

level via the Group Risk and Compliance Committee

(“GRCC”) and the Board.

Bottom-up: identified at a business level and escalated,

where appropriate, via risk updates to the GRCC.

The established framework for monitoring these risks

supports the group’s organisational readiness to respond.

Group-level emerging risks are monitored by the GRCC and

Risk Committee on an ongoing basis, with agreed mitigating

actions in place to ensure the group’s preparedness should a

risk crystallise. Ongoing monitoring also tracks several sub-

risks to support identification of key themes and within the

year the sub-risks covered have evolved accordingly in line

with the perceived risk landscape.

Emerging risks are considered on both an internal and

external basis with careful consideration given to likely

emergence periods. Additionally, active monitoring of the

correlation impacts across emerging risks, uncertainties and

principal risks is undertaken.

Strategic report

Governance report

Financial statements

Principal and emerging risks

Emerging risks

Risk emergence

E1:

Economic uncertainty

Short term

E2:

Geopolitical uncertainty

Medium term

E3:

Transitional climate risks

Long term

E4:

Strategic disruption

Risk report continued

Close Brothers Group plc Annual Report 2026

Business and strategic risk

The risk of realising lower than

anticipated profits or experiencing a

loss rather than a profit due to failure

to adapt to changing market

conditions, pursuing an ineffective

strategy or ineffective

implementation of strategy.

See page 71.

• Business and strategic risk has stabilised somewhat in recent months, but

remains elevated and is likely to remain so throughout FY 2027.

• The uncertain macro environment presents an overarching risk to the group’s

business and strategy and our ability to deliver new growth initiatives.

• While we have greater clarity on the outcome of the FCA review of historical

motor finance commissions, some uncertainty remains in relation to the

ongoing legal challenges to the scheme.

• Additionally, the group continues to execute a significant transformation

programme involving operating model changes to certain businesses and

central functions.

• A number of management actions have strengthened our capital position

and simplified the group, ensuring we are well placed to navigate the current

uncertainty. However, this risk is likely to remain elevated until there is full

clarity in relation to motor finance commissions and changes from the

transformation programme have been delivered.

Capital risk

The risk that the group has

insufficient regulatory capital

(including equity and other loss-

absorbing debt instruments) to

operate effectively, including

meeting minimum regulatory

requirements, and to operate within

Board-approved risk appetite and

support its strategic goals.

See page 72.

• In response to the continuing uncertainty relating to the FCA motor finance

commission redress scheme, we have continued to strengthen our capital

position substantially above regulatory requirements. The group's CET1

capital ratio was 14.1% at 31 July 2026.

• We currently estimate that the implementation of Basel 3.1 on 1 January

2027 will result in a reduction in the group's CET1 capital ratio of

approximately 80bps with the minimum CET1 capital requirement reducing

by c.40bps, reflecting the PRA’s Pillar 2a SME Lending Adjustment, which

was introduced to mitigate the impact of the removal of the Pillar 1 SME

support factor under the Basel 3.1 framework. On a pro forma basis, this

would reduce the group's CET1 capital ratio as at 31 July 2026 to 13.3%,

against the minimum CET1 capital requirement of 9.9%, resulting in overall

CET1 capital headroom of c.340bps. In monetary terms, the impact on the

group’s overall CET1 capital headroom is minimal.

Change execution risk

The risk of loss, reputational damage

or poor strategic and regulatory

outcomes resulting from the failure

to effectively execute, embed and

deliver the outcomes of change

initiatives in line with objectives and

business requirements.

See page 75.

• Change delivery capacity and capability continue to be areas of

management focus, to enable safe delivery of the significant change

programmes planned and under way to support the group’s

transformation. Strong resource partners secured to strengthen

capacity.

• Additional management oversight is in place to provide necessary

strategic direction to transformation programmes and to manage strain

on resource through the introduction of a bank investment delivery

oversight group.

Conduct risk

The risk that the group’s behaviours, or

those of its colleagues, whether

intentional or unintentional, result in

poor outcomes for customers or the

markets in which it operates. It is

rooted in the importance of delivering

good customer outcomes at every

stage of the customer journey.

See page 76.

• The group will continue to invest in keeping abreast of regulatory

guidance and developments to maintain a strong focus on regulatory

expectations in relation to the delivery of good customer outcomes.

• This includes adapting to the need for revised market strategies due to

the impact of regulatory change on product design and distribution.

• The external macroeconomic environment continues to increase financial

pressure on consumers with an ongoing regulatory expectation to evolve

the effectiveness of the support remedies offered to customers with

vulnerabilities and those in financial difficulty.

Credit risk

The risk of a reduction in earnings and/

or value due to the failure of a

counterparty or associated party, with

whom the group has contracted, to

meet its obligations as they fall due.

See page 77.

• The outlook for the UK economy remains uncertain, reflecting a weak

employment market, subdued housing market performance and ongoing

geopolitical tensions, all of which continue to impact both individuals

and SMEs.

• While some forward-looking indicators are positive, there remains the

real risk of deterioration in current macroeconomic conditions (including

a protraction of the US conflict with Iran), which leads to the risk of

increased credit losses in the future.

• Nonetheless, the credit quality of the loan book remains robust,

supported by disciplined application of prudent lending criteria and risk

appetite.

Principal risk

Outlook

Strategic report

Governance report

Financial statements

Cyber risk

The risks arising from inadequate

internal and external information and

cyber security, where failures impact

the confidentiality, integrity and

availability of information, electronic

data or critical technology services.

See page 89.

• The threat landscape continues to evolve, with attacks increasing in both

frequency and severity.

• Cyber risk is driven by criminal and state-linked actors, maturation of AI-

driven attacks, geopolitical volatility, and growing supply chain

interdependencies.

• AI-driven attacks are expected to increase in sophistication and scale, with

advanced AI surpassing skilled humans in vulnerability discovery, targeting,

social engineering, and exploit development.

• Ransomware remains a primary operational risk, requiring strong

preventative and recovery measures, as it evolves from data theft to

disruption of time-sensitive operations.

• Third-party and supply chain security remain key concerns; we support the

UK government’s focus in this area in forthcoming cyber resilience

legislation. Our transition to cloud creates the potential for concentration and

systemic risk arising from shared dependencies, requiring careful

management to maintain resilience.

• Cyber risk remains central to our operational resilience framework, with

continued focus on scenario testing, recovery planning, and integration with

enterprise risk management.

Funding and liquidity risk

Funding risk is the risk of loss

caused by the inability to raise funds

at an acceptable price or to access

markets in a timely manner or

any decrease in the stability of the

current funding base.

Liquidity risk is defined as the risk

that the group, or any of its entities,

do not have sufficient liquid assets

to meet liabilities as they come due

during normal and disrupted

markets.

See page 91.

• The group has a long-standing approach based on the principle of

“borrow long, lend short” that provides significant funding resilience. The

group also continues to benefit from its predominantly retail deposit

weighted funding mix and prudent maturity profile.

• The group expects to continue to see corporate deposits reduce

proportionately and the attrition from this segment will continue to be

met through growth in retail deposits.

• Access to wholesale funding markets provides further diversification to

the funding mix, whilst enabling the group to opportunistically meet

funding requirements – should pricing and market access allow it.

Legal and regulatory risk

The risk of non-compliance with

laws and regulations which could

give rise to fines, litigation, sanctions

and/or direct claims by customers

and the potential for material

adverse impact upon the group.

See page 93.

• We are operating in an environment of notably elevated legal and regulatory

risks, particularly regarding historical motor finance commissions.

• Legal risk with respect to the motor commissions matter has increased lately

through the four legal challenges (three lenders, one consumer group) filed

against the FCA's redress scheme, with a timeline stretching into 2027 for

the litigation to be resolved, and the FCA advising lenders they should plan

for a "no scheme" outcome as well as planning to deliver the FCA's scheme.

County court litigation may also increase following the Court of Appeal's

recent ruling that one bulk claim against a number of lenders can proceed

based on the facts of the case.

• Regulatory risk remains elevated more broadly, including the recently

announced reform of the consumer credit regime, which will require a

complete overhaul of our journeys, documents and processes.

Market risk

The current or prospective risk to the

group’s capital or earnings, arising

from changes in interest rates, credit

spreads and foreign exchange rates

applied to the group’s non-trading

book.

See page 94.

• Following the sale of Winterflood Securities, the group’s exposure to market

risk has reduced, reflecting the removal of trading book-related exposures

and a simplified risk profile.

• Residual market risk is now primarily associated with the non-trading book,

including interest rate risk, credit spread risk and foreign exchange risk.

• These exposures are expected to remain broadly stable over the outlook

period and continue to be managed within approved risk appetite and

established risk management frameworks.

Principal risk

Outlook

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Operational risk

The risk of loss or customer harm

resulting from inadequate or failed

internal processes, people and

systems or external events. This

includes the risk of being unable

to recover systems quickly and

maintain critical services.

See page 96.

• The group-wide operational risk framework has been significantly

enhanced over the year as part of the group’s investment in

strengthening risk management capability. This has included the

successful implementation of a new Governance, Risk and Compliance

("GRC") system, enhancing monitoring, reporting and oversight,

alongside the rollout of group-wide operational risk training in support.

• In addition, the group has completed its review and evolution of the Risk

Target Operating Model, resulting in improved clarity of roles and

responsibilities, increased capability, and stronger embedment of risk

management practices across the business. Focus has now transitioned

to ongoing optimisation and continuous improvement within BAU

activities.

• Following the FCA’s publication of the motor finance redress scheme in

March 2026, the group has established the necessary arrangements to

respond effectively to customer remediation requirements.

Reputational risk

The risk of detriment to stakeholder

perception of the group, leading to

impairment of its reputation and

future goals, due to any action or

inaction of the company, its

employees or associated third

parties.

See page 99.

• Established group-wide and employee-level focus on responsibility and

sustainability enables an approach in all businesses that aligns to a

range of stakeholder expectations, which is supported by group-level

oversight.

• Increased media attention, including in relation to any possible redress

schemes such as that associated with the FCA’s review of historical

motor finance commission arrangements, may lead to an adverse

perception of the group.

Principal risk

Outlook

Strategic report

Governance report

Financial statements

Cross-cutting risks

Geopolitical uncertainty

The risk that UK or global

political events result in

disruption to the business or

negatively impact business

performance or prospects.

• The group operates predominantly in the UK and Republic of Ireland, covering

approximately 98% of the loan book exposure. Nevertheless, geopolitical developments

(including international conflicts and any change in tariff regimes) have the potential to

directly or indirectly impact the group’s customers, operations or supply chain.

• The group has a strong financial position, maintaining capital and liquidity levels in excess

of regulatory minima.

• Regular stress testing is undertaken on performance and financial position in the event

of various adverse conditions to test the robustness and resilience of the group.

• Risk appetite is regularly reviewed to ensure it remains appropriate in the prevailing

geopolitical and macroeconomic environment.

Transitional climate risks

The risk that the move to a

low-carbon economy impacts

demand for the group’s

products and services.

• Transitional climate risks across the medium to long term may potentially impact the

group’s product offering, operations and strategic direction. Monitoring is in place to

continually identify and assess climate risks and opportunities.

• Regular updates are provided to the Group Risk and Compliance Committee and Risk

Committee, which retains oversight responsibility, while senior management responsibility

is assigned to the Group Chief Risk Officer.

• The group remains focused on supporting its customers in their transitions to a low-carbon

economy.

Financial risks

Economic uncertainty

The risk that changes in the

external macroeconomic

environment or consumer

sentiment negatively impact

on the group’s performance

or prospects.

• Persisting national or international macroeconomic uncertainty (for example, from financial

volatility or changes to macroeconomic policies) can impact business, customer and

broader market confidence. Specifically, elevated interest rates, inflation and/or a rise in

unemployment has the potential to impact credit performance or demand for the group’s

products and services.

• The group’s business model aims to enable it to trade successfully and support clients in

a wide range of economic conditions. By maintaining a strong financial and capital position,

the group aims to be able to absorb short-term economic downturns, respond to any

change in activity or market demand, and in so doing build long-term relationships by

supporting clients when it really matters.

• The group focuses on credit quality and returns rather than overall growth or market share

and continues to invest in the business for the long term, to support customers and clients

through the cycle.

• Risk appetite is regularly reviewed to ensure it remains appropriate in the prevailing

macroeconomic environment. Regular stress testing is undertaken on performance and

financial position in the event of various adverse conditions to test the robustness and

resilience of the group.

Strategic risks

Strategic disruption

The risk that changes in

competition, technology,

competitor business models

or client expectations

negatively impact on demand

for the group’s products and

services.

• Strategic disruption may arise from technological change or new business models that may

impact the group’s market position and future profitability.

• While regulation remains a barrier to entry for many potential competitors, consumer

expectations continue to evolve, challenging existing capabilities and traditional

approaches.

• Competitors are adapting in response, while new financial technology companies develop

alternative business models. For example, cloud-delivered solutions reduce barriers to

entry and new product time to market, allowing new competitors and start-ups to compete

in the marketplace more rapidly.

• The growing adoption of AI by our competitors to improve their service offerings poses a

risk. The group acknowledges the benefits of investment in this technology and has started

the adoption and exploitation of strategic capabilities such as cloud and AI solutions in a

considered and incremental manner in line with our investment appetite.

• Market developments are closely monitored through horizon scanning to identify emerging

dynamics as well as evolving preferences of the group’s customers. The group prides itself

on its knowledge of its customers and the industries and sectors in which they operate.

Emerging risks/uncertainty

Mitigating actions and key developments

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Business and strategic risk is the risk of realising

lower than anticipated profits or experiencing a

loss rather than a profit, due to failure to adapt to

changing market conditions, pursuing an

ineffective strategy or ineffective implementation

of strategy.

Exposure

The group operates in an environment where it is exposed to

various independent influencing factors. Its profitability can

be impacted by: the broader UK economic climate; changes

in technology, regulation and customer behaviour;

competition from traditional and new players; front-line sales

performance; cost movements; and strategic changes. All of

these can vary in both nature and extent across its divisions.

Changes in these factors could result in additional

investment requirements or higher costs and affect the

group’s ability to continue to advance loans or products at

its desired risk and return criteria, which could in turn

contribute to a loss of market confidence.

Risk appetite

The group has moderate appetite for business risks arising

from the pursuit of strategic objectives that could lead to

earnings volatility, reduced profitability, or failure to achieve

planned business outcomes. This is reflected in our

sustainable business model focused on:

• disciplined pricing and underwriting, which remains

consistent throughout the economic cycle;

• prudent management of financial resources, including

capital, funding and liquidity;

• conservative risk appetite;

• the diversification and specialism of our businesses; and

• our distinctive culture characterised by expertise,

consistent service and long-term relationships.

Measurement

Business and strategic risk is measured through a number of

key performance metrics (including those set out on pages

14 and 15) and risk indicators at a business, divisional and

group level which provide transparency on progress and

execution against strategy. These indicators are typically

reported monthly via relevant committees, with oversight via

the Board, most notably through its review of key financial

metrics and underlying performance trends.

The status of key group initiatives and projects is also

tracked and discussed, noting the importance of their

successful delivery to the group’s strategic trajectory.

Mitigation

To support the management of its strategy, and help mitigate

potential business and strategic risk, the group maintains a

comprehensive and rigorous framework of consideration and

approval covering the design and endorsement of strategy,

and the ongoing monitoring of its implementation.

Over the past year, the group has made significant progress

in executing against its three key strategic priorities –

simplify, optimise, and grow. With the simplification phase

largely complete, the focus has been on delivering a major

group-wide transformation programme to reduce the cost

base and improve efficiency. We are implementing the use of

automation and AI to create a more scalable operating

model, improve speed of service for our customers, and

ensure we remain competitive in a rapidly changing

environment.

In effecting this change, our guiding principle is to maintain

and enhance the key differentiators which are valued by our

customers and are why we win business. These include:

• relationship-led, expert service;

• consistency, trust and reliability;

• fast and easy to do business with; and

• customer centricity and deep understanding of the sectors

and assets we finance.

This differentiated approach results in strong customer

engagement and high levels of repeat business. The group is

further protected by the diversification of its lending

businesses and products, which provides resilience against

competitive pressure or market weakness in any one of the

sectors it operates in.

Monitoring

On an ongoing basis, strategy is formulated and managed at

an individual business level through local executive

committees with top-down oversight maintained through the

group’s Executive Committee, which holds dedicated

strategy offsite meetings periodically through the year.

Outputs also feed into the group’s annual budgeting and

planning process, which typically operates on a three-to-five-

year time horizon. The group’s budget and plan are subject

to review and challenge, initially at a business level and

subsequently by the group’s Executive Committee, ahead of

submission to the Board, which reviews, challenges and

agrees the group’s budget and three-year plan.

The ongoing strategic planning process is supplemented by

an annual Board strategy day, which takes a thematic

approach to the review and challenge of group and

business-level strategic priorities.

New growth initiatives and potential acquisitions are

assessed against the group’s strategic objectives and its

Model Fit Assessment Framework, to ensure consistency

with the group’s strategic priorities and the key attributes of

its business model. We also undertake a periodic review of

our portfolio of specialist businesses to ensure capital is

allocated appropriately, with a disciplined approach to

exiting or restructuring any business that no longer fits our

strategy, risk appetite or return requirements.

Capital and liquidity adequacy planning conducted as part of

both the annual ICAAP and ILAAP is used to assess the

resilience of the group’s current strategy and business model

in the event of various stress scenarios. Although not

formally linked, outputs and analysis from both exercises are

used to guide strategic planning.

The annual risk appetite statement review also ensures the

group’s risk appetite and supporting key risk indicators are

aligned with the financial and strategic plan. Agreed appetite

is communicated throughout the group through the review

and approval of divisional risk appetite statements and

business-level key risk indicators.

Within credit risk, all businesses monitor agreed external

early warning indicators (for example, movement in housing

indices) with a view to supporting the early identification of

Strategic report

Governance report

Financial statements

Business and strategic risk

negative trends, and enhancing the group’s ability to

respond appropriately, minimising potential impact on

performance.

In addition, emerging risks are monitored and debated on an

ongoing basis at all levels of the group and across all

functions. These include developments in areas such as

technology, regulation and sustainability, which could

present both opportunities and threats. Within the risk

function, reporting capabilities continue to be enhanced to

further support the group’s ability to identify and respond

effectively to changes in the external environment and in

customer behaviours with a view to mitigating any potential

impact on business performance.

Outlook

Business and strategic risk has stabilised following the

successful delivery of a number of management actions to

strengthen our capital position and simplify the group.

However, the risk is likely to remain elevated in FY 2027,

given the uncertainty in relation to the ongoing legal

challenges to the FCA’s motor finance consumer redress

scheme, and the continued execution of our transformation

programme.

We continue to see good growth prospects across our

businesses, as we focus on resuming our track record of

earnings growth and delivering sustainable risk-adjusted

returns. While the uncertain macro environment presents an

overarching risk to the group’s business and strategy and

our ability to deliver new growth initiatives, we are prepared

for a range of different scenarios to ensure the group has the

resources and operational capability to perform effectively.

For further details on emerging risks and uncertainties see

page 70. In addition, further commentary on the market

environment and its impact on the group is outlined on

pages 16 to 21.

Capital risk is the risk that the group has

insufficient regulatory capital (including equity

and other loss-absorbing debt instruments) to

operate effectively, including meeting minimum

regulatory requirements, operating within Board-

approved risk appetite and supporting its

strategic goals.

Exposure

The group’s exposure to capital risk principally arises from

its requirement to meet minimum regulatory requirements set

out in the Capital Requirements Regulation (“CRR”) and PRA

requirements and guidelines, and is usually specified in

terms of minimum capital ratios (capital resources as a

percentage of risk-weighted assets). The group operates a

prudent business model which results in comparatively low

levels of leverage and so risk-based capital requirements

are, and are likely to remain, the group’s binding constraint.

The PRA supervises the group on a consolidated basis and

receives information on the capital adequacy of, and sets

capital requirements for, the group as a whole. The group’s

Pillar 1 information is presented in the first table of the

“Measurement” section. Under Pillar 2, the group completes

an annual self-assessment of risks known as the ICAAP. The

ICAAP is subject to the PRA's supervisory review and

evaluation process ("SREP") on a regular basis, which

culminates in the PRA setting a Total Capital Requirement

(“TCR”) that the group and its regulated subsidiaries are

required to hold at all times.

Following the recent SREP earlier this year, the group was

set a TCR of 10.5%, of which 5.9% must be met with CET1

capital. From 1 January 2027, the group's TCR will reduce to

9.7%, of which 5.4% must be met with CET1 capital,

reflecting the PRA's Pillar 2a SME Lending Adjustment,

which was introduced to mitigate the impact of the removal

of the Pillar 1 SME support factor under the Basel 3.1

framework.

There are no planned increases to the UK countercyclical

buffer (“CCyB”) at this time, and the rate remains at 2%, with

the group’s overall CCyB remaining at 1.9%.

Pillar 3 requires firms to publish a set of disclosures which

allow market participants to assess information on the firm’s

capital, risk exposures and risk assessment process. The

group’s Pillar 3 disclosures, which are unaudited, can be

found on the group’s website at www.closebrothers.com/

investor-relations/investor-information/results-reports-and-

presentations.

Risk appetite

The group maintains a strong base level and composition of

capital, sufficient to support the development and growth of

the business, continue to meet Pillar 1 requirements, TCR,

additional Capital Requirements Directive (“CRD”) buffers

and leverage ratio requirements, and be able to withstand a

severe but plausible stress scenario with satisfactory capital

and leverage ratios.

The group’s policy is to be well capitalised and its approach

to capital management is driven by strategic and

organisational requirements, while also taking into account

the regulatory and commercial environments in which it

operates. Accordingly, a prudent capital position is a core

part of the group’s business model, allowing it to grow and

invest in the business, support paying dividends to

shareholders and meet regulatory requirements.

Capital triggers and limits are maintained within the risk

appetite framework and are approved by the Board at least

annually.

The group has set a medium-term target range for the CET1

capital ratio of 12.0% to 13.0%.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Capital risk

Measurement

The group maintains a strong capital base to support the

development of the business and to ensure the group meets

the TCR and additional regulatory buffers at all times. As a

result, the group maintains capital adequacy ratios above

minimum regulatory requirements, which are currently set at

a minimum CET1 capital ratio of 10.3% and a minimum total

capital ratio of 14.9%. (From January 2027, post Basel 3.1

implementation, these will be 9.9% and 14.1%). The

minimum CET1 capital requirements are inclusive of the

capital conservation buffer (2.5% of RWAs) and the CCyB

(currently 1.9% of RWAs), and exclusive of any applicable

PRA buffer.

Analysis of the composition of regulatory capital and Pillar 1

RWAs and a table showing the movement in CET1 capital

during the year are shown on the following pages. A

comprehensive analysis of the composition of regulatory

capital and RWAs is provided in the group’s Pillar 3 disclosures.

The CET1 capital ratio increased from 13.8% to 14.1%,

mainly driven by the recognition of other profits attributable

to shareholders (c.80bps), and total credit risk RWA

reduction (c.70bps), predominantly related to loan book RWA

reduction (c.50bps). The sale of Winterflood contributed an

increase of c.50bps. These benefits were partially offset by

the additional provision in relation to motor finance

commissions (-c.150bps) and AT1 coupon payments in the

year (-c.20bps).

CET1 capital decreased 6% to £1,266.1 million (31 July

2025: £1,348.1 million), primarily driven by the £147.0 million

net of tax provision in relation to motor finance commissions,

AT1 coupon payments of £22.3 million, partially offset by the

recognition of the group’s other profits attributable to

shareholders in the year of £82.5 million.

Tier 1 capital decreased 5% and total capital decreased 2%

to £1,466.1 million and £1,716.1 million respectively (31 July

2025: £1,548.1 million and £1,748.1 million respectively),

reflecting the same movements in relation to CET1 capital.

Total capital also reflects a £50 million increase in Tier 2

capital as the group issued £250 million Fixed Rate

Subordinated Tier 2 Notes and conducted a tender offer for

£200 million Fixed Rate Subordinated Notes.

RWAs decreased 8% to £9.0 billion (31 July 2025: £9.8

billion), driven by a reduction in credit risk RWAs (£568.5

million) and operational risk RWAs (£158.1 million) and

market risk RWAs (£114.0 million). The decline in credit risk

RWAs was driven by a £350.3 million decrease in loan book

RWAs across the Premium and Property businesses mainly

due to lower loan book balances and also reflecting the

beneficial impact of the ENABLE Build Guarantee Scheme

within the Property business. In addition, other credit risk

RWAs decreased by £204.3 million, largely due to reductions

in Novitas receivables (£52.0 million), operating lease

exposures (£35.4 million), prepayments (£30.6 million)

together with the disposals of Winterflood (£45.9 million) and

Brewery Rentals (£40.8 million). The decrease in market risk

RWAs (£114.0 million) was primarily driven by the

Winterflood disposal. The reductions in operational risk

RWAs (£158.1 million) was also primarily driven by the

Winterflood disposal, following the approval from the

Prudential Regulation Authority (“PRA”) for a full release of its

associated operational risk RWAs. As a result, CET1, tier 1

and total capital ratios were 14.1% (31 July 2025: 13.8%),

16.3% (31 July 2025: 15.8%) and 19.1% (31 July 2025:

17.8%), respectively.

Mitigation

In response to the continuing uncertainty relating to the FCA

motor finance commission redress scheme, we have

continued to strengthen our capital position substantially

above regulatory requirements. The group's CET1 capital

ratio was 14.1% at 31 July 2026. Given the continued

uncertainty regarding the outcome of the legal challenges to

the FCA’s motor finance consumer redress scheme and any

potential financial impact, the group will not pay a final

dividend on its ordinary shares for the 2026 financial year.

We remain committed to the resumption of shareholder

distributions at an appropriate time and will reassess our

options as greater certainty emerges regarding motor finance

commissions, taking into account the group's future capital

needs and shareholder feedback.

Monitoring

Both actual and forecast capital adequacy, including the

potential impact of capital headwinds, are reported monthly

through the group’s governance framework, with oversight

from the Capital Adequacy Committee (“CAC”), GRCC and

the Risk Committee. Annually, as part of the ICAAP, the

group also undertakes its own assessment of its capital

requirements against its principal risks (Pillar 2a) together

with an assessment of how capital adequacy could be

impacted in a range of stress scenarios (Pillar 2b). Under

both assessments, the group ensures that it maintains

sufficient levels of capital.

The CAC is responsible for the management of capital risk

and for the allocation of capital across the group, which

includes the setting of the group’s capital strategy and the

setting and monitoring of a comprehensive capital risk

appetite framework. These are managed through a series of

group policies, standards and methodology documents and

supported by capital reporting and planning control

frameworks. The CAC, whose membership consists of

finance, business and risk executives, is responsible for

measuring and monitoring the actual and forecast capital

position on a monthly basis. Key capital metrics are reported

to the Board on a regular basis, with any changes to the

capital structure of the group reserved for the group Board.

The CAC also monitors actual, forecast and stressed capital

metrics using an IRB approach in order to prepare for

anticipated future transition to this approach.

Capital outlook

We currently estimate that the implementation of Basel 3.1

on 1 January 2027 will result in a reduction in the group's

CET1 capital ratio of approximately 80bps with the minimum

CET1 capital requirement reducing by c.40bps, reflecting the

PRA’s Pillar 2a SME Lending Adjustment, which was

introduced to mitigate the impact of the removal of the Pillar

1 SME support factor under the Basel 3.1 framework. On a

pro forma basis, this would reduce the group's CET1 capital

ratio as at 31 July 2026 to 13.3%, against the minimum

CET1 capital requirement of 9.9%, resulting in overall CET1

capital headroom of c.340bps. In monetary terms, the impact

on the group’s overall CET1 capital headroom is minimal. In

the medium-term, we expect to operate within our guidance

range of 12-13%, as we generate capital, target balance

sheet growth and resume shareholder distributions, at an

appropriate time.

Strategic report

Governance report

Financial statements

Composition of regulatory capital and Pillar 1 RWAs

CET1 capital

Shareholders’ equity per balance sheet

1,651.6

1,735.5

Regulatory adjustments to CET1 capital

Contingent convertible securities recognised as AT1 capital1

(197.6)

Intangible assets, net of associated deferred tax liabilities

(154.5)

(176.1)

Foreseeable AT1 coupon charges2

(3.8)

Cash flow hedging reserve

(0.6)

(3.8)

Pension asset, net of associated deferred tax liabilities

—

(0.1)

Prudent valuation adjustment

(0.6)

(1.0)

Securitisation positions which can alternatively be subject to a 1,250% risk weight3

(25.8)

(11.3)

Deferred tax assets that rely on future profitability

(2.6)

—

IFRS 9 transitional arrangements4

—

6.3

CET1 capital

1,266.1

1,348.1

Additional Tier 1 capital

200.0

Total Tier 1 capital

1,466.1

1,548.1

Tier 2 capital – subordinated debt

250.0

200.0

Total regulatory capital (audited)

1,716.1

1,748.1

RWAs

Credit and counterparty credit risk

8,309.8

8,864.4

Operational risk

662.0

820.1

Market risk5

—

114.0

8,971.8

9,798.5

CET1 capital ratio

14.1%

13.8%

Tier 1 capital ratio

16.3%

15.8%

Total capital ratio

19.1%

17.8%

31 July 2026

£ million

31 July 2025

£ million

1. The contingent convertible securities are classified as an equity instrument for accounting but treated as AT1 for regulatory capital purposes; see Note

18 to the Financial Statements.

2. Under CRR Article 26, a deduction for foreseeable charges has been recognised at 31 July 2026 and 31 July 2025. The deduction at 31 July 2026

reflects charges for the coupon on the group’s contingent convertible securities.

3. Under CRR Article 36, a deduction for securitisations positions, which are subject to a 1,250% risk weight, but alternatively are allowed to be deducted

from CET1, has been recognised at 31 July 2026. For more information on this securitisation with the British Business Bank, refer to the Banking

Commercial section of the Financial overview. The deduction is applicable from 31 July 2026 (31 July 2025: £11.3 million).

4. IFRS 9 transitional arrangements no longer applied as at 31 July 2026 and therefore had no effect on regulatory capital. In FY25, the CET1 ratio

benefited by 0.1 percentage points from these arrangements, with the ratio reducing from 13.8% to 13.7% on a fully loaded basis.

5. The group applies CRR Article 351 de minimis exemption, under which foreign exchange positions below the prescribed threshold are excluded from

market risk own funds requirements.

Movement in CET1 capital during the year

CET1 capital at 1 August

1,348.1

1,374.8

Loss in the period attributable to shareholders

(63.4)

(77.9)

AT1 coupon charges (audited)

(22.3)

IFRS 9 transitional arrangements

(6.3)

(5.8)

Decrease in intangible assets, net of associated deferred tax liabilities

21.6

87.8

Deferred tax assets that rely on future profitability

(2.6)

—

Other movements in reserves recognised for CET1 capital

5.0

2.4

Other movements in adjustments from CET1 capital

(14.0)

(10.9)

CET1 capital at 31 July

1,266.1

1,348.1

31 July 2026

£ million

31 July 2025

£ million

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Change execution risk is the risk of loss,

reputational damage or poor strategic and

regulatory outcomes resulting from the failure to

effectively execute, embed and deliver the

outcomes of change initiatives in line with

objectives and business requirements.

Exposure

The group continues to adapt and transform the way it

conducts business in response to changing customer

behaviour, technological developments, regulatory

expectations, and cost management initiatives under the

group’s strategy to "simplify, optimise and grow". Delivery of

this strategy is dependent on the sustained execution of

complex and often concurrent transformation activity.

Accordingly, effective management of transformation

projects is required to successfully deliver the group's

strategic priorities, including change programmes and key

business initiatives that drive revenue growth, product

enhancements and operational efficiency outcomes.

The magnitude, complexity and concurrent demands of

these projects and programmes increase execution risk,

particularly where initiatives compete for shared resource or

rely on critical dependencies.

Execution is further constrained by finite operational capacity

and increasing regulatory complexity, reducing tolerance for

delay and amplifying the impact of delivery failure.

The failure to successfully deliver or achieve any of the

expected benefits of these strategic initiatives, or to meet

customer and stakeholder expectations, could have an

adverse effect on the group’s business, results of operations,

financial condition, customer outcomes, prospects and

reputation.

Risk appetite

Change initiatives carry an inherent level of risk that has the

potential to be amplified by transformation. The group

continues to manage this risk within appetite, reducing the

likelihood of poor cost-benefit outcomes or short-term

operational disruption from poorly designed or delivered

change initiatives.

Measurement

Change execution risk is measured in a multi-faceted

approach governing group-wide change initiatives. Change

initiatives follow a designated governance path, managed

through an established governance structure subject to

standards and reporting requirements.

The group’s enterprise-wide change team and designated

business change functions include experienced project

professionals who are responsible for delivering change and

meeting governance requirements. The group’s extensive

measurement capabilities deployed to monitor wider

operational risk include indicators which enable losses

associated with execution, delivery and process

management to be identified.

Mitigation

The group’s Enterprise Risk Management Framework,

comprising a comprehensive suite of policies, standards,

and the three lines of defence operating model, establishes

consistent control objectives across all risk disciplines.

This unified approach to defining and embedding control

expectations helps reduce change execution risk.

Processes and procedures are in place to govern all levels of

change management, ensuring effective prioritisation,

oversight and decision-making across the investment

portfolio. Senior management receives regular updates on

the change portfolio and individual projects, supporting

strong governance and oversight of execution risks, while

ensuring that resources are appropriately allocated to enable

successful delivery.

The Enterprise Project Management Office conducts periodic

reviews of change delivery progress, associated risks, and

resource deployment across the portfolio. These reviews

help identify and mitigate potential delivery and capacity

risks.

This structured approach ensures that risks are effectively

managed and that investment and capacity are aligned with

the group’s risk appetite, thereby supporting the reduction of

overall exposure.

Monitoring

The group holds an Enterprise Change Portfolio Review

Board, which provides management with updates on the

progress of change programmes. The Review Board also

serves as a gateway to the Bank Investment Committee,

whose approval is required for any investment-related

expenditure.

Upon completion of a project, a formal review is also

conducted prior to closure. This process serves as a

valuable learning opportunity, helping to inform and improve

future projects and change initiatives.

In addition, the risk function maintains oversight of the

group’s business planning process. This includes analysing

industry trends and identifying forward-looking threats that

could materially impact the delivery of strategic objectives or

significantly influence the assessment of operational risk

capital.

Outlook

The outlook for change execution risk is increasing in the

current environment. Delivery capacity and capability remain

key areas of management focus to support the safe

execution of the significant change programmes, both

planned and in progress, as part of the group’s

transformation.

Strategic report

Governance report

Financial statements

Change execution risk

Conduct risk is the risk that the group’s

behaviours, or those of its colleagues, whether

intentional or unintentional, result in poor

outcomes for customers or the markets in which

it operates. It is rooted in the importance of

delivering good customer outcomes at every

stage of the customer journey.

Exposure

The group is exposed to conduct risk in its provision of

products and services to customers either directly or via its

distributors, and through other business activities that enable

delivery. Conduct risk can relate to both existing and legacy

matters. The regulatory change agenda continues at pace

and remains focused on ensuring consumer protection and

access to services in the current macroeconomic and

geopolitical environment. Regulatory expectations, including

with respect to retail customer savings and borrowing,

continue to evolve, requiring agility and continued

enhancements to controls within each of the group’s

businesses operating in these markets.

Risk appetite

The group has no appetite for intentionally undertaking

activities that result in poor customer outcomes or have an

adverse material impact on the markets in which it operates.

The group has minimal appetite for causing customer

detriment or foreseeable harm resulting from inappropriate

judgements or behaviours in the execution of business

activities.

Measurement

The Conduct Risk Framework is dedicated to the

identification and management of customer outcomes and is

designed to work in synergy with the operational risk

framework, whereby management information and key risk

indicators enable measurement of conduct risk, supported

by appropriate tooling and training.

Businesses with products in scope of the FCA’s Consumer

Duty have a documented set of conduct key risk indicators,

which have undergone a period of maturity over the past

three years. These key risk indicators are aligned to the four

Consumer Duty outcomes plus culture, and they provide an

informed insight around the delivery of customer outcomes

and customer harm. Where foreseeable or actual customer

harm is identified, businesses are required to consider and

deploy, where appropriate, remedial actions. Reporting and

oversight are via the relevant divisional risk and compliance

committees, with a quarterly Customer Outcomes Report

shared with the Board. This report supports the annual

assessment of customer outcomes where the Board is

required to review and approve an assessment of whether

the firm is delivering good customer outcomes.

Mitigation

The group uses its Conduct Risk Framework to identify and

respond in a timely manner to unintentional behaviour that

results in poor outcomes for customers at each stage of the

customer journey and takes steps to proactively identify

conduct risks within its businesses.

Individuals across the organisation are encouraged to take

responsibility for managing the conduct of their business

and/or function and support is provided to enable them to

drive improvement as necessary.

The group strives to maintain a culture which is aligned to

our values which places the customer at the heart of the

business model and encourages colleagues to exhibit the

desired behaviours. Each division has a remuneration

strategy that is designed to incentivise good behaviours and

due consideration is given to individual conduct as part of

any remuneration during periodic performance reviews.

Policies and standards set out expectations of employees

and key controls to ensure conduct risk is managed within

the agreed risk appetite, including for essential areas such as

dealing with clients, dealing with markets, complaint

handling, vulnerable customers and conflicts of interest.

Mandatory staff training on key conduct areas is provided on

a regular basis.

All products are subject to a robust risk-based product

development and review process.

On an ongoing basis, the Board actively oversees Consumer

Duty, including through engagement with regular

management information to identify risks to customer

outcomes, and through monitoring the status of work to

improve outcomes where necessary. This includes oversight

of identification and resolution of any customer harms, such

as that which arose out of historical deficiencies in early

settlement processes.

Conduct Risk Framework

Monitoring

Risk identification and timely action are undertaken by

management and employees as the first line of defence. The

risk and compliance functions seek to ensure conduct risk

reporting is robust and remains fit for purpose, and agreed

management actions appropriately mitigate the identified

risks.

The compliance monitoring function undertakes regular

reviews of key areas, such as complaint handling, vulnerable

customer processes and customer communications, to

confirm customers are experiencing good outcomes. Group

internal audit provides independent assurance on the

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Product

Governance

Culture and

behaviours

Infrastructure

External risk

Business

process

Customer

Conduct risk

adequacy, completeness and control effectiveness of key

areas using a risk-based approach. Compliance monitoring

and audit findings assist with detection of potential conduct

risk or poor customer outcomes in order that appropriate

action plans can be put in place.

All risk and compliance committees ("RCCs") are required to

review conduct risk reporting and outputs and consider any

required action. Where appropriate, issues may be escalated

to both the GRCC and the Risk Committee.

Further to the enhanced regulatory requirements of the

FCA’s Consumer Duty for retail customers, reporting

continues to evolve. Key risk indicators, which are used for

monitoring, will be evaluated with the introduction of new

regulatory requirements.

Outlook

Conduct risk remains elevated as the macroeconomic

environment continues to place financial pressure on

customers as a result of the continuing rise of the cost of

living and elevated interest rates. The importance of

appropriate support for customers in financial difficulty,

including vulnerable customers, is expected to remain

elevated. The group is focused on maintaining its culture

which enables tailoring its approach to supporting customers

to drive good customer outcomes.

With the strategic repositioning of the Premium Finance

business to increase its focus on commercial lines products,

management attention remains focused on sustaining good

customer outcomes for customers with finance through

impacted personal lines brokers.

The group’s regulators continue to evolve market-wide

expectations for firms to deliver good customer outcomes.

The group continues to engage with its regulators in an open

and cooperative manner, including with respect to historical

motor finance commissions matters. Where it becomes

evident that good customer outcomes may not have been

achieved, the group takes steps to support affected

customers and to prevent recurrence.

Credit risk is the risk of a reduction in earnings

and/or value, as a result of the failure of a

counterparty or associated party, with whom the

group has contracted, to meet its obligations as

they fall due. Credit risk arises primarily from the

group's lending and treasury activities.

The group applies consistent and prudent lending criteria to

mitigate credit risk. Its lending activities are predominantly

secured across a diverse range of asset classes. This

controls concentration risk in both the loan book and

associated collateral. Credit risk appetites are set around

levels of collateralisation such that portfolios remain

predominantly secured. At 31 July 2026, secured lending

accounts for 93.0% (31 July 2025: 92.5%) of the loan book.

The group has established limits for all financial

counterparties with whom it places deposits, enters into

derivative contracts or whose debt securities are held, and

the credit quality of the counterparties is monitored.

While these amounts may be material, the counterparties are

all regulated institutions with investment grade credit ratings

assigned by international credit rating agencies and are

monitored in accordance with the regulatory large exposures

framework.

The group’s principal credit risk exposure is to the loan book,

which is the focus of the credit risk part of the Risk Report.

Managing credit risk

Exposure

As a lender to businesses and individuals, the group is

exposed to credit losses if customers are unable to repay

loans and outstanding interest and fees. At 31 July 2026,

gross loans and advances to customers was £9.7 billion

(31 July 2025: £9.7 billion).

Further details on loans and advances to customers and

debt securities held are in Notes 10 and 11 to the Financial

Statements. Further commentary on the credit quality of the

loan book is outlined on pages 85 to 89.

Risk appetite

The group seeks to maintain the discipline of its lending

criteria, both to preserve its business model and to maintain

an acceptable return that appropriately balances risk and

reward. This is underpinned by a strong customer focus and

credit culture that extend across people, structures, policies

and principles. This in turn provides an environment for long-

term sustainable growth and low, predictable loan losses.

To support this approach, the group maintains a credit risk

appetite framework to define and align credit risk strategy

with its overall appetite for risk and business strategies, as

defined by the Board.

The group Credit Risk Appetite Statement (“CRAS”) outlines

the specific level of credit risk that the group is willing to

assume, utilising defined quantitative limits and triggers

against agreed measures, and covers both credit

concentration and portfolio performance measures.

The measures supporting the group CRAS are based on the

following key principles:

• To lend within familiar asset classes, in well-known and

understood markets.

• To operate as a predominantly secured, or structurally

protected1, lender against identifiable and accessible

assets, and maintain conservative loan-to-value (“LTV”)

ratios across the group’s portfolios.

• To maintain a diversified loan portfolio (by business, asset

class and UK geography), as well as a short average tenor

and low average loan size.

• To rely on local underwriting expertise, with authority

delegated from the Risk Committee, and ongoing central

oversight.

• To maintain rigorous and timely collections and arrears

management processes.

• To operate strong control and governance within the

lending businesses, overseen by a central group credit risk

team.

Ultimate responsibility for the approval and governance of

the group CRAS lies with the Board, on recommendation

from the GRCC, with support from the Credit Risk

Management Committee (“CRMC”). Performance is

monitored against agreed appetites on a monthly basis.

Strategic report

Governance report

Financial statements

Credit risk

The CRAS is embedded into business-level credit risk

management through a hierarchy of local triggers and limits,

which are approved by the Chief Credit Risk Officer

(“CCRO”) and noted at CRMC. Performance is also

monitored monthly via divisional RCCs. Material breaches

are escalated via established governance channels.

CRAS metrics are closely aligned with the group’s overall

strategy to facilitate monitoring of the composition and

quality of the loan book in line with defined appetite.

Measurement

A consolidated central credit reporting framework is in place

and facilitates effective credit risk management and

measurement by the central group credit risk team. The

framework enables the identification, measurement,

monitoring and control of all material credit risks within the

lending portfolios, setting clear credit risk appetite within

which all lending is originated, allowing asset portfolios to

grow responsibly and profitably.

A centralised framework incorporates:

• the use of common data definitions across all businesses;

• consistent and controlled extraction and housing of credit

data from the group’s core business systems;

• dynamic credit risk management to improve strategic

policy decision-making;

• oversight and control of the profile of the lending book to

manage credit risk appetite; and

• identification, monitoring and control of material credit

risks against a clear and communicated CRAS.

Mitigation (audited)

Credit assessment and lending criteria

The group’s general approach to credit assessment is based

on the provision of affordable lending on a secured or

structurally protected basis, against assets that are known

and understood. These assets are typically easily realisable

with strong secondary markets and predictable values, and

spread across a broad range of classes within established

sectors.

Whilst diverse, the businesses adhere to a set of common

lending principles resulting in stable portfolio credit quality

and consistently low loss rates through the cycle.

Credit risk governance framework

Risk Committee

Group internal audit

Risk-specific committees

Third-line oversight

Impairment

Adequacy

Committee

Credit Risk

Management

Committee

Group Risk and

Compliance

Committee

Group Credit

Committee

Model

Governance

Committee

Policy and governance

Credit risk appetite statements/

early warning indicators

Exceptions and large deals

Divisional risk committees

1. Exposures are considered structurally protected when, in management’s judgement, they have characteristics which mitigate the credit risk of the

exposure to a significant extent, in spite of not representing tangible security.

The common lending principles are as follows:

• Predominantly secured lending: 97.1% of loan book

secured or structurally protected.

• Short average tenor: portfolio residual maturity of 16

months.

• Small average loan size and low single-name

concentration risk: balance for the top 10 facility limits

represents 5.7% of book.

• Further diversification by sector, asset class and UK

geography.

• Local underwriting expertise with central oversight and

focus on assets that are known and understood.

All lending criteria and assessment procedures are

thoroughly documented in robust credit policies and

standards, at both a group and business level.

Expertise

Across the various businesses, credit risk employees are

specialists in their area and can support loan book growth in a

manner that is consistent with both risk strategy and appetite.

This business-level distribution allows the formation of strong

relationships with customers and intermediaries based on a

deep understanding of their needs and the markets in which

they operate. Consistent underwriting discipline and lending

against assets that are known and understood benefit

customers through the cycle and allow maintenance of a

track record of strong margins and profitability.

Governance framework and oversight

Lending is underpinned by a strong control and governance

framework both within the lending businesses and through

oversight via a central group credit risk team.

Credit underwriting is undertaken either centrally or through

regional office networks, depending on the nature of the

business and the size and complexity of the transaction.

Underwriting authority is delegated from the Risk Committee,

with lending businesses approving lower-risk exposures locally

subject to compliance with credit policy and risk appetite.

Local risk directors assure the quality of underwriting

decisions for all facilities within the business’ delegated

sanctioning authority level via a quality assurance

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

programme, the outputs of which are reported biannually

with consolidated summaries presented to the CRMC.

These underwriting approaches are reinforced by timely

collections and arrears management, working in conjunction

with the customer to achieve the best possible outcomes.

The local model is supported by central oversight and

control. An independent central group credit risk team

provides ongoing monitoring of material credit risks through

regular reviews of appetite and policy.

Monitoring

High-level requirements are outlined in documented

standards covering the identification, monitoring and

management of customers in financial difficulty, with detailed

credit policy and guidance formalised within local credit

policies, including guidelines on the identification and

treatment of vulnerable customers.

Documented policy includes business-specific guidance for

identifying customers in, or likely to experience, financial

difficulty. There are accompanying courses of action outlined

that protect the group’s position, taking account of the

terms/covenants of facilities, security enforcement options,

legal remedies and third-party intervention (for example,

brokers).

This process is owned by the risk directors, facilitating

prompt action to review the financial conditions of customers

when warning signs indicate deterioration in financial health,

credit quality, covenant compliance or asset strength/

coverage. Where possible, credit limits are amended where

there is evidence of delinquency or deteriorating financial

condition/capacity to repay.

The credit risk framework aligns with the broader three lines

of defence approach, with a governance structure flowing

from local first-line business teams up to second-line risk

directors (and key oversight committees such as credit

committees, divisional RCCs, the CRMC, the Model

Governance Committee (“MGC”) and the Risk Committee)

overlaid with a third line formed by the group internal audit

function.

First line of defence: Credit risk management

The lending businesses have primary responsibility for

establishing a robust risk and control environment as part of

day-to-day operations, and enabling good-quality credit

applications.

They are also responsible for determining that their activities

are compliant with the rules and guidance set out in local

credit policies and processes. Each lending business has its

own formalised credit risk appetite and policy documents,

approved by divisional RCCs. This risk culture is facilitated

by local profit and loss ownership, promoting a long-term

approach, with an understanding of how loans will be repaid.

Second line of defence: Risk oversight and control

The second line of defence has three tiers: business-aligned

risk directors and their teams, the central group credit risk

team, and oversight committees. The risk directors, who

report to the CCRO, are responsible for setting and

communicating credit risk strategy, identifying exceptions

and ensuring local compliance.

Similarly, the risk heads for the treasury and asset and

liability management functions ensure that their respective

operations are performed in line with the group financial

institution and non-banking financial institution credit risk

standards and also report up through the appropriate risk

committees.

The central group credit risk team provides a further layer of

oversight and approval, supported by credit committees, and

the CRMC, MGC, GRCC and Risk Committee. Together, the

second line of defence provides a clear tactical and strategic

understanding of credit risk, proposing enhancements to the

credit risk framework for ongoing effective management and

control.

Third line of defence: Internal audit

The third line of defence is the group internal audit function.

This team uses both a risk-based approach and a rolling

programme of reviews to verify that the first and second lines

of defence are working effectively.

Business overview

The Commercial business is a combination of several

specialist, predominantly secured, lending businesses.

The nature of assets financed varies across the businesses.

The majority of the loan book comprises loans of less than

£2.5 million. Credit assessment is undertaken predominantly

on an individual loan-by-loan basis.

Collection and recovery activity is executed promptly by

experts with relevant experience in specialised assets. This

approach allows remedial action to be implemented at the

appropriate time to minimise potential loss and support good

and fair customer outcomes.

The Retail business is predominantly high-volume secured or

structurally protected lending. The majority of the loan book

comprises loans less than £20,000 and includes both

regulated and unregulated agreements. Credit issues are

identified via largely automated monitoring and tracking

processes. Collections processes and actions, focused on

good and fair customer outcomes, are designed and

implemented to restore customers to a performing status,

with recovery methods applied to minimise potential loss.

The Property business is predominantly a low-volume,

specialised lending portfolio with credit assessment

undertaken on an individual loan-by-loan basis. The majority

of the loan book comprises residential development loans of

less than £10 million. All loans are regularly reviewed to

assess performance, with residential development facilities

monitored monthly by independently appointed project

monitoring surveyors to certify build payments and the

residual cost to complete. This maintains the thorough

supervision of all live developments and facilitates the

monthly checking of on-site progress against the original

build plan.

In the Commercial and Property businesses, performing

loans with elevated levels of credit risk may be placed on

watch lists depending on the perceived severity of the credit

risk. Loans appearing on watch lists are subject to monthly

management meetings where appropriate strategies are

determined.

Outlook

Expected credit losses increased in the year to 31 July 2026,

primarily driven by increases to existing impaired accounts in

the Property division, offsetting impacts of model changes in

the Retail division and other underlying portfolio movements

across the group. This increase is set against a backdrop of

uncertain market conditions, which continue to be monitored

closely.

The external environment has been mixed this year. While

the UK economy has shown some resilience, overall growth

remains modest and uneven.

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Consumer spending continues to be constrained, reflecting

ongoing pressure on real incomes and cautious sentiment

among households and SMEs. Despite a continued easing in

inflation, uncertainty has persisted, driven by geopolitical

developments and volatility in energy markets.

Notwithstanding reductions in the Bank of England base rate

in 2025, monetary policy remains relatively restrictive, with

persistent high borrowing costs as the bank rate was held at

3.75% in July. Headwinds therefore continue, including

higher energy and input costs, ongoing trade-related

uncertainty and cost-of-living pressures. All of these factors

could result in higher credit losses in the future.

Consumer affordability continues to be challenged,

particularly as higher energy costs place strain on disposable

income. SME resilience is also under pressure from

persistent cost inflation, elevated financing costs and

uncertain demand, alongside broader volatility linked to

global conflicts and supply chain disruption.

In this context, the credit quality of the loan book remains

robust, and risk appetite has remained largely consistent,

maintaining the group’s prudent, through-the-cycle

underwriting standards.

Further details on loans and advances to customers and

debt securities held are in Notes 10 and 11 to the Financial

Statements.

Credit risk highlights (audited)1

Gross loans and advances to customers

Commercial

4,947.1

4,789.7

Retail

2,907.7

2,974.0

Property

1,862.4

1,933.6

Total gross loans and advances to customers

9,717.2

9,697.3

Impairment provisions

Commercial

72.4

73.5

Retail

86.9

95.1

Property

105.1

81.1

Total impairment provision

264.4

249.7

Provision coverage ratio

Commercial

1.5 %

Retail

3.0 %

3.2 %

Property

5.6 %

4.2 %

Total impairment coverage ratio

2.7 %

2.6 %

Part and non-performing loans

Loans in Stage 2

1,329.0

1,291.0

Loans in Stage 3

472.9

492.1

Stage 2 coverage

2.5 %

2.6 %

Stage 3 coverage

37.1 %

33.6 %

31 July 2026

£ million

31 July 2025

£ million

1. The credit risk highlights table relates to assets held at amortised cost, which excludes £10.4 million (31 July 2025: £11.8 million) of loans held at fair

value through profit or loss (“FVTPL”) under IFRS 9.

Disclosures are provided for loans and advances to

customers held at amortised cost under IFRS 9. This

excludes £10.4 million (31 July 2025: £11.8 million) of loans

and advances to customers measured at fair value through

profit or loss which are managed on a consistent basis as

detailed on pages 77 to 79, but do not attract an ECL under

IFRS 9. Stage allocation of loans and advances to customers

has been applied in line with the definitions set out in Note 1

to the Financial Statements.

At 31 July 2026, 81.4% (31 July 2025: 81.6%) of gross loans

and advances to customers were Stage 1. Stage 2 loans and

advances to customers increased to 13.7% (31 July 2025:

13.3%). The remaining 4.9% (31 July 2025: 5.1%) of loans

and advances to customers were deemed to be credit-

impaired and were classified as Stage 3.

Relative to 31 July 2025, the overall staging profile of loans

and advances to customers has remained broadly

consistent, as migrations out of Stage 1 in the Commercial

and Property divisions were broadly offset by opposite

movements in the Retail division.

Overall impairment provisions increased to £264.4 million

(31 July 2025: £249.7 million), driven by uplifts on existing

impaired accounts in the Property division, offsetting

impacts of model changes in the Retail division, and

smaller movements following regular reviews of staging

and provision coverage for individual loans and portfolios

across the group.

As a result, there has been a slight overall increase in

provision coverage to 2.7% (31 July 2025: 2.6%).

Provision coverage analysis by

business (audited)

In Commercial, the impairment coverage ratio was stable at

1.5% (31 July 2025: 1.5%), reflecting offsetting impacts of

stage migrations, write-offs, model calibrations and strong

new business levels during the financial year.

In Retail, the provision coverage ratio reduced to 3.0%

(31 July 2025: 3.2%), reflecting model changes during the

year which were partially offset by impacts of enduring

macroeconomic pressures that have seen higher but stable

levels of arrears and forbearance in the Motor Finance

business as a result of persistent cost-of-living challenges

for customers.

In Property, the provision coverage ratio increased to 5.6%

(31 July 2025: 4.2%), primarily as a result of increased

provisions on a small number of facilities, including legacy

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

cases, during the financial year. These provision increases

reflect updated estimates in the context of challenging

market conditions as a result of build cost inflation and a

subdued sales market.

See Note 10 to the Financial Statements for full staging

tables and analysis, and pages 82 to 85 for additional detail

on changes to macroeconomic forecasts that have impacted

provisions during this financial year.

Measuring credit risk across our businesses

To assess credit risk effectively across the group, a number

of judgements and estimates are used. These are based on

historical experience and reasonable expectations of future

events and are reviewed on an ongoing basis.

In particular, the calculation of the group’s expected credit

loss provision under IFRS 9 requires the group to make a

number of judgements, assumptions and estimates, which

have a material impact on the accounts.

This assessment, which requires judgement, is unbiased

and probability-weighted and uses historical, current and

forward-looking information. The most significant

judgements and estimates are set out below.

While the impact of climate change represents a source of

uncertainty, the group does not consider climate-related

risks to be a critical accounting judgement or estimate at

31 July 2026. Climate risk continues to be a key area of

focus for the group and it continues to assess the sensitivity

of assets and customers to climate-related risks as part of

regular credit monitoring. Transitional climate risks are

considered to be largely mitigated by short average loan

book tenors (16 months), conservatively secured and

diversified portfolios, and the rigorous underwriting,

monitoring and control processes that are in place.

Use of judgements (audited)

In the application of the group’s accounting policies,

which are described in Note 1 to the Financial Statements,

judgements that are considered by the Board to have the

most significant effect on the amounts in the Financial

Statements are as follows.

Significant increase in credit risk

Assets are transferred from Stage 1 to Stage 2 when there

has been a significant increase in credit risk since initial

recognition. Typically, the group assesses whether a

significant increase in credit risk has occurred based on a

quantitative and qualitative assessment, with a “30 days

past due” backstop.

Due to the diverse nature of the group’s lending businesses,

the specific indicators of a significant increase in credit risk

vary by business and may include some or all of the

following factors:

•

quantitative assessment: the lifetime probability of

default (“PD”) has increased by more than an agreed

threshold relative to the equivalent at origination.

Thresholds are based on a fixed number of risk grade

movements which are bespoke to each business to

ensure that the increased risk since origination is

appropriately captured;

•

qualitative assessment: events or observed behaviour

indicate credit deterioration. This includes a wide range

of information that is reasonably available, including

individual credit assessments of the financial

performance of borrowers as appropriate during routine

reviews, plus forbearance and watch list information; or

•

backstop criteria: the “30 days past due” backstop is met.

Definition of default

The definition of default is an important building block for

expected credit loss models and is considered a key

judgement. A default is considered to have occurred if any

unlikeliness to pay criterion is met or when a financial asset

meets a “90 days past due” backstop. While some criteria

are factual (e.g. administration, insolvency or bankruptcy),

others require a judgemental assessment of whether the

borrower has financial difficulties which are expected to

have a detrimental impact on their ability to meet contractual

obligations. A change in the definition of default may have

a material impact on the expected credit loss provision.

Use of estimates (audited)

Expected credit loss provisions are a key source of

estimation uncertainty which, depending on a wide range of

factors, could result in a material adjustment to the carrying

amounts of assets and liabilities in the next financial year.

The accuracy of expected credit loss provisions can be

impacted by unpredictable effects or unanticipated changes

to modelled estimates. In addition, forecasting errors could

also occur due to macroeconomic scenarios or weightings

differing from actual outcomes observed. Regular model

monitoring, validations and provision adequacy reviews are

key mechanisms to manage estimation uncertainty across

model estimates. Further detail on these most significant

estimates is set out in the following section.

Modelled estimates

The calculation of expected credit losses (“ECL”) for loans

and advances to customers, either on a 12-month or lifetime

basis, is based on the PD, the exposure at default (“EAD”)

and the loss given default (“LGD”) and includes forward-

looking macroeconomic information where appropriate.

PD, EAD and LGD parameters are projected over the

remaining life of each exposure. ECL is calculated for each

future quarter by multiplying the three parameters and is

then discounted back to the reporting date and summed.

The discount rate used in the ECL calculation is the effective

interest rate.

IFRS 9 risk parameters are estimated using historical data

wherever possible, and in the absence of sufficient loss

history an expert judgement approach is considered for

some parameters.

Probability of default

PD estimates represent the likelihood of a borrower

defaulting on their financial obligation. Bespoke model-

based approaches to estimate PDs are employed across

the Commercial, Retail and Property businesses. The

framework applied typically includes an economic response

model to quantify the impact of macroeconomic forecasts

and a risk ranking mechanism (e.g. a scorecard) to quantify

obligor-level likelihood of default. Risk characteristics that

feed into the PD model framework include current and past

information related to borrowers, transaction and payment

profiles, and future economic forecasts. Statistical

techniques, based on evidence observed in historical data,

and business knowledge are used to determine which

characteristics are predictive of default behaviour.

Exposure at default

EAD represents the amounts expected to be owed at the

time of default and is estimated using an amortising

schedule for the large majority of exposures, or a credit

conversion factor, depending on the nature of lending.

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Loss given default

LGD represents an expectation of the extent of loss on a

defaulted exposure after taking into account cash recoveries,

including the value of collateral held and other credit risk

mitigants. LGD methodologies vary by the nature of assets

financed and can include estimates for the likelihood of

collateral recovery and a separate calculation for the likely

loss on recovery. For some businesses, LGDs are estimated

using liquidation curves based on historical cash flows.

Recoveries are adjusted to account for the impact of

discounting using the effective interest rate.

Individually assessed provisions

When assessing expected credit loss provisions on an

individual, rather than collective, basis, management will

make assumptions in relation to the timing and value of

future cash flows under multiple probability-weighted

scenarios. These assumptions represent a source of

estimation uncertainty due to the material impact they could

have on the carrying amounts of assets in the next financial

year.

Forward-looking information

Determining expected credit losses under IFRS 9 requires

the incorporation of forward-looking macroeconomic

information that is reasonable, supportable and includes

assumptions linked to economic variables that impact losses

in each portfolio. The introduction of macroeconomic

information introduces additional volatility to provisions.

In order to calculate forward-looking provisions, economic

scenarios are sourced from Moody’s Analytics. These cover

a range of plausible economic paths that are used in

conjunction with PD, EAD and LGD parameters for each

portfolio to assess expected credit loss provisions across a

range of conditions. An overview of these scenarios using

key macroeconomic indicators is provided on pages 82

to 84. Ongoing benchmarking of the scenarios to other

economic providers is carried out monthly to provide

management with comfort on Moody’s Analytics

scenario paths.

Five different projected economic scenarios are currently

considered to cover a range of possible outcomes. These

include a baseline scenario, which reflects the best view of

future economic events. In addition, one upside scenario and

three downside scenario paths are defined relative to the

baseline. Management assigns the scenarios a probability

weighting to reflect the likelihood of specific scenarios, and

therefore loss outcomes, materialising, using a combination

of quantitative analysis and expert judgement.

The impact of forward-looking information varies across the

group’s lending businesses because of the differing sensitivity of

each portfolio to specific macroeconomic variables. This is

reflected through the development of bespoke macroeconomic

models that recognise the specific response of each business to

the macroeconomic environment.

The modelled impact of macroeconomic scenarios and their

respective weightings is reviewed by business experts in

relation to stage allocation and coverage ratios at the

individual and portfolio level, incorporating management’s

experience and knowledge of customers, the sectors in

which they operate, and the assets financed.

This includes assessment of the reaction of the ECL in the

context of the prevailing and forecast economic conditions,

for example where currently higher interest rates and

inflationary conditions exist compared to recent periods.

Economic forecasts have evolved over the course of 2026

and reflect the mixed external backdrop observed in the

year. Forecasts deployed in IFRS 9 macroeconomic models

are updated on a monthly basis. At 31 July 2026, the latest

baseline scenario forecasts gross domestic product (“GDP”)

growth of 1.0% in calendar year 2026 and an average base

rate of 3.8% across the same period. Consumer Price Index

(“CPI”) inflation is forecast to be 3.2% in calendar year 2026

in the baseline scenario, with 4.7% forecast in the protracted

downside scenario over the same period.

At 31 July 2026, the scenario weightings were: 30% upside,

32.5% baseline, 20% mild downside, 10.5% moderate

downside and 7% protracted downside. As economic

forecasts are considered to recognise developments in the

macroeconomic environment appropriately, no change has

been made to the weightings ascribed to the scenarios since

31 July 2025.

Given the current economic uncertainty, further analysis has

been undertaken to assess the appropriateness of the five

scenarios used. This included benchmarking the baseline

scenario to consensus economic views, as well as consideration

of an additional forecast related to stagflation, which could be

considered as an alternative downside scenario.

Compared to the scenarios in use in the expected credit

losses calculation, the stagflation scenario includes a longer

period of higher interest rates coupled with a shallower but

extended impact on GDP. Due to the relatively short tenor of

the portfolios, the stagflation scenario is considered to be of

less relevance than those deployed. This is supported by the

fact that, due to the higher severity of recessionary factors in

the existing scenarios, using the stagflation scenario instead

of the moderate or protracted downside scenario would

result in lower expected credit losses.

The final scenarios deployed reflect a marginally worsened

UK economic outlook relative to 31 July 2025, primarily due

to persistent concerns linked to the conflict in Iran and

associated supply chain pressures. Under the baseline

scenario, UK headline CPI inflation is forecast to rise from

current levels before resuming its moderating trend towards

the Bank of England's 2% target in 2027. Following recent

decisions to hold rates at 3.75%, the Bank of England base

rate is only expected to start reducing from 2027 onwards in

all scenarios. House price outlook has deteriorated, reflecting

a challenging year for the housing market that featured

volatile mortgage rate movements and subdued activity in

the context of wider political and macroeconomic

uncertainty. Unemployment rate forecasts have marginally

deteriorated, recognising increases observed since 31 July

2025. Conversely, the GDP outlook has improved as the UK

economy demonstrated some signs of resilience over the

year. While GDP forecasts have strengthened, we consider

that there remains a material level of uncertainty that could

negatively impact UK economic growth in the near term. In

recognition of this, we are holding adjustments to reflect this

increased potential for losses at 31 July 2026 (see the "Use

of adjustments" section for further detail).

The following tables show economic assumptions within

each scenario, and the weighting applied to each at 31 July

2026. The metrics shown are key UK economic indicators,

chosen to describe the economic scenarios. These are the

main metrics used to set scenario paths, which then

influence a wide range of additional metrics that are used in

expected credit loss models. The first tables show the

forecasts of the key metrics for the scenarios utilised for

calendar years 2026 and 2027. The subsequent tables show

averages and peak-to-trough ranges for the same key

metrics over the five-year period from 2026 to 2030.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Scenario forecasts and weights

At 31 July 2026

UK GDP growth

1.0%

1.5%

1.8%

4.2%

0.3%

(1.5)%

0.1%

(2.9)%

0.0%

(3.9)%

UK unemployment

5.2%

5.1%

5.0%

4.5%

5.4%

5.6%

5.5%

7.2%

5.6%

8.4%

UK HPI growth

1.2%

1.9%

7.6%

12.0%

(1.9)%

(3.8)%

(3.7)%

(10.3)%

(5.6)%

(17.4)%

BoE base rate

3.8%

3.3%

3.8%

3.5%

3.8%

2.9%

3.8%

2.8%

3.7%

2.4%

UK CPI inflation

3.2%

2.0%

3.2%

2.1%

3.8%

(0.2)%

4.2%

(2.2)%

4.7%

(2.9)%

Weighting

32.5%

30%

20%

10.5%

Baseline

Upside (strong)

Downside (mild)

Downside (moderate)

Downside (protracted)

2026

2027

2026

2027

2026

2027

2026

2027

2026

2027

At 31 July 2025

UK GDP growth

1.1%

1.0%

1.9%

3.7%

0.4%

(1.9)%

0.2%

(3.4)%

0.1%

(4.3)%

UK unemployment

4.7%

4.5%

4.1%

4.8%

5.2%

5.0%

6.8%

5.1%

8.0%

UK HPI growth

3.3%

3.2%

9.9%

13.4%

0.2%

(2.6)%

(1.6)%

(9.2)%

(3.6)%

(16.4)%

BoE base rate

4.2%

3.2%

4.3%

3.5%

4.1%

2.4%

4.1%

1.8%

3.9%

1.3%

UK CPI inflation

3.1%

2.0%

3.2%

2.1%

0.3%

1.7%

(0.6)%

1.3%

(1.1)%

Weighting

32.5%

30%

20%

10.5%

Baseline

Upside (strong)

Downside (mild)

Downside (moderate)

Downside (protracted)

2025

2026

2025

2026

2025

2026

2025

2026

2025

2026

Notes:

UK GDP growth: National Accounts Annual Real Gross Domestic Product, Seasonally Adjusted – year-on-year change (%).

UK unemployment: ONS Labour Force Survey, Seasonally Adjusted – Average (%).

UK HPI growth: Average nominal house prices, Land Registry, Seasonally Adjusted – Q4-to-Q4 change (%).

BoE base rate: Bank of England base rate – Average (%).

UK CPI inflation: ONS, All items, annual inflation – Q4-to-Q4 change (%).

At 31 July 2026

UK GDP growth

1.6 %

2.4 %

1.2 %

0.8 %

0.5 %

UK unemployment

5.0 %

4.4 %

5.2 %

7.0 %

7.9 %

UK HPI growth

1.8 %

3.4 %

0.1 %

(1.7) %

(4.4) %

BoE base rate

3.0 %

3.1 %

2.6 %

2.1 %

1.7 %

UK CPI inflation

2.2 %

2.3 %

1.8 %

1.3 %

1.1 %

Weighting

32.5 %

30 %

20 %

10.5 %

7 %

Five-year average (calendar years 2026 to 2030)

Baseline

Upside

(strong)

Downside

(mild)

Downside

(moderate)

Downside

(protracted)

At 31 July 2025

UK GDP growth

1.6 %

2.3 %

1.1 %

0.8 %

0.7 %

UK unemployment

4.7 %

4.1 %

4.9 %

6.7 %

7.6 %

UK HPI growth

2.5 %

4.2 %

0.8 %

(1.0) %

(3.5) %

BoE base rate

3.0 %

3.1 %

2.7 %

2.0 %

1.5 %

UK CPI inflation

2.2 %

2.3 %

1.6 %

1.2 %

0.9 %

Weighting

32.5 %

30 %

20 %

10.5 %

7 %

Five-year average (calendar years 2025 to 2029)

Baseline

Upside

(strong)

Downside

(mild)

Downside

(moderate)

Downside

(protracted)

Notes:

UK GDP growth: National Accounts Annual Real Gross Domestic Product, Seasonally Adjusted – CAGR (%).

UK unemployment: ONS Labour Force Survey, Seasonally Adjusted – Average (%).

UK HPI growth: Average nominal house prices, Land Registry, Seasonally Adjusted – CAGR (%).

BoE base rate: Bank of England base rate – Average (%).

UK CPI inflation: ONS, All items, annual inflation – CAGR (%).

At 31 July 2026

UK GDP growth

8.5%

0.6%

12.6%

0.6%

6.0%

(1.7)%

4.3%

(3.2)%

2.5%

(4.4)%

UK unemployment

5.4%

4.9%

5.1%

4.1%

5.8%

4.9%

7.7%

5.0%

9.0%

5.0%

UK HPI growth

9.2%

0.2%

22.1%

0.2%

0.6%

(5.8)%

0.5%

(16.5)%

0.5%

(25.4)%

BoE base rate

3.8%

2.5%

3.8%

2.5%

3.8%

1.6%

3.8%

1.0%

3.8%

0.7%

Five-year period (calendar year 2026 to 2030)

Baseline

Upside (strong)

Downside (mild)

Downside (moderate)

Downside (protracted)

Peak

Trough

Peak

Trough

Peak

Trough

Peak

Trough

Peak

Trough

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UK CPI inflation

3.4%

1.7%

3.4%

1.9%

4.6%

(0.8)%

5.0%

(2.2)%

5.4%

(2.9)%

Weighting

32.5%

30%

20%

10.5%

Five-year period (calendar year 2026 to 2030)

Baseline

Upside (strong)

Downside (mild)

Downside (moderate)

Downside (protracted)

Peak

Trough

Peak

Trough

Peak

Trough

Peak

Trough

Peak

Trough

At 31 July 2025

UK GDP growth

8.2%

0.7%

12.3%

0.7%

5.7%

(2.1)%

4.0%

(3.8)%

3.6%

(5.0)%

UK unemployment

4.8%

4.5%

4.7%

3.8%

5.2%

4.5%

7.5%

4.5%

8.8%

4.5%

UK HPI growth

13.2%

1.5%

27.8%

1.5%

4.3%

(3.1)%

2.2%

(12.6)%

2.2%

(22.0)%

BoE base rate

4.6%

2.5%

4.6%

2.5%

4.6%

1.8%

4.6%

1.0%

4.6%

0.6%

UK CPI inflation

3.4%

1.9%

3.4%

2.0%

3.4%

(0.5)%

3.4%

(1.2)%

3.4%

(2.1)%

Weighting

32.5%

30%

20%

10.5%

Five-year period (calendar year 2025 to 2029)

Baseline

Upside (strong)

Downside (mild)

Downside (moderate)

Downside (protracted)

Peak

Trough

Peak

Trough

Peak

Trough

Peak

Trough

Peak

Trough

Notes:

UK GDP growth: Maximum and minimum quarterly GDP as a percentage change from start of period (%).

UK unemployment: Maximum and minimum unemployment rate (%).

UK HPI growth: Maximum and minimum average nominal house price as a percentage change from start of period (%).

BoE base rate: Maximum and minimum Bank of England base rate (%).

UK CPI inflation: Maximum and minimum inflation rate over the five-year period (%).

These periods have been included as they demonstrate the

short, medium and long-term outlooks for the key

macroeconomic indicators which form the basis of the

scenario forecasts. The portfolio has an average residual

maturity of 16 months, with 99% of loan value having a

maturity of five years or less.

The following charts represent the quarterly forecast data

included in the above tables incorporating actual metrics up

to 31 July 2026. The dark blue line shows the baseline

scenario, while the other lines represent the various upside

and downside scenarios.

Real gross domestic product (annual % change)

GDP Growth

(% change in quarter

from previous year)

Baseline

Upside

Mild Downside

Moderate Downside

Protracted Downside

2025

2026

2027

2028

2029

2030

-6%

-4%

-2%

Unemployment rate (%)

Unemployment Rate

(end of quarter

percentage values)

Baseline

Upside

Mild Downside

Moderate Downside

Protracted Downside

2025

2026

2027

2028

2029

2030

10%

House price index – current prices (annual % change)

HPI Growth

(% change in quarter

from previous year)

Baseline

Upside

Mild Downside

Moderate Downside

Protracted Downside

2025

2026

2027

2028

2029

2030

-20%

-15%

-10%

-5%

10%

15%

20%

Bank of England base rate (%)

Base Rate

(end of quarter

percentage values)

Baseline

Upside

Mild Downside

Moderate Downside

Protracted Downside

2025

2026

2027

2028

2029

2030

Consumer price index (annual % change)

CPI Inflation

(% change in quarter

from previous year)

Baseline

Upside

Mild Downside

Moderate Downside

Protracted Downside

2025

2026

2027

2028

2029

2030

-4%

-2%

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Scenario sensitivity analysis (audited)

The expected credit loss provision is sensitive to judgements

and estimations made with regard to the selection and

weighting of multiple economic scenarios. As a result,

management has assessed and considered the sensitivity of

the provision as follows:

• For the majority of the portfolios, the modelled expected

credit loss provision has been recalculated under the

upside strong and downside protracted scenarios

described above, applying a 100% weighting to each

scenario in turn. The change in provision requirement is

driven by the movement in risk metrics under each

scenario and resulting impact on stage allocation.

• Expected credit losses based on a simplified approach,

which do not utilise a macroeconomic model and require

expert judgement, are excluded from the sensitivity

analysis.

• In addition to the above, key considerations for the

sensitivity analysis are set out below, by segment:

– In Retail, the sensitivity analysis does not apply further

stress to the expected credit loss provision on loans and

advances to customers in Stage 3, because the

measurement of expected credit losses is considered

more sensitive to credit factors specific to the borrower

than macroeconomic scenarios.

– In Property, the sensitivity analysis excludes individually

assessed provisions which are deemed more sensitive

to credit factors than the macroeconomic scenarios.

Based on the above analysis, at 31 July 2026, application of

100% weighting to the upside strong scenario would

decrease the expected credit loss by £20.9 million whilst

application of 100% weighting to the protracted downside

scenario would increase the expected credit loss by £37.9

million, driven by the aforementioned changes in risk metrics

and stage allocation of the portfolios.

When performing sensitivity analysis there is a high degree

of estimation uncertainty. On this basis, 100% weighted

expected credit loss provisions presented for the upside and

downside scenarios should not be taken to represent the

lower or upper range of possible and actual expected credit

loss outcomes. The recalculated expected credit loss

provision for each of the scenarios should be read in

the context of the sensitivity analysis as a whole and in

conjunction with the disclosures provided in Note 10 to the

Financial Statements. The modelled impact presented is

based on gross loans and advances to customers at 31 July

2026; it does not incorporate future changes relating to

performance, growth or credit risk. In addition, given the

change in the macroeconomic conditions, underlying

modelled provisions and methodology, and refined approach

to adjustments, comparison between the sensitivity results at

31 July 2026 and 31 July 2025 is not appropriate.

The economic environment remains uncertain and future

impairment charges may be subject to further volatility,

including from updates to macroeconomic variable forecasts

impacted by sustained cost-of-living pressures, changes in

fiscal policy, trade-related uncertainty (including the impact

of tariffs), and ongoing geopolitical conflicts.

Use of adjustments (audited)

Limitations in the group’s expected credit loss models or

input data may be identified through ongoing model

monitoring and validation of models. In certain

circumstances, management make appropriate adjustments

to model-calculated expected credit losses. These

adjustments are based on management judgements or

quantitative back-testing to ensure expected credit loss

provisions adequately reflect all known information. These

adjustments are generally determined by considering the

attributes or risks of a financial asset which are not captured

by existing expected credit loss model outputs. Management

adjustments are actively monitored, reviewed and

incorporated into future model developments where

applicable.

Macroeconomic forecasts continue to react to a range of

external factors including changes in the UK’s economic

policy, in particular following the change in Prime Minister,

inflationary pressures, the ongoing conflicts in Ukraine and

the Middle East, and uncertainty from tariffs. In response, our

use of adjustments has evolved.

In particular, adjustments have been held during the

financial year in response to earlier improvements in

macroeconomic forecasts that resulted in releases in

modelled provisions. A number of these releases were

considered premature or counterintuitive by management

and adjustments were made as a result. Portfolio

performance has been closely monitored during the financial

year under review, over which modelled provisions have

increased and external forecasts have appropriately

responded to the evolving external conditions. As a result,

previously held adjustments have been unwound in

recognition of the portfolio and models appropriately

reacting to changes in the external environment.

Notwithstanding this, new macroeconomic adjustments

linked to elevated uncertainty around the UK's near-term

GDP growth outlook have been applied, and remain under

close review by management.

The overall value of adjustments has decreased since

31 July 2025, due to comparatively lower values for the new

macroeconomic adjustments, as well as a net reduction in

adjustments relating to individual customers where, in

management's judgement, modelled provisions did not

adequately reflect expected credit losses.

The approach to adjustments continues to reflect the use

of expert management judgement which incorporates

management’s experience and knowledge of customers,

the areas in which they operate, and the underlying assets

financed.

The need for adjustments will continue to be monitored as

new information emerges which might not be recognised in

existing models.

At 31 July 2026, £(0.3) million (31 July 2025: £4.0 million) of

the expected credit loss provision was attributable to

adjustments, which reflects the net offsetting position of

positive and negative adjustments depending on the

adjustment purpose or model requirement. Adjustments

include £1.1 million held to reflect forward-looking economic

uncertainty (31 July 2025: £2.1 million).

Other credit risk tables (audited)

Segmental credit risk

The following tables set out loans and advances to

customers, trade receivables and undrawn facilities by the

group’s internal credit risk grading and illustrate the

allocation of these per IFRS 9 staging category for

comparative purposes. The analysis of lending has been

prepared based on the following risk categories:

• Low risk: The credit risk profile of the borrower is

considered acceptable with the borrower considered likely

to meet obligations as they fall due. Standard monitoring is

in place.

• Medium risk: Evidence of deterioration in the credit risk

profile of the borrower exists which requires increased

Strategic report

Governance report

Financial statements

monitoring. Potential concerns over their ability to meet

obligations as they fall due may exist.

• High risk: Evidence of significant deterioration in the credit

risk profile of the borrower exists which requires enhanced

management. Full repayment may not be achieved, with

potential for loss identified.

Low risk loans and advances to customers represent 85% of

the overall portfolio (31 July 2025: 85%), reflective of relative

portfolio resilience against the backdrop of persistent

macroeconomic pressures during the financial year.

76% (31 July 2025: 77%) of total advances were classified

as low risk Stage 1. Low risk Stage 2 represented 9%

(31 July 2025: 8%) of loans and advances to customers,

largely comprising early arrears cases, or agreements which

have triggered a significant increase in credit risk indicator,

or the “30 days past due” backstop. Low risk Stage 3 loans

and advances to customers primarily related to agreements

which have triggered the “90 days past due” backstop but

where full repayment is expected.

Medium risk loans account for 10% (31 July 2025: 9%) of

total loans and advances to customers, of which the majority

were spread across Stages 1 and 2. Medium risk Stage 1

increased to 6% (31 July 2025: 4%). Medium risk Stage 2

represented 4% (31 July 2025: 5%) of the overall portfolio.

Loans and advances to customers reflected as medium risk

Stage 3 primarily related to agreements that have triggered

the “90 days past due” backstop in addition to other

significant increases in credit risk triggers.

High risk loans accounted for 5% (31 July 2025: 5%) of total

loans and advances to customers, with the majority

corresponding to Stage 3.

At 31 July 2026

Gross loans and advances to customers1

Low risk

7,347.6

892.4

15.5

8,255.5

Medium risk

541.5

381.7

17.1

940.3

High risk

30.1

61.4

440.3

531.8

Total

7,919.2

1,335.5

472.9

9,727.6

Undrawn commitments

Low risk

778.6

1.7

—

780.3

Medium risk

—

13.4

—

13.4

High risk

—

4.6

Total

778.6

15.1

4.6

798.3

Gross trade receivables2

Low risk

8.9

—

8.9

Medium risk

—

0.3

—

0.3

High risk

—

1.8

Total

8.9

0.3

1.8

11.0

Stage 1

£ million

Stage 2

£ million

Stage 3

£ million

Total

£ million

At 31 July 2025

Gross loans and advances to customers

Low risk

7,491.4

769.6

18.7

8,279.7

Medium risk

422.1

461.4

23.1

906.6

High risk

4.0

68.5

450.3

522.8

Total

7,917.5

1,299.5

492.1

9,709.1

Undrawn commitments

Low risk

809.8

7.7

—

817.5

Medium risk

—

2.2

—

2.2

High risk

—

3.3

Total

809.8

9.9

3.3

823.0

Gross trade receivables2

Low risk

8.2

—

8.2

Medium risk

—

0.5

—

0.5

High risk

—

1.9

Total

8.2

0.5

1.9

10.6

Stage 1

£ million

Stage 2

£ million

Stage 3

£ million

Total

£ million

1. Gross loans and advances to customers include £10.4 million (31 July 2025: £11.8 million) of loans and advances held at FVTPL, allocated as Stage 1

Low risk £3.9 million (31 July 2025: £3.3 million) and Stage 2 Medium risk £6.5 million (31 July 2025: £8.5 million) based on management judgement.

2. Lifetime expected credit losses are recognised for all trade receivables under the IFRS 9 simplified approach, therefore the staging presented here

represents an internal management view. The figures presented are on a gross basis before deducting for expected credit losses of £1.8 million (31 July

2025: £2.1 million) relating to predominantly Stage 3 receivables.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Forbearance

Forbearance occurs when a customer is experiencing

difficulty in meeting their financial commitments and a

concession is granted, by changing the terms of the financial

arrangement, which would not otherwise be considered. This

arrangement can be temporary or permanent, depending on

the customer’s circumstances. The group reports forborne

exposures as either performing or non-performing in line with

regulatory requirements. A forbearance policy is maintained

to embed necessary processes and enable consistently fair

treatment of all customers and that each is managed based

on their individual circumstances. The arrangements agreed

with customers will aim to create a sustainable and

affordable financial position, thereby reducing the likelihood

of suffering a credit loss. The forbearance policy is

periodically reviewed to maintain its effectiveness.

The group offers a range of concessions to support

customers which vary depending on the product and the

customer’s status. Such concessions include grace periods/

payment moratoria, extensions of the loan term, and

refinancing.

Loans are classified as forborne at the time a customer in

financial difficulty is granted a concession and the loan will

remain treated and recorded as forborne until the following

exit conditions are met:

• the loan is considered as performing and there is no

past‑due amount according to the amended contractual

terms;

• a minimum two-year probation period has passed from the

date the forborne exposure was considered as performing,

during which time regular and timely payments have been

made; and

• none of the customer’s exposures with Close Brothers are

more than 30 days past due at the end of the probation

period.

At 31 July 2026, the gross carrying amount of exposures

with forbearance measures was £435.8 million (31 July 2025:

£406.1 million). The key driver of this increase was higher

forbearance in Invoice Finance, linked to large single names.

This increase was partially offset by reductions across other

Commercial and Retail businesses, reflecting stability in

portfolio performance against the backdrop of continued

macroeconomic challenges and cost-of-living pressures on

customers.

An analysis of forborne loans is shown in the table below:

Gross loans and advances to customers (£ million)

9,727.6

9,709.1

Forborne loans (£ million)

435.8

406.1

Forborne loans as a percentage of gross loans and advances to customers (%)

4.5 %

4.2 %

Provision on forborne loans (£ million)

125.5

113.8

Number of customers supported

13,823

15,882

31 July 2026

31 July 2025

The following is a breakdown of forborne loans by segment:

Commercial

143.4

112.9

Retail

46.8

50.6

Property

245.6

242.6

Total

435.8

406.1

31 July 2026

£ million

31 July 2025

£ million

The following is a breakdown of the number of customers supported by segment:

Commercial

815

948

Retail

12,966

14,880

Property

Total

13,823

15,882

31 July 2026

Number of

customers

supported

31 July 2025

Number of

customers

supported

The following is a breakdown of forborne loans by concession type:

Grace period/payment moratorium

114.1

136.3

Extension of maturity/term

162.3

139.5

Rescheduled payments

29.1

32.7

Other forbearance measures1

130.3

97.6

Total

435.8

406.1

31 July 2026

£ million

31 July 2025

£ million

1. Includes £0.2 million of debt forgiveness concessions (31 July 2025: £0.2 million).

Strategic report

Governance report

Financial statements

Government lending schemes

Since the pandemic period, following accreditation,

customers have been offered facilities under various UK and

Irish government-introduced loan schemes, thereby enabling

the group to maximise its support to small businesses. At

31 July 2026, there are 2,857 (31 July 2025: 3,350) remaining

facilities, with a residual balance of £535.6 million (31 July

2025: £461.6 million) following continued new lending and

regular repayments across the Commercial businesses.

The group maintains a regular reporting cycle of these

facilities to monitor performance. To date, a number of

claims have been made and payments received under the

government guarantee.

Collateral held

The group mitigates credit risk through holding collateral

against loans and advances to customers. The group has

internal policies on the acceptability of specific collateral types,

the requirements for effective enforceability and monitoring

of collateral in-life. Internal policies define, amongst other

things, legal documentation requirements, the nature of

assets accepted, LTV and age at origination, and exposure

maturity and in-life inspection requirements. An asset valuation

is undertaken as part of the loan origination process.

The principal types of collateral held by the group against

loans and advances to customers in the Property and

Commercial businesses include residential and commercial

property and charges over business assets such as

equipment, inventory and accounts receivable. Within Retail,

the group holds collateral primarily in the form of vehicles in

Motor Finance and refundable insurance premiums in

Premium Finance, where an additional layer of protection

may exist through broker recourse.

The group’s collateral policies have not materially changed

during the reporting period. There has been an increase in

the proportion of exposures in higher LTV bands during the

year. This is mainly reflective of greater high-LTV account

volumes in the Property business, driven by updated

valuations on a small group of larger individually assessed

accounts.

Analysis of gross loans and advances to customers by LTV

ratio is provided below. The value of collateral used in

determining the LTV ratio is based upon data captured at

loan origination or, where available, a more recent valuation.

LTV1

60% or lower

671.1

131.6

844.8

1,647.5

>60% to 70%

591.8

141.2

721.9

1,454.9

>70% to 80%

463.2

338.8

61.9

863.9

>80% to 90%

984.1

806.8

5.6

1,796.5

>90% to 100%

1,610.6

576.3

50.6

2,237.5

Greater than 100%

351.6

515.4

177.2

1,044.2

Structurally protected2

38.2

364.3

—

402.5

Unsecured

246.9

33.3

0.4

280.6

Total at 31 July 20263

4,957.5

2,907.7

1,862.4

9,727.6

Commercial

£ million

Retail

£ million

Property

£ million

Total

£ million

LTV1

60% or lower

650.7

131.7

976.1

1,758.5

>60% to 70%

622.3

139.2

709.1

1,470.6

>70% to 80%

423.8

330.4

40.6

794.8

>80% to 90%

972.1

976.3

30.3

1,978.7

>90% to 100%

1,492.3

534.7

67.7

2,094.7

Greater than 100%

342.4

434.5

109.6

886.5

Structurally protected2

69.9

394.9

—

464.8

Unsecured

228.0

32.3

0.2

260.5

Total at 31 July 20253

4,801.5

2,974.0

1,933.6

9,709.1

Commercial

£ million

Retail

£ million

Property

£ million

Total

£ million

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Gross loans and advances to customers which are credit-impaired split by LTV ratio:

LTV

60% or lower

19.3

1.2

13.6

34.1

>60% to 70%

22.1

2.3

18.7

43.1

>70% to 80%

5.4

7.2

13.6

26.2

>80% to 90%

17.0

18.1

5.6

40.7

>90% to 100%

28.9

22.1

50.6

101.6

Greater than 100%

21.5

16.1

177.2

214.8

Structurally protected2

0.8

4.8

—

5.6

Unsecured

5.5

0.9

0.4

6.8

Total at 31 July 2026

120.5

72.7

279.7

472.9

Commercial

£ million

Retail

£ million

Property

£ million

Total

£ million

LTV

60% or lower

27.2

2.0

40.8

70.0

>60% to 70%

4.4

3.1

37.7

45.2

>70% to 80%

6.0

9.4

6.7

22.1

>80% to 90%

14.5

23.1

26.1

63.7

>90% to 100%

30.9

29.8

67.7

128.4

Greater than 100%

15.0

21.4

109.6

146.0

Structurally protected2

1.9

5.3

—

7.2

Unsecured

8.2

1.1

0.2

9.5

Total at 31 July 2025

108.1

95.2

288.8

492.1

Commercial

£ million

Retail

£ million

Property

£ million

Total

£ million

1. Government lending scheme facilities totalling £535.6 million (31 July 2025: £461.6 million) are allocated to a low LTV category reflecting the nature of

the government guarantee and resultant level of lending risk.

2. Exposures are considered structurally protected when, in management’s judgement, they have characteristics which mitigate the credit risk of the

exposure to a significant extent, in spite of not representing tangible security.

3. Total gross loans and advances to customers includes £10.4 million (31 July 2025: £11.8 million) of loans and advances held at FVTPL.

Cyber risk is risk arising from inadequate internal

and external information and cyber security,

where failures impact the confidentiality, integrity

and availability of information, electronic data or

critical technology services.

Exposure

Cyber risks arise from the group’s routine operations, its use

of technology, and its reliance on digital services, data and

interconnected third parties. These risks may lead to service

disruption, compromise of sensitive information, financial

loss, regulatory consequences, reputational harm, or adverse

effects on customer outcomes and trust.

The group’s exposure to cyber risk continues to evolve as the

threat landscape changes and as the group introduces new

digital products and services, expands its use of cloud-based

technologies, and works with third-party service providers and

supply chains to deliver critical business services. These

dependencies are integral to the group’s strategy, but they

may also increase concentration risk and the potential for a

cyber event affecting one provider or shared technology

dependency to have broader operational consequences.

The group's exposure may increase as threats evolve,

including through the maturation of artificial intelligence-

enabled attack techniques. To address these challenges, the

group maintains robust cyber controls, monitoring and

recovery capabilities designed to ensure risks are managed

within acceptable levels and that material disruption can be

responded to and recovered from effectively.

Day-to-day management of cyber risk is the responsibility of

business and technology teams, supported by guidance and

oversight from the information security and risk and

compliance functions, and subject to independent assurance

from group internal audit.

Requirements and responsibilities are defined in the

Information Security Policy and supporting standards. These

form part of the Enterprise Risk Management Framework to

identify, assess, mitigate, monitor and report cyber risks,

incidents, vulnerabilities and issues that could affect the

achievement of business objectives or disrupt critical

systems, services and processes.

Risk appetite

The group is committed to maintaining high standards of cyber

security and resilience in support of its strategic objectives.

The group recognises that the evolving threat landscape and

our reliance on technology and third parties mean cyber risk

cannot be eliminated but has no appetite for avoidable cyber

security breaches resulting in material business or customer

impact. The group accepts only the residual level of cyber

risk that remains within its defined thresholds and impact

tolerances, following the application of appropriate and

proportionate mitigating controls.

Strategic report

Governance report

Financial statements

Cyber risk

Measurement

The group measures cyber risk through a combination of key

risk indicators, observed impact of risk events, periodic risk

and control assessments, threat intelligence, and scenario

analysis. Conservative trigger and limit thresholds for

relevant indicators are monitored regularly, with exceptions

reported to the Group Risk and Compliance Committee

(“GRCC”).

Material cyber risk events are identified, reviewed and

escalated in line with criteria set out in the Enterprise Risk

Management Framework, the Information Security Policy and

supporting standards. Where appropriate, this includes

formal post-incident review, root cause analysis and the

capture of lessons learned, with appropriate management

action plans implemented and tracked to completion.

Mitigation

The group adopts a risk-based approach to the mitigation of

cyber risk, using an enterprise-wide control framework

aligned with relevant laws and regulations to inform cyber

risk management activities. The group maintains robust

information security policies, standards and controls, with

periodic assurance to evaluate whether these are designed

appropriately and operating effectively.

The group continues to invest in both preventative and

detective measures and in wider cyber resilience capabilities.

These include, among other things, threat intelligence,

security monitoring and response, cloud security, identity

and access management, vulnerability management, secure

change and development practices, third-party security

oversight, colleague education and awareness, and effective

deployment of controls and assurance activity across the

three lines of defence model.

Focus continues to be placed on strengthening resilience

against ransomware and other disruptive attack types

through layered preventative controls. The group also

continues to strengthen oversight of third-party and supply

chain risk, including risks arising from cloud adoption and

shared dependencies, recognising the potential for

concentrated or systemic impacts where multiple firms rely

on common providers or technology platforms.

Where deviations from risk thresholds or emergent cyber

threats are observed, the group undertakes assessment and

remediation activities to address identified deficiencies and

bring exposure within risk appetite.

Monitoring

The Board delegates authority to the GRCC, supported by

the Operations and Technology Risk Committee (“OTRC”), to

oversee the day-to-day management of the group’s cyber

risk and its exposure. Regular management information

relating to the group’s cyber risk profile, control environment,

vulnerabilities, incidents and resilience posture is presented

to and discussed by these committees and, where relevant,

by local business risk and compliance committees (“RCCs”).

Specialist internal resources and third-party consultancies

are engaged to periodically assess the group’s cyber

security programme and the effectiveness of its controls,

supporting continuous improvement in the management of

material cyber risks.

In addition to routine monitoring of known risks, the group

undertakes continuous horizon scanning of trends and

emerging risks to support ongoing improvement. These

include changes in threat actor tactics, techniques and

procedures, geopolitical developments, concentrations in

third-party and cloud ecosystems, and technological

developments with the potential to affect the group’s cyber

security posture, including artificial intelligence and quantum

computing.

Outlook

The cyber threat landscape continues to evolve, with attacks

increasing in both frequency and severity, and financial

services remain a primary target. As cyber threats become

increasingly sophisticated, the group will uphold a balanced,

risk-based strategy in managing related risks, with

investment and control improvements directed towards

areas of significant risk concentration.

Advances in artificial intelligence are expected to materially

increase the speed, scale and sophistication of cyber

attacks, potentially reducing the time available to identify and

remediate weaknesses before they are targeted. The group

will closely monitor developments in this area and will

continue to strengthen vulnerability management, exposure

reduction, and detection capabilities.

Third-party and supply chain security remain key areas of

focus, particularly as cloud adoption increases reliance on

shared providers, creating potential concentration and

systemic risks that require careful management. We support

the UK government’s continued focus on strengthening

resilience in this area through forthcoming cyber resilience

legislation.

Cyber risk will remain central to the group’s operational

resilience framework, with continued emphasis on scenario

testing, recovery planning, and integration with enterprise

risk management to ensure the group is able to respond to

and recover from disruptive cyber events effectively.

The group will continuously monitor the cyber threat

landscape and engage collaboratively with regulators,

industry bodies, trusted third parties, and peer organisations

to ensure robust oversight. We will implement measures to

address risks that exceed established thresholds, including

strengthening cyber security policies, procedures and

controls to minimise both the likelihood and impact of such

events.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Funding risk is the risk of loss caused by the

inability to raise funds at an acceptable price or

to access markets in a timely manner or from

any decrease in the stability of the current

funding base.

Liquidity risk is the risk that the group or any of

its entities does not have sufficient liquid assets

to meet liabilities as they fall due in normal and

disrupted market conditions.

Exposure

Close Brothers Group plc manages its own funding and

liquidity requirements, including parent company unsecured

funding issuance, and maintains liquidity in line with its

Individual Liquidity Adequacy Assessment Process

("ILAAP"). The ILAAP is the group's framework for

identifying, measuring, monitoring and managing funding

and liquidity risks, and for assessing the level of liquidity

required to remain resilient under a range of severe but

plausible stress scenarios. It helps ensure that sufficient

high-quality liquid assets are maintained to meet obligations

as they fall due and supports compliance with regulatory

liquidity requirements.

Funding and liquidity risk are managed by the bank (Close

Brothers Limited and its subsidiaries) on behalf of the group,

while remaining subject to legal entity-specific governance

and risk management requirements.

The group's funding profile comprises a broad range of

channels. The approach to funding is weighted

predominantly towards retail deposits and also includes

secured funding, unsecured funding and non-retail deposits.

Funding risk exposure primarily arises if the bank is unable to

obtain the necessary funding to support its asset positions.

Unsustainable or undiversified funding bases, such as an

over-reliance on short-term deposits, can increase the level

of risk and can lead to a deviation from the funding plan. In

turn, this can increase the costs of raising new funds,

reducing the bank’s ability to originate new assets and

potentially leading to negative market or customer perception.

The respective bank and consolidated ILAAPs cover a range

of severe yet plausible stress testing scenarios including

market and idiosyncratic. This ensures liquidity management

remains a source of strength and supports a prudent

approach to assessing and maintaining liquidity

requirements.

Further detail on the group’s funding and liquidity exposure

is provided on pages 53 and 54 of the Financial overview

and Note 24 “Financial risk management”.

Risk appetite

The group has a low appetite for liquidity risk and seeks to

maintain sufficient liquidity resources to survive a combined

market-wide and idiosyncratic stress for a period of at least

three months.

The group has a low appetite for funding risk and seeks to

maintain sufficient and diverse (in terms of source, type and

tenor) funding and to ensure a sound level of liquidity is

maintained at all times.

Measurement

A variety of metrics are used to measure the group's funding

and liquidity position to ensure compliance with both

external regulatory requirements and internal risk appetite.

These metrics cover both the short and long-term view of

liquidity and funding and have limits and early warning

indicators in place that are approved via the bank's Asset

and Liability Committee (“ALCO”). These metrics include the

surplus tenor of weighted average funding allocated to the

loan book, available cash balance with the Bank of England,

and the liquid assets to total assets ratio.

Funding is measured and monitored in accordance with the

group's funding plan, which seeks to ensure that the bank

maintains a balanced and prudent approach to its funding

risk that is in line with risk appetite. The funding plan is

supplemented by metrics that highlight any funding

concentration risks, funding ratios and levels of

encumbrance. The net stable funding ratio (“NSFR”) was

implemented by the PRA on 1 January 2022. The group's

four- quarter average ratio to 31 July 2026 was 144.0% (31

July 2025: 145.9%), well above regulatory requirements and

internal risk appetite.

Liquidity is managed in accordance with regulatory

requirements and the ILAAP which is approved by the Board

and receives oversight at the group ALCO ("GALCO"). The

group’s liquidity coverage ratio (“LCR”) is above the

regulatory requirement. The group’s 12-month average LCR

to 31 July 2026 was 1,113.5% (31 July 2025: 1,011.6%).

In addition to regulatory metrics, the group also uses a suite

of internally developed liquidity stress scenarios to monitor

its potential liquidity exposure daily and determine its HQLA

requirements. This ensures that the group remains within risk

appetite and identifies potential areas of vulnerability. The

outcomes of these scenarios are formally reported to the

relevant ALCOs, GRCC and Board.

Strategic report

Governance report

Financial statements

Funding and liquidity risk

Mitigation (audited)

The funding approach is based on the principles of “borrow

long, lend short” and ensuring a diverse range of sources

and channels of funding. Economic uncertainty has

continued over the last 12 months, increasing market

competitiveness. Despite the challenges this has presented,

the group's ability to fund the loan book has been largely

unaffected. The group has sought to grow retail deposits as

a percentage of the customer deposit base and optimise the

funding mix in light of market conditions. The bank's

deposits remain well balanced and diverse in terms of

source, type and tenor, ensuring flexibility. Retail and

corporate customer funding is supported by wholesale

funding programmes including unsecured medium-term

notes and secured funding programmes. The balance sheet

and funding plan remain well within internal risk appetite,

with funding maintained in excess of loan book

requirements. This supports the bank's "borrow long, lend

short" principle, providing resilience through the funding

cycle and ensuring funds are available to support customers

when needed.

The following tables analyse the contractual maturities of the

group’s on-balance sheet financial liabilities on an

undiscounted cash flow basis.

At 31 July 2026

Deposits by banks

20.3

—

20.3

Deposits by customers

838.7

2,602.6

1,056.2

2,035.8

1,529.4

—

8,062.7

Loans and overdrafts from banks

0.9

—

0.9

Debt securities in issue

—

343.2

42.5

41.6

1,217.3

257.2

1,901.8

Subordinated loan capital

—

7.7

—

7.7

61.3

334.2

410.9

Total

859.9

2,953.5

1,098.7

2,085.1

2,808.0

591.4 10,396.6

On demand

£ million

In less than

three months

£ million

In more than

three months

but not more

than six

months

£ million

In more than

six months

but not more

than one year

£ million

In more than

one year but

not more

than five years

£ million

In more than

five years

£ million

Total

£ million

At 31 July 2025

Deposits by banks

9.3

78.9

—

88.2

Deposits by customers

1,161.7

2,625.6

1,570.5

2,070.3

1,614.3

—

9,042.4

Loans and overdrafts from banks

1.5

—

1.5

Debt securities in issue

—

71.2

84.3

114.5

1,577.6

403.3

2,250.9

Subordinated loan capital

—

2.0

—

3.0

15.0

205.0

225.0

Total

1,172.5

2,777.7

1,654.8

2,187.8

3,206.9

608.3 11,608.0

On demand

£ million

In less than

three months

£ million

In more than

three months

but not more

than six

months

£ million

In more than

six months

but not more

than one year

£ million

In more than

one year but

not more

than five years

£ million

In more than

five years

£ million

Total

£ million

Monitoring

Funding and liquidity are measured and monitored on a daily

basis with monthly reports forming standing items for

discussion at the relevant ALCO and GRCC, with the Risk

Committee maintaining overall oversight. Any liquidity and

funding issues are escalated as required to the ALCO, and

then onwards to the GRCC and Risk Committee.

The group operates a three lines of defence model with the

treasury function responsible for the measurement and

management of the group's funding and liquidity position

and asset and liability management risk. The Risk function

provides independent review and challenge. ALCO provides

oversight of funding and liquidity and supports the relevant

senior managers in discharging their senior management

function responsibilities. Internal audit provides independent

assurance on first and second lines of defence, the

appropriateness and effectiveness of internal controls and

policy implementation.

Outlook

Following the FCA's announcement of the industry-wide

redress scheme (PS26/3) for motor finance customers, the

group has consciously managed liquidity levels lower,

remaining at a robust level. During the year, treasury assets

decreased by 36% to £1.8 billion (31 July 2025: £2.8 billion)

and were predominantly held on deposit with the Bank of

England. During the 2027 financial year, the focus will be on

maintaining secured funding programmes and continuing to

fund primarily through retail deposits. The funding model

continues to provide robust support, and the strength of the

“borrow long, lend short” business model provides

significant funding resilience, resulting in a stable funding

base.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Legal and regulatory risk is the risk of non-

compliance with laws and regulations which

could give rise to fines, litigation, sanctions and

the potential for material adverse impact upon

the group.

Exposure

The group is subject to the laws and regulations of the

various jurisdictions in which it operates. This exposure

includes risks of breaching financial services regulations and

laws, as well as action resulting from contractual breach and

litigation (including direct customer claims based on

regulatory breaches).

Failure to comply with existing legal or regulatory

requirements, or to adapt to changes in a timely fashion in

the course of the provision of products and services, may

result in legal and regulatory risk.

With an increased regulatory focus on protecting customers,

any failure to implement and/or adapt to these changes

quickly may expose the group to reputational harm, legal or

regulatory sanctions and/or customer redress requirements.

Changes could also affect our financial performance, capital,

liquidity and access to markets in which we operate.

Risk appetite

The group has low appetite for legal and regulatory risk,

seeking to operate to high ethical standards and expecting

its staff to operate in accordance with the laws, regulations

and voluntary codes which impact the group and its

activities.

The group seeks to avoid knowingly operating in a manner

which is contrary to the provisions of the regulatory system

and has no tolerance for knowingly transacting business

outside the scope of its regulatory permissions or relevant

legislation.

The group will respond in an appropriate, risk-based and

proportionate manner to any changes to the legal and

regulatory environment, as well as changes driven by any

strategic initiatives.

Measurement

The group monitors and manages its legal, regulatory and

compliance risks through regular engagement and

interaction across the organisation, and the implementation

of appropriate policies, standards and procedures. This

includes reliance on a formal horizon scanning capability to

identify changes, as well as regular management information

which enables oversight and challenge via RCCs.

Mitigation

The group’s Enterprise Risk Management Framework,

including its suite of policies and standards and the

associated three lines of defence operating model, sets

common control objectives across risk disciplines. This

consistent approach to setting and embedding control

expectations acts to mitigate the likelihood and impact of

events which could give rise to legal and regulatory risk.

Clear accountability and ownership for meeting regulatory

requirements is overseen by business heads, thus driving

oversight and action.

Dedicated specialist legal and compliance teams with

relevant knowledge and experience provide advice, support

and challenge to the group’s businesses, enabling alignment

with legal and regulatory requirements. These teams further

have the ability to consult with external experts on technical

or otherwise complex matters as appropriate.

Internal change and investment processes consider

regulatory and legal inputs, such that sufficient funding can

be allocated to deliver system and process changes in line

with evolving regulatory and legal expectations.

Monitoring

In line with the group’s three lines of defence model,

businesses monitor their alignment with standards on an

ongoing basis. Relevant management information, including

the output of quality assurance activities, is reviewed by the

RCCs.

An independent compliance monitoring team undertakes

assurance to assess compliance with key regulations and the

effectiveness of associated controls. Reports are provided to

management and any remedial actions identified are tracked

to completion.

Legal and compliance teams monitor for external

developments through both structured horizon scanning

activity, regular external updates on relevant issues and

engagement in industry forums.

Outlook

Legal and regulatory risk continues to be notably elevated

across the financial services industry, particularly regarding

historical motor finance commissions. The UK government’s

current proposals to reform UK financial services and the

consumer credit regime and potential divergence between

the UK and EU regulatory regimes could affect and provide

further challenges for the group.

The ongoing inherent risk exposure for the group continues

to increase across the jurisdictions in which it operates. The

nature and scale of any risk exposure related to Consumer

Duty by the FCA remains to be seen as it continues to evolve

across the industry. Separately, the group’s retail lending

offerings in the Republic of Ireland operate in an environment

with increasing regulatory activity – the Central Bank of

Ireland continues to embed further regulatory expectations

with respect to operational resilience and securing customer

interests.

The group faces legal risks that could result in awards of

substantial monetary damages, remediation exercises or

fines. Specifically, the group has received a number of

complaints, some of which are with the Financial

Ombudsman Service (“FOS”), and is subject to a number of

claims through the courts regarding historical commission

arrangements with intermediaries on its Motor Finance

products.

This inflow of complaints commenced following the FCA’s

2021 changes to its Handbook rules after its consideration of

historical motor finance commission arrangements and has

increased following the January 2024 publication of three FOS

Strategic report

Governance report

Financial statements

Legal and regulatory risk

decisions against other lenders on this topic, and the FCA’s

simultaneous announcement of a review of this sector. This

has resulted in the publication by the FCA on 30 March 2026

of a motor finance consumer redress scheme to compensate

motor finance customers who were treated unfairly.

The group's best current estimate of the cost of this

industry-wide scheme as published is recognised in a

provision of c. £320 million. Legal risk with respect to the

motor commissions matter has increased lately through the

four legal challenges (three lenders, one consumer group)

filed against the FCA’s redress scheme, with a timeline

stretching into 2027 for the litigation to be resolved, and the

FCA advising lenders they should plan for a "no scheme"

outcome as well as planning to deliver the FCA's scheme.

The provision therefore includes an assumption of delayed

implementation due to the legal challenges. County court

litigation may also increase following the Court of Appeal's

recent ruling that one bulk claim against lenders can proceed

on the facts of that case. The ultimate cost to the group

remains subject to the outcome of the legal challenges and

any further legal, regulatory or industry developments

including court claims and complaints from customers.

As outlined in Note 15, the group has recognised a provision

of £31.3 million (31 July 2025: £33.0 million) in relation to a

proactive customer redress programme to be implemented

by the group, following identification of historical deficiencies

in certain operational processes related to early settlements

of loans in the Motor Finance business.

Market risk is the current or prospective risk to

the group’s capital or earnings arising from

changes in interest rates, credit spreads and

foreign exchange rates applied to the group’s

non-trading book.

Exposure

The group’s market risk exposure consists of interest rate

risk in the banking book (“IRRBB”), credit spread risk in the

banking book (“CSRBB”) and foreign exchange risk.

IRRBB is predominantly incurred in the bank (Close Brothers

Limited and its subsidiaries) as a result of its lending and

funding activities and from funding activities for the group

parent company (Close Brothers Group Plc).

CSRBB arises from the HQLA portfolio held in the bank.

Foreign exchange risk is incurred across the group and

arises from foreign currency loan commitments; translating

foreign currency assets, liabilities and profits; and non-

sterling investments.

Risk appetite

The group has a low appetite for market risks arising from

movements in interest rates, credit spreads and foreign

exchange rates that could lead to financial loss, earnings

volatility, or adverse impacts on capital.

The group’s policy is to match repricing characteristics of

assets and liabilities naturally. Where this is not possible,

vanilla interest rate swaps are used to hedge the risk within

prescribed limits.

The group has a limited appetite for credit spread risk which

occurs due to the HQLA portfolio. The portfolio primarily

comprises Bank of England reserves, highly rated UK and

European sovereign debt, sovereign-guaranteed debt,

supranational debt and UK covered bonds.

The group has a restricted appetite for foreign exchange risk.

It avoids large open positions and sets individual currency

limits to mitigate the risk.

Measurement

Interest rate risk

The group recognises three main sources of IRRBB which

could adversely impact future income or the value of the

balance sheet:

• repricing risk – the risk presented by assets and liabilities

that reprice at different times;

• embedded optionality risk – the risk presented by

contractual terms embedded into certain assets and

liabilities; and

• basis risk – the risk presented by a mismatch in the

reference interest rate for assets and liabilities.

IRRBB is assessed and measured on a behavioural basis by

applying key behavioural and modelling assumptions

including, but not limited to, those related to fixed rate loans

subject to prepayment risk, the behaviour of non-maturity

assets and liabilities, the treatment of own equity, and the

expectation of embedded interest rate options. This

assessment is performed across a range of regulatory

prescribed and internal interest rate shock scenarios

approved by the relevant ALCO.

Two measures are used for measuring IRRBB, namely

Earnings at Risk (“EaR”) and Economic Value (“EV”):

• EaR measures short-term impacts to earnings, highlighting

any earnings sensitivity, should interest rates change

unexpectedly.

• EV measures longer-term earnings capacity, by estimating

the present value sensitivity of the balance sheet, should

rates change unexpectedly.

EaR impact (audited)

The table below sets out the assessed impact on group net

interest income over a 12-month period from interest rate

changes. The results shown are for an instantaneous and

parallel change in interest rates at 31 July 2026:

0.5% increase

3.4

2.1

2.5% increase

17.1

10.1

0.5% decrease

(3.5)

(2.1)

2.5% decrease

(15.5)

(9.3)

31 July 2026

£ million

31 July 2025

£ million

EaR changed from £(2.1) million as at 31 July 2025 to £(3.5)

million as at 31 July 2026, under a 0.5% reduction in interest

rates. This was primarily driven by higher cash balances held

at the parent company following the disposals of Close

Brothers Asset Management and Winterflood Securities, with

proceeds retained at the parent company and deposited with

the bank. As cash holdings are negatively impacted by lower

interest rates, this results in increased sensitivity to a

downward interest rate shock.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Market risk

The group’s EaR at 31 July 2026 reflects its policy to ensure

exposure to interest rate shocks is managed within the

group’s risk appetites and the group’s strategy to manage

and minimise interest rate risk, to that required to operate

efficiently. The EaR measure is a combination of the group’s

repricing profile and the embedded optionality risk, of which

the latter is negligible at 31 July 2026.

The group also monitors any potential earning exposure from

basis mismatches between its lending and funding activities

on a monthly cadence. To provide a clearer assessment of

the group's exposure to interest rate changes, basis risk is

excluded from the EaR numbers.

EV impact (audited)

The table below sets out the assessed impact on group EV,

which measures the potential change in the balance sheet

value following an instantaneous and parallel change in

interest rates at 31 July 2026:

0.5% increase

0.9

1.0

2.5% increase

4.9

4.8

0.5% decrease

(0.8)

(0.9)

2.5% decrease

0.1

(0.3)

31 July 2026

£ million

31 July 2025

£ million

The group’s EV at 31 July 2026 reflects its policy to ensure

exposure to interest rate shocks is managed within the

group’s risk appetites, and the group’s strategy to manage

and minimise interest rate risk, to that required to operate

efficiently. The EV measure is a combination of the repricing

profile and the embedded optionality. Economic Value at

31 July 2026 improved to £(0.8) million for a 0.5% decrease

in interest rates due to the group bond being closer to

maturity, and more active group hedging.

For a 2.5% decrease in interest rates, EV benefited from the

interest rate floors embedded in some of the customer loans.

Credit spread risk in the banking book

The group’s HQLA portfolio is held for the purpose of

liquidity management. The table below sets out the total

exposure to each asset class held within the HQLA portfolio

by the bank.

Credit spread risk arises from the bonds held within the

HQLA portfolio and reflects the risk that changes in credit

spreads may adversely affect the value of those securities.

Credit spreads represent the excess yield of a bond over an

equivalent risk-free rate and are influenced by market

perception of credit risk, liquidity conditions and broader

market sentiment.

Within the HQLA portfolio, each bond’s interest rate

exposure is hedged, leaving the residual credit spread.

Credit spread risk is monitored, assessed and measured

using a range of metrics, including a historical stress test

methodology that is consistent with PRA requirements. The

resulting exposure is monitored against an internal risk

appetite limit. While changes in credit spreads affect the

economic value of securities throughout their life, losses are

typically only crystallised if the bond is sold and the swap

hedging the interest rate risk is unwound before maturity.

Cash and balances at central

banks

1,190.7

1,917.0

Sovereign and central bank debt

(LCR Level 1)

340.1

601.6

Covered bonds (LCR Level 1)

78.5

100.4

Covered bonds (LCR Level 2)

5.4

5.2

SSA bonds (LCR Level 1)

144

146.2

Total treasury liquid asset

holdings

1,758.7

2,770.4

31 July 2026

£ million

31 July 2025

£ million

At 31 July 2026, the bank did not hold any encumbered

assets in its HQLA portfolio.

Foreign exchange risk (audited)

The group recognises three categories of FX risk:

1. transaction risk: the risk relating to foreign currency loan

commitments;

2. translation risk: the risk relating to converting foreign

currency balances and profits into sterling; and

3. structural FX risk: the risk relating to the potential impact

on capital ratios relating to non-GBP exposures.

Transaction risk is measured daily within treasury based on

net cash flows and contracted future exposures. Treasury’s

strategy is to hedge the FX risk as soon as it arrives, and to

have zero FX transaction exposure each day at close of

business.

Translation risk is monitored within each business monthly,

translating non-UK profits regularly to mitigate fluctuations in

foreign exchange rates. The group’s largest FX exposure is

from its euro lending and funding activities. A change in the

euro exchange rate would increase the group’s equity by the

following amounts:

31 July 2026

£ million

31 July 2025

£ million

15% strengthening of sterling

against the euro

2.0

The bank seeks to match its assets and liabilities by

currency; any remaining gaps are hedged using exchange

rate derivative contracts. Details of these derivatives are

disclosed in Note 12 “Derivative financial instruments”.

Structural FX risk is assessed at least annually and is

deemed to be immaterial.

The group has policies and processes in place to manage

foreign currency risk, and as such the impact of any

reasonably expected exchange rate fluctuations would not

be material.

Mitigation (audited)

The group maintains a limited appetite for interest rate risk

with simple hedging strategies in place to mitigate risk. The

bank’s treasury is responsible for hedging the non-traded

interest rate risk. Any residual risk which cannot be naturally

matched is hedged utilising vanilla derivative transactions to

remain within prescribed risk limits. The Group Asset and

Liability Committee (“GALCO”) and ALCO are respectively

responsible for approving any changes to hedging strategies

before implementation for the parent company and bank.

Derivative transactions can only be undertaken with

approved counterparties and within the respective credit risk

limits assigned to those counterparties.

Strategic report

Governance report

Financial statements

All marketable securities are “hold to collect and sell” and

have their interest rate exposure hedged on a back-to-back

basis with vanilla interest rate swaps. The exception to this is

the £250 million group bond, which is hedged as part of the

overall group exposure.

Foreign exchange exposures are generally hedged using

foreign exchange forwards or currency swaps with

exposures monitored daily against approved limits.

Monitoring

The GALCO monitors the market risk exposure across the

group’s balance sheet. ALCO monitors the market risk

exposure for the bank. Treasury is responsible for day-to-day

management of all market risks. Day-to-day oversight is

exercised via a combination of daily reporting by the treasury

finance team, and business RCC review and challenge.

Further independent oversight is provided via the second line

of defence through the asset liability management risk team

(“ALM Risk”), with monthly reporting into ALCO and GALCO.

Businesses within the bank have operational processes and

controls in place to monitor their exposure to IRRBB and

ensure it remains within approved local risk appetites. Any

exceptions are reported to treasury ALM on the same

working day. Residual IRRBB that is not transferred into

treasury for central management through the bank’s funding

transference process, is monitored by the businesses,

treasury’s first line of defence, and ALM Risk.

Treasury ALM is responsible for maintaining processes and

controls to monitor the group position and report exposures

to ALCO and GALCO, and subsequently to GRCC and the

Risk Committee. An ALM system is deployed as the primary

source for IRRBB reporting and risk measurement.

Outlook

The group expects exposure to interest rate risk, credit

spread risk and foreign exchange risk to remain broadly

stable.

Operational risk is the risk of loss or customer

harm resulting from inadequate or failed

processes, people and systems or external

events. This includes the risk of being unable to

recover systems quickly and maintain critical

services.

Exposure

Operational risks arise from day-to-day business activities,

many of which have the potential to result in direct or indirect

financial loss or adverse impacts, including effects on the

group's financial performance, standards of customer care,

or reputation.

The group seeks to deliver operational efficiency in executing

its objectives and recognises that a degree of loss may arise

from operational failure. The implementation of key controls

and monitoring activities supports effective risk management

and helps maintain exposure within acceptable limits.

Operational risk is a core component of the Enterprise Risk

Management Framework and is embedded in day-to-day

business activities. Requirements and responsibilities are set

out in the Operational Risk Policy and supporting standards

which form part of the framework used to identify, assess,

mitigate, monitor and report the operational risks, events and

issues that could impact the achievement of business

objectives or disrupt core processes.

The business is responsible for the day-to-day management

of operational risk, supported by advice and oversight from

the risk and compliance function, with independent

assurance provided by group internal audit.

The group’s exposure to operational risk is impacted through

the need to engage with innovative, dynamic third parties;

delivery of new products and services; and effective use of

reliable data in a changing external environment, to support

delivery of the group’s strategic objectives.

Operational risk oversight is aligned across several key risk

categories, included below. In addition, the operational risk

taxonomy also includes operational risks associated with

other principal risks, including conduct, compliance, legal

and regulatory, and change execution risk.

Resilience risk

The risk that the group is unable to adapt to disruptions,

while maintaining continuous operations on critical

processes and safeguarding technology in the face of severe

but plausible adverse events, operational disruptions, or

incremental changes. The group recognises the heightened

regulatory focus on resilience with reliance on remote

working, use of third parties, cloud solutions, and automated

digital solutions.

How this risk is managed

The group’s technology estate is undergoing significant

transformation, with a strategic shift towards simplification

and optimisation. This includes the migration of core

business services to cloud platforms and deepening

partnerships with key third-party providers. The group

continues to prioritise resilience through enhanced business

continuity and disaster recovery plans.

Financial crime and fraud risk

The risk that the group’s products and services are used to

facilitate financial crime and fraud against the group, its

customers and third parties. If the group does not take

measures to minimise the impact of financial crime and fraud

risk, or adhere to the relevant laws and regulations, it risks

financial loss, regulatory fines, and reputational damage.

The group has an established control framework to help

prevent and mitigate financial crime and fraud risks,

including policies, standards and procedures detailing fraud

loss recovery plans that are consistent with the group’s

purpose and designed to help safeguard the interest of

customers.

The opportunism and sophistication of individuals and

groups, and the technology available to enable financial

crime and fraud, continue to increase. In response, the group

has strengthened its investment in fraud prevention

capabilities, particularly in its asset-backed businesses.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

Operational risk

The primary driver of events remains asset misappropriation,

with the most significant losses arising from misuse of credit

facilities.

How this risk is managed

The group has established a framework of systems and

controls to help prevent and detect financial crime and fraud.

The framework is reviewed and enhanced continually to

respond to evolving threats and to reduce the risk of the

group's products and services being used for financial crime

purposes. The group also leverages data analytics and

emerging technologies to strengthen its ability to prevent,

detect and respond to financial crime and fraud.

Third-party risk

The risk associated with the group’s use of third parties,

including outsourced and offshoring arrangements, including

the risk of failure which may impact customer service; the

potential cessation of specific activities; the risk of personally

identifiable information or group sensitive data being

exposed or exploited; and the risk of financial, reputational

and regulatory censure should the third party enter into any

illegal or unethical activities.

In line with the group’s increased strategic appetite for

material outsourcing to provide greater agility in meeting its

strategic goals, our risk frameworks are evolving to maintain

effective risk management.

How this risk is managed

The group continues to enhance its third-party risk and

controls framework, and oversight approach, with ongoing

performance management and due diligence undertaken, to

confirm that supplier relationships are controlled effectively.

Workplace risk (property, physical and personal

security risk)

The risk to the safety and protection of colleagues,

customers and physical assets arising from unauthorised

access to buildings, theft, robbery, intimidation, blackmail,

sabotage, terrorism, and other physical security risks.

How this risk is managed

Physical and personal security standards are managed by

the group’s property and workplace team. Controls are in

place to protect physical assets, as well as the security of

colleagues and customers.

Data risk

The risk of poor quality data arising from inaccurate,

incomplete, inaccessible, or misused data resulting in

operational disruption, customer detriment, flawed decision-

making, reporting failures, or regulatory breaches.

Quality data underpins decision-making at all levels of the

organisation. The group views data risk holistically through

the life cycle from acquisition to usage and eventual

disposal.

How this risk is managed

The group has taken steps to strengthen its data strategy,

governance framework and methodology to identify, assess,

treat and report risks and issues across our critical data

elements. Governance is embedded across businesses to

support well-managed, reliable data of sufficient quality,

supporting effective decision-making and regulatory

compliance.

Model risk

The risk of loss arising from decisions based on the output of

models, driven by errors in their development,

implementation, or use. Model risk is inherently higher where

models are more complex, rely on uncertain inputs or

assumptions are widely used. Ineffectively managed, model

risk can result in poor decision-making, misreporting, or a

failure to identify and assess risks adequately.

The group uses models to support a range of business and

risk management activities. These include informing

decision-making and strategy, valuing exposures (including

impairment), undertaking stress testing, supporting capital

and regulatory assessments, and informing decision-making.

How this risk is managed

The group maintains a robust model risk management

framework, supported by clear policies, standards, and

independent validation activities. Model governance is

overseen through established processes, including

management of the model inventory and regular reporting on

model performance and risk. The Model Governance

Committee serves as the primary approval authority and

oversees the framework for managing model risk.

People risk

The risk of not having sufficiently skilled, capable, and engaged

colleagues, who are clear on their responsibilities and

accountabilities and who behave in an ethical way.

Inadequacies could lead to inappropriate decision-making that

is detrimental to customers, colleagues, other key stakeholders,

or shareholders and could lead to regulatory sanction.

How this risk is managed

The group has a range of key risk indicator (“KRI”) metrics to

measure and report people risk. Controls are designed to

manage people risk. Group-wide systems provide tools and

guidance to support colleagues in fulfilling their

responsibilities and fostering a positive culture. Regular

employee engagement surveys are also conducted.

Transactional processing and execution risk

The risk of financial loss, regulatory breach or customer harm

resulting from failures to correctly capture, route, execute,

record, or settle transactions across internal or external

systems, including failures caused by data quality issues,

configuration errors or process breakdowns. The risk of

system or human error, including those arising from the

integration of AI technologies, increases with the scale,

speed and complexity of transaction processing.

These factors can amplify the impact of errors and reduce

the ability to detect and remediate issues in a timely manner.

As the group adopts AI technologies within its operations,

additional risks may arise, including bias and model errors. If

not appropriately governed, these could impair the group’s

ability to accurately execute, monitor and report transactions.

How this risk is managed

The group maintains a framework of controls designed to

ensure the accurate and timely processing of transactions

across its operations. This includes established policies,

procedures and oversight mechanisms governing transaction

processing, reconciliation, and exception management.

The group has introduced an AI Policy to support the safe

and responsible use of AI technologies, setting out

requirements for design, deployment, monitoring, and

governance. This is supported by broader risk management

practices, including controls over data quality, system

configuration, and change management.

Ongoing monitoring, reconciliation processes and control

testing are used to identify and address issues promptly,

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Financial statements

while continuous improvement initiatives seek to strengthen

controls in line with the evolving risk environment.

Risk appetite

The group is prepared to tolerate a level of operational risk

exposure within agreed limits but has low appetite for

operational risks with significant residual exposure. In these

instances, a near-term mitigation strategy is required. The

group monitors loss trends and seeks to limit aggregate

losses arising in any given year. Where risks could impact

not just financial loss but our ability to service customers,

controls are implemented in a manner that reduces the

likelihood of higher-impact events. Should they crystallise,

immediate steps are taken to minimise disruption and ensure

swift recovery.

Measurement

Operational risk is measured through KRIs, analysis of risk

events, ongoing risk and control self-assessments, and

scenario analysis. Each key risk has a set of defined KRIs,

which are regularly monitored via local, divisional and group

committees with exceptions reported to the GRCC and the

Board Risk Committee.

Material operational risk events are identified, reviewed, and

escalated in accordance with the Enterprise Risk

Management Framework and supporting standards. Root

cause analysis is undertaken and lessons learnt are applied

through management action plans.

Losses arising from internal and external events are

categorised using the group’s risk taxonomy to support

trend analysis. Given the nature of some operational risk

events, losses and recoveries may crystallise over time and

may therefore be restated across reporting periods.

Mitigation

The group seeks to deliver its strategic objectives and

maintain operational resilience and recognises that a degree

of loss may arise from operational failure.

A clear governance structure supports effective risk

ownership and accountability across the group. Risk culture

is reinforced through training, tone from the top and clear

escalation routes for concerns.

We operate controls over the group’s most significant

operational risks, determining near-term mitigation strategies

where risks are greatest to prevent material disruption of our

service to customers and/or our businesses. Where

appropriate, insurance is maintained to mitigate the financial

impact of certain risks.

Monitoring

The Board delegates authority to the GRCC to manage the

group’s operational risk framework on a day-to-day basis

and provide oversight of its exposure. The committee is

supported by the Operational Technology Risk Committee

("OTRC") which is responsible for oversight of technology,

information security, data, third-party and resilience-related

risks. Regular management information is presented to and

discussed by these committees and additionally local

business RCCs.

The risk function has a dedicated operational risk team

which is responsible for maintaining the framework and

reporting necessary for effective operational risk

management. The group identifies, assesses, and monitors

all key operational risks, including conducting an annual

assessment of control effectiveness, monitoring key risk

indicators and escalating events in accordance with policy

and standard requirements.

Second-line operational risk managers are aligned to

businesses, with an additional technical second line of

defence team providing specialist oversight of technology,

information security, data, resilience, and third-party risks.

Monitoring of all operational risk domains is conducted via

divisional RCCs with escalation to the GRCC and Board Risk

Committee as appropriate.

Operational risk losses by Basel category

Business disruption and system failures

Clients, products and business practices

14%

10%

Execution, delivery and process management

11%

17%

25%

External fraud

86%

79%

82%

64%

Internal fraud

Employment practices and workplace safety

Damage to physical assets

% of total volume

% of total losses

Operational risk losses by Basel category1, 2, 3, 4, 5

2026

2025

2026

2025

1. Gross losses less than £5,000 excluded.

2. Historical loss amounts can change due to the dynamic and ongoing reporting of recoveries.

3. Percentages have been rounded where appropriate.

4. Excludes operational losses in relation to early settlements in Motor Finance and motor finance commissions.

5. Excludes losses captured in FY 2025 for Winterflood, later divested.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

The delivery of a standardised framework and management

information across all operating risks is complemented by

periodic thematic reviews conducted on key focus areas and

reviewed by the GRCC and Board Risk Committee.

Assurance is obtained through reviews conducted by second

line and group internal audit.

Stress testing

The group develops and maintains a suite of operational risk

scenarios using internal and external data. These scenarios

provide insights into the stresses the business could be

subject to, given plausible but severe circumstances.

Scenarios cover material operational risks across key risk

domains and are developed by businesses and senior

management across the group, with the process facilitated

by the risk function as part of the operational risk

assessment within the ICAAP.

Outlook

The group continues to undertake a significant change

agenda to simplify its operating model and reduce its cost

base. As a result, change delivery, prioritisation and

execution capacity remain key areas of management focus,

with heightened risk of delivery strain, competing priorities

and potential control weaknesses during periods of

transformation. Ensuring sufficient capability, clear

accountability and effective challenge across the change

portfolio will remain critical. Continued management strain is

anticipated as the organisation balances strategic delivery

with business-as-usual requirements.

In support, the already established group-wide operational

risk framework has been further strengthened through

investment in capability and improved tooling. This includes

the implementation of an enhanced Governance, Risk and

Compliance ("GRC") system, improving the quality,

consistency, and timeliness of risk data, and enabling more

effective monitoring, reporting, and oversight across the

organisation. Group-wide training initiatives have also been

rolled out to support greater risk awareness, consistency in

application of the framework and embedding of risk

ownership within the first line.

Looking ahead, management focus will continue to be on:

• Embedding framework maturity – driving consistent

adoption and effective use of risk tools and processes with

particular emphasis on risk identification, assessment and

control assurance.

• Risk data and insights – enhancing the use of data, MI and

analytics to enable more proactive risk identification,

improved trend analysis, and earlier intervention.

• Third-party and outsourcing risk – increasing scrutiny over

supplier resilience, concentration risk and oversight

arrangements, particularly in the context of technology

transformation.

• Operational resilience – continuing to build on the group’s

ability to prevent, respond to and recover from disruption,

including scenario testing and alignment with evolving

regulatory expectations.

• Risk culture and accountability – reinforcing clear

ownership of risk within the first line, supported by

ongoing training and leadership engagement to embed a

strong risk culture.

Overall, while the control environment continues to mature,

the scale of ongoing transformation, combined with external

pressures and evolving regulatory expectations, is expected

to sustain the inherent level of operational risk in the near

term. Continued focus on capability, governance and

disciplined execution will be key to maintaining effective risk

management.

Reputational risk is the risk of detriment to

stakeholder perception of the group, leading to

impairment of its reputation and its future goals,

due to any action or inaction of the company, its

employees or associated third parties.

Exposure

Protection and effective stewardship of the group’s

reputation are fundamental to its long-term success.

Detrimental stakeholder perception could lead to impairment

of the group’s current business and future goals. The group

remains exposed to potential reputational risk in the course

of its usual activities, such as through employee, supplier or

intermediary conduct, the provision of products and

services, crystallisation of another risk type, or as a result of

changes outside its influence.

Risk appetite

The group has a strong reputation which it has built over

many years and considers it a valuable asset, managing it

accordingly through consistent focus on a set of cultural and

ethical attributes. The group has no tolerance for behaviours

that contradict these attributes in a manner that could harm

it, and avoids engaging with third parties, markets or

products that would inhibit the group’s adherence to them.

The group seeks to operate in a responsible manner that has

client outcomes at the heart of everything that it does.

Protection of the group’s reputation is firmly embedded in its

business-as-usual activities, and the group, as part of its

overall strategy, adopts a prudent approach to risk-taking.

The group also recognises that its reputation is linked to

broader responsibilities to help address social, economic

and environmental challenges, and maintains appropriate

sustainable objectives that the group sets itself as a

business.

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Financial statements

Reputational risk

Core drivers of reputational risk

Employee conduct

Supplier and

intermediary conduct

Products and services

Changes in business/

societal context

Crystallisation of

another risk type

Reputational risk

Customers

Intermediaries

Employees

Suppliers

Regulators and

government

Communities and

the environment

Investors

Measurement

Risk identification and subsequent management actions are

embedded within business-as-usual activities.

Additionally, the group actively monitors for changes in the

business, legal, regulatory and social environment in which it

operates to ensure the timely identification, assessment and

mitigation of any potential reputation concerns that may arise

following changes in the expectations of key stakeholders.

For instance, the management of the increased media

attention in relation to the FCA’s review of historical motor

finance commission arrangements and the subsequent

publication of its motor finance commission redress scheme.

Mitigation

Reputational risk management is embedded through the

organisation, including via:

• focus on employee conduct, with cultural attributes

embedded throughout the group;

• supplier and intermediary conduct management through

the relationship life cycle;

• new product approval and existing product review

processes for business products and services;

• a proactive approach to environmental, social and

governance matters;

• embedding of reputational risk management within the

management frameworks of other risk types;

• proactive communication and engagement with investors,

analysts and other market participants; and

• proactive engagement with regulators on key matters.

In addition, the group maintains policies and standards that

serve to protect the group’s reputation, most notably those

covering anti-bribery, conflicts of interest, dignity at work

and high-risk client policies. These are regularly reviewed

and updated with staff receiving annual training to reinforce

understanding of their obligations.

The group crisis management team supports management of

cases where there is a potential risk of reputational impact

on the group on an exceptional basis. A communications

plan also forms part of the group’s Recovery Plan, which

sets out core principles to ensure fair and transparent

communication, to control the risk of misinformation and

minimise any negative reaction to the implementation of

recovery options.

Monitoring

Reputational risk is considered across all three lines of

defence as part of oversight and assurance activities.

Adherence to the group’s cultural framework is monitored

through the culture dashboard, which is reported to the

Board on a quarterly basis and includes key metrics in

relation to culture across the group and each of its divisions.

Customer forums are also in place across the group,

reinforcing its commitment to favourable client outcomes.

Regular engagement with investors also enables open

communication with this stakeholder group.

Sustainability considerations are integrated across

management forums at a business and group level. For more

information on this see the Sustainability Report on page 28.

Outlook

Established group-wide and employee-level focus on

responsibility and sustainability enables an approach in all

businesses that aligns to a range of stakeholder

expectations, which is supported by group-level oversight.

The continuation of elevated attention in relation to any

redress schemes, including that associated with the FCA's

review of historical motor finance commission arrangements,

may lead to an adverse perception of the group.

Risk report continued | Principal and emerging risks

Close Brothers Group plc Annual Report 2026

100

Going concern

The Directors have assessed whether they consider it

appropriate that the company and the group adopt the going

concern basis of accounting in preparing the financial

statements. For the purposes of going concern, the Directors

have reviewed the group’s strategic plan to December 2027,

being 15 months from the date of approval of the financial

statements. This is in line with the assessment period (15

months) reviewed as part of the FY 2025 going concern

assessment and is in excess of IAS 1 and UK Corporate

Governance Code requirements of at least 12 months.

As part of the Directors’ consideration of the appropriateness

of adopting the going concern basis, a range of forward-

looking scenario analyses have been considered. These

include the 3 Year Strategic Plan (“3YSP”) presented to the

Board in July, a “realistic downside” scenario, “stressed

downside” scenario, and the 2025 Internal Liquidity

Adequacy Assessment Process (“ILAAP”) and 2025 Internal

Capital Adequacy Assessment Process (“ICAAP”). These

were reviewed together with a number of key risks which are

set out in the Risk Report under the heading Principal risks:

Funding and liquidity risk on pages 91 to 92 and Capital risk

on pages 72 to 74.

The Financial Conduct Authority (“FCA”) review of historical

motor finance commission arrangements and the

subsequent publication of its motor finance consumer

redress scheme continues to be a key area of focus in the

2026 financial year. The group recognised a further provision

of £165 million relating to motor finance commissions in the

2026 financial year. This provision reflects management’s

best estimate of the cost of the FCA scheme as published,

per IAS 37, and represents a move from a probability

weighted approach to a single-scenario provision. This

provision has since been reviewed, considering recent

developments including confirmation that the Upper Tribunal

hearings are expected to commence in either December

2026 or February 2027. Based on further analysis, whilst

alternative outcomes remain plausible, the Directors have

concluded that the existing provision continues to be

appropriate. Nevertheless, the group recognises the need to

plan for a range of possible outcomes, and continues to

prioritise maintaining a strong capital position, balance sheet,

and prudent approach to managing its financial resources.

Further details on motor finance commissions are outlined on

pages 93 to 94.

The group’s realistic downside going concern scenario

builds on the 3YSP, and overlays subdued loan book growth,

lower-than-expected cost savings and higher bad debts. The

stressed downside scenario builds upon this, with further

reduced cost savings, higher bad debts, as well as an

additional hypothetical conduct event provision in 2027.

The modelling output of the stressed downside scenario

highlights the resilient capital position, with the group's

capital ratios in excess of minimum regulatory requirements

and capacity to absorb losses and increases in RWAs

beyond the impacts modelled, strengthened by available

management actions.

The two stress testing scenarios modelled for the group’s

most recent ICAAP, approved by the Board in January 2026,

were used to provide additional context for the Directors

alongside the going concern assessment. The ICAAP forms

part of the group’s overall capital risk framework, outlined on

page 72.

The group continues to have a strong and conservative

business model, lending in a variety of sectors across a

diverse range of assets. The group remains well positioned in

each of its businesses, is soundly funded, and has strong

levels of liquidity. The group maintains strong headroom to

minimum regulatory requirements to withstand the “stressed

downside” going concern scenario elements.

Under all assessed scenarios, the group continues to

operate with sufficient levels of capital for the next 15

months from the date of approval of the financial statements,

with the group’s capital ratios in excess of minimum

regulatory requirements.

Separately from managing the group capital position, the

group adopts a conservative approach to funding and

liquidity risk and seeks to maintain a funding and liquidity

position characterised by sustaining a diverse range of

funding sources and holding a prudent level of high-quality

liquidity. As such, the weighted average maturity of its

funding is longer than the weighted average maturity of its

lending portfolio. The Board reviewed these factors when

concluding upon going concern.

These objectives form the basis for the group Funding and

Liquidity Risk Appetite Statement, approved annually by the

Board, which outlines the levels of funding and liquidity risk

that the group is willing to assume. Given the materiality of

the lending divisions, this is primarily focused on the levels of

risk assumed within the bank.

As part of the liquidity management process, the bank also

uses a suite of internally developed liquidity stress scenarios

to monitor its potential liquidity exposure daily and determine

its HQLA requirements. This ensures that the bank remains

within risk appetite and identifies potential areas of

vulnerability. These stresses are formally approved by the

ALCO, GRCC and Board and cover both idiosyncratic and

market-wide stresses. The bank adopts the most severe

stress to determine the amount of liquidity it needs to hold.

At 31 July 2026, the bank held sufficient liquidity resources

to meet the applicable stress.

In conclusion, the Directors have determined that they have

a reasonable expectation that the company and the group,

as a whole, have adequate resources to continue as a going

concern for a period of at least 12 months from the date of

approval of the financial statements. Accordingly, they

continue to adopt the going concern basis in preparing the

Annual Report.

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Financial statements

101

Viability statement

Consideration

In accordance with provision 31 of the UK Corporate

Governance Code, the Board has assessed the prospects of

the group and confirms that it has a reasonable expectation

that the company and group will continue to operate and

meet their liabilities, as they fall due, for the three-year period

up to 31 July 2029.

Strategic and financial outlook

The Board has considered the longer-term viability of the

group and considers three years to be an appropriate period

for the assessment to be made. A period of three years has

been chosen because it is the period covered by the group’s

well-embedded strategic planning cycle. A three-year period

aligns with the group regulatory and internal stress testing

processes, including: (i) group-wide internal forecasting and

stress testing, which have undergone significant review and

challenge, to confirm the viability of the group; (ii) the ICAAP,

which assesses capital requirements; and (iii) the ILAAP,

which identifies liquidity requirements.

Risk management and risk profile

In making its assessment, the Board has identified and

assessed the principal and emerging risks facing the group

and these are highlighted on pages 65 to 70. The group’s

approach to monitoring and managing the principal risks

faced by its business, including financial, business, market

and operational risks, has remained consistent given the

group’s core activities, business model and strategy are

unchanged.

The group utilises an established risk management

framework to identify and monitor its portfolio of emerging

risks taking both a “bottom up” and “top down” approach.

These approaches are monitored by the local and group risk

and compliance committees. Key emerging risks can be

found in the Risk Report on page 70.

Assessment

The group will continue to monitor and assess these risks,

by: adhering to its established business model as outlined on

pages 8 and 9; implementing an integrated risk management

approach based on the concept of “three lines of defence”;

and setting and operating within clearly defined and

monitored risk appetites.

As outlined in the going concern statement, a key area of

focus for the financial year has been the FCA's review of

historical motor finance commission arrangements and the

subsequent publication of its motor finance consumer

redress scheme. Some uncertainty continues, and the Board

has placed considerable focus on its review and challenge of

the group’s 3YSP and the results of key scenario modelling.

The group’s business model has worked well through a

range of economic, social and environmental conditions over

multiple economic cycles, and this is projected to continue

over the medium term. Taking into account the group’s

lending in a variety of sectors across a diverse range of

assets, the Board considers medium-term economic, social,

environmental and technological trends at the individual

business unit level as part of the strategic planning cycle.

This includes focusing on the long-term strategic approach

to simplify, optimise and grow the group business model,

with key priorities outlined on pages 10 to 11.

The Board has also assessed the group’s viability by

considering several forward-looking scenarios, namely the

ICAAP and ILAAP, as well as the realistic and stressed

downside scenarios that were used for the going concern

assessment.

Various macroeconomic assumptions have been assessed

across the scenarios including GDP growth, inflation, interest

rates, unemployment and residential house prices (refer to

the Risk Report on pages 82 to 84). The modelling considers

the group’s future projections of profitability, cash flows,

capital requirements and resources, and other key financial

and regulatory ratios over the period. In the modelled

scenarios, it has been assumed that no significant structural

changes to the company or group will be required that are

not known or planned at the time of the assessment.

The group’s realistic and stressed downside going concern

scenarios have been extended out to the 2029 financial year

in order to support the viability assessment, with overlays to

the 3YSP. The overlays include subdued loan book growth,

lower-than-expected cost savings and higher bad debts, as

well as an additional hypothetical conduct event provision in

2027. Headroom to regulatory requirements was maintained

on all capital ratios in this scenario, demonstrating the

group’s capacity to absorb losses. In addition, the Directors

have reviewed the key management actions which would be

taken in the event of a stress scenario, in order to mitigate

the stress, and the viability of these actions based on recent

experience.

The group maintains capital ratios significantly above

regulatory minima, which are currently set at a minimum

common equity tier 1 ratio of 10.3% and a minimum total

capital ratio of 14.9%. In all assessed scenarios, the

company and group continue to operate with sufficient levels

of capital, with the group’s capital ratios and funding and

liquidity positions in excess of minimum regulatory

requirements.

The Directors have also considered the operational agility

and resilience of the company and the group. The Directors

continually expect to maintain a high level of operational and

system performance.

Close Brothers Group plc Annual Report 2026

102

In making this assessment, the Directors have considered a

wide range of information, including:

• the Board’s risk appetite and robust assessment of the

principal and emerging risks which could impact the

performance of the group, and how these are managed –

please refer to the Risk Report on pages 60 to 101;

• the group’s current financial position and prospects –

please refer to the Financial Overview section on pages 48

to 59; and

• the group’s business model and strategy – please refer to

the Business model section on pages 8 to 9, and the

Strategy and Key Performance Indicators sections on

pages 10 to 11 and 14 to 15 respectively.

The Directors have also considered the results of the most

recent iterations of the following reviews:

• the annual review of the Recovery Plan, which included

employing a number of scenarios to test the group

Recovery Plan, the wide range of risk indicators and the

recovery options available to the group;

• the 2025 group ICAAP, which included both stress testing

and scenario analysis. At a group level, two stress test

scenarios were assessed representing protracted

downside scenarios. These took account of the scope and

likely effectiveness of mitigating actions that could be

taken by management to avoid or reduce the impact or

occurrence of underlying risks. As part of the ICAAP,

reverse stress testing was also undertaken to support the

identification of potential adverse circumstances and

events; and

• the 2025 ILAAP, which was reviewed to assess the

group’s liquidity across a range of market-wide and

idiosyncratic scenarios. This confirmed the ongoing

strength of the group’s funding and liquidity model. Please

refer to Note 24 on financial risk management for further

details.

This forward-looking Viability Statement made by the Board

is based on information and knowledge of the group at

29 September 2026. Unexpected risks and uncertainties may

arise from future events or conditions, such as economic

changes and business conditions, which are beyond the

group’s control and could cause the group’s actual

performance and results to differ from those anticipated.

In conclusion, the Directors have determined that they have

a reasonable expectation that the group and company will be

able to continue their operations and meet their liabilities as

they fall due over the three-year period of the assessment.

This Strategic Report was approved by the board and signed

on its behalf by

Mike Morgan

Chief Executive

29 September 2026

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103

Chairman's introduction to governance

Dear shareholder

On behalf of the Board, I am pleased to present our

Corporate Governance Report (the "Report") for the year

ended 31 July 2026. The Report outlines our governance

framework, explains how we have complied with the UK

Corporate Governance Code 2024 (the "Code") and

summarises how the Board and its committees have

discharged their responsibilities during the year.

Outlook

Notwithstanding the outcome of our Supreme Court appeal

of Hopcraft on 1 August 2025, which provided clarity as to

the law, during the year there remained a significant amount

of uncertainty pending the outcome of the FCA's review of

motor finance commissions and subsequent legal challenges

to the scheme.

On 30 March 2026 the FCA published their Policy Statement

PS26/3: Motor finance consumer redress scheme. After

undertaking a thorough review of the Policy Statement and

its impact on the group, it was established that the estimated

cost of the scheme, as published, was c.£320 million. It was

concluded that this cost could be comfortably absorbed by

existing capital resources, leaving the group well positioned

to continue delivering its strategy. After due consideration by

the Board, which was informed by consultation with our

professional advisers, the decision was taken in April 2026

not to challenge the FCA's motor finance consumer redress

scheme.

As we have worked through these challenging circumstances,

maintaining robust corporate governance has remained

essential. As a Board, we will remain focused on ensuring

that our corporate governance framework continues to

provide the foundation to deliver on our purpose and our

strategy, generating positive outcomes for all stakeholders.

Strategic priorities

The continued uncertainty relating to historical motor finance

commissions arrangements has again been a major focus for

the year and has demanded proactive and dynamic

leadership from the Board to equip the group for a broad

range of potential outcomes. Effective Board decision-

making has been supported by significant additional meeting

time through a number of ad hoc Board meetings. I would

like to thank my fellow Directors for their dedication and the

considerable time they have committed to the business of

the group over the past year.

During the year, the Board has continued to remain focused

on delivering the group's strategic priorities: simplify,

optimise and grow. With the simplification of the business

largely complete, following the successful disposal of

Winterflood Securities last December, this has moved us

very much into the optimisation phase. We are pleased to

have accelerated achievement of a number of cost-saving

targets as part of the transformation programme, which was

launched at the start of the financial year. This has included

the streamlining of businesses and functions, increased use

of outsourcing and offshoring, a decrease in our property

footprint and third-party spend and a corresponding

reduction in headcount in order to drive operational

efficiency and build sustainable growth for the future.

The group's business model relies on the excellent service,

expertise and the strong relationships we build with our

customer base. These foundations continue to lie at the very

centre of the service that we provide and the Board is

focused on these key elements of our model in the

implementation of our strategy.

Leadership and culture

Chair succession

As announced on 31 July 2026, having joined the Board in

2017, I am now at the end of my nine-year tenure. I will

therefore not seek re-election at the 2026 Annual General

Meeting ("AGM") to be held on 19 November 2026 and will

step down from my role at the conclusion of that meeting. It

has been a great privilege and pleasure to hold the role of

Chairman of the Board and I thank my fellow Directors and

the senior management team that have supported me

throughout my tenure.

In anticipation of this transition, a search process was

undertaken with support from an external executive search

and leadership advisory firm (Russell Reynolds). Russell

Reynolds is independent, and has no other connection to the

company and its Directors. The process included market

mapping and assessment of external candidates with

relevant leadership and regulated financial services

experience. The Board was keen to consider both internal

and external candidates and Mark Pain, our current Senior

Independent Director ("SID") was put forward as a candidate

for the role. Mark was benchmarked against the external

candidates and was assessed as a strong successor to the

position of Chair. In order to avoid any potential conflicts of

interest, given Mark's role as SID, this process was instead

led by Tracey Graham, Non-executive Director and Chair of

the Remuneration Committee.

Having considered the Board's succession needs and

Mark's performance and experience as SID, together with his

broader Board experience as a Chair, SID and Committee

Chair, the Board (with myself and Mark recused from voting)

approved Mark's appointment as the new Chair of the Board

in July 2026 which will take place with effect from the

conclusion of the 2026 AGM. Regulatory approval for the

appointment was subsequently received on 26 August 2026.

Senior Independent Director appointment

Having given careful consideration to the Board's succession

requirements, Tracey Graham was identified as a strong

candidate to succeed Mark Pain as the SID. Tracey has a

proven record and strong reputation as a SID within the

financial services industry and has demonstrated her skill

both externally and also as a Non-executive Director on the

Board. Tracey's proposed appointment was supported both

by myself and Mark Pain and, following Board approval, her

appointment as SID will take place with effect from the

conclusion of the 2026 AGM. Regulatory approval for

Tracey's appointment was received on 2 September 2026.

I am delighted with the appointments of Mark as Chair of the

Board and Tracey as SID. Their experience, judgement and

deep understanding of the group will be invaluable as the

Board continues to support the delivery of the group's long-

term strategy.

Close Brothers Group plc Annual Report 2026

104

In light of the fact that myself, as outgoing Chairman, the

incoming Chair and SID were members of the Nomination

and Governance Committee, the Board oversaw the

succession process to address any potential conflicts of

interest. The Committee subsequently reviewed the preferred

candidates and, as stated above, the relevant members

recused themselves from the voting process in respect of

their individual appointments.

The Board, supported by the Nomination and Governance

Committee, will continue to assess the composition of the

Board's committees to ensure that their collective skills,

experience and expertise remain aligned with the group's

strategic objectives.

Board composition and diversity

The Board is committed to ensuring that its collective skills,

experience and diversity are aligned with the needs of the

group and its strategic objectives. It continues to maintain a

diverse composition, with women making up 56% of the

Directors and one Director from an ethnic minority

background. Following Fiona McCarthy's appointment as an

Executive Director last year and the appointment of Tracey

Graham as the SID with effect from the conclusion of our

AGM in November 2026, the Board will not only meet but

also exceed the FCA Listing Rule requirement for at least one

of its most senior Board positions to be held by a female

Director. Further details on the Board's composition and

diversity are provided on pages 107 and 124.

We will seek to take opportunities to further improve the

diversity of the Board where this is consistent with the skills,

experience and expertise required as the needs of the

organisation and our stakeholders evolve over time.

Board effectiveness

The Board undertakes a formal and rigorous review of its

performance annually. This year the performance review was

conducted internally and led by the Company Secretary and

I am pleased to report that the review concluded that the

Board and its committees continue to operate efficiently and

effectively. Please see pages 115 and 116 for further detail.

Sustainability, ESG and diversity and inclusion

Responsibility for sustainability, including ESG was

transferred to the Board during FY 2026 to ensure that these

matters can continue to be considered holistically as part of

Board decision-making and strategy. During the year, we

continued to embed our business-led climate strategy,

supporting customers as they progress on their own

sustainability journeys. At Close Brothers, sustainability

encompasses far more than environmental responsibility. It is

rooted in our commitment to deliver enduring value for

customers, colleagues, shareholders and communities,

through a responsible and relationship-focused banking

model. Our specialist approach, long-term perspective and

distinctive culture remain central to both our success and our

sustainability agenda.

The Nomination and Governance Committee remains

committed to overseeing the development of a diverse senior

management talent pipeline and acknowledges the strong

link between diversity and inclusion ("D&I") and the

successful delivery of the company's purpose and strategic

aims. To this end, the Committee considered updates during

the year in relation to diversity and inclusion initiatives across

the group and oversaw the group's refreshed three-year

diversity and inclusion strategy, focusing on the attraction

and retention of diverse talent, enhancing the culture of the

group, shaping the group's inclusive brand and embedding

inclusion in all interactions with stakeholders. Further details

on our D&I progress can be found on pages 124 and 125.

I am pleased to report that, notwithstanding the challenges

facing the group and the broader market environment, our

distinctive culture remains a defining strength. Our

colleagues have continued to demonstrate their commitment

to our values, providing customers with the expertise and

exceptional service for which we are recognised. More

information on the Board's oversight of culture can be found

on page 119.

Stakeholder engagement

The Board places strong emphasis on stakeholder interests

when shaping the group's strategy and overseeing the risk

profile. During the year, the Board engaged with a range of

stakeholder groups and took into account a broad spectrum

of stakeholder interests. Our formal statement under Section

172 of the Companies Act 2006, along with further details on

how the Directors have engaged with and considered

stakeholder interests, is set out on pages 119 to 121.

Maintaining constructive and open dialogue with

shareholders remains a high priority for the Board and

relevant Board members have engaged with investors on the

group's strategic objectives, particularly its longer-term

direction and prospects. This included our annual corporate

governance roadshow, at which I met with shareholders

representing c.50% of the issued share capital to discuss a

variety of topics.

As a Board, we will remain focused on ensuring that our

corporate governance framework continues to provide a

strong foundation to deliver on our strategy and core values,

generating positive outcomes for all stakeholders.

The Board would like to express its appreciation to our

shareholders, stakeholders and colleagues for their

continued support and engagement. Their contribution has

played an important role in enabling the group to respond

effectively to the challenges and opportunities encountered

during the year.

Michael N. Biggs

Chairman

29 September 2026

Strategic report

Governance report

Financial statements

105

"At Close Brothers, sustainability

encompasses far more than

environmental responsibility. It is

rooted in our commitment to

delivering enduring value for

customers, colleagues,

shareholders and wider society."

Governance at a glance

Compliance with the UK Corporate Governance Code 2024

The UK Corporate Governance Code 2024 (the "Code") was

published by the FRC in January 2024, with the majority of its

provisions applicable to the company from 1 January 2025.

Provision 29 was not applicable to the company during FY

2026 but will be applicable for our financial year commencing

1 August 2026. A copy of the Code can be found on the FRC's

website at www.frc.org.uk. It is the Board's view that,

throughout the year, the company has applied the principles

and complied in full with the provisions set out in the Code.

The following table sets out the relevant sections of this

Annual Report 2026, where shareholders can read in more

detail how we have embedded governance principles and

specific provisions of the Code across our organisation.

More information on the group's preparation for compliance

with Provision 29 of the Code can be found on page 131.

Board leadership

Page 112

Division of responsibilities

Pages 114 and 115

Composition, succession

and evaluation

Page 116 and 123

Audit, risk and internal control

Page 126

Remuneration

Page 137

Other statutory disclosures

Information regarding the company's share capital,

restrictions on voting rights, appointment and

replacement of Directors and Directors' powers as

required by DTR7.2.6R is contained in the Directors'

Report and is incorporated into this Corporate

Governance Statement by reference.

Board statistics

Board composition at the date of publication is

summarised below. Membership of the Board is

continuously reviewed to ensure the group’s current

and future needs are met. More information can be

found on pages 124 and 125.

Gender diversity

Female

Male

Ethnic diversity

White/White British

Asian/Asian British

Balance of the Board

Executive Directors

Non-executive Directors

Board tenure

0-3 years

4-6 years

7-9 years

Board priorities for FY 2027

Read more about the Board's activities over the year

on pages 117 and 118.

Enhanced strategic focus

Continuing to oversee and execute

the transformation programme and

focus on growth, with clear linkage

to strategic objectives.

Stakeholder engagement

Continuing to engage with a wide

range of stakeholder groups to

ensure the expectations of

stakeholders are considered and

embedded in Board decision-

making.

Board composition

Consideration of future composition

and skills requirements for the

Board and its committees, with

succession planning remaining an

ongoing area of focus.

Close Brothers Group plc Annual Report 2026

106

Customers and partners

Colleagues

Suppliers

Investors

Regulators and government

Communities and environment

Our governance framework

The Board is accountable for driving the group's long-term success and delivering enduring value to shareholders, while

safeguarding stakeholder interests. It defines the group's strategy and retains ultimate oversight of governance

performance, culture, risk management and internal control.

Non-executive Directors’ skills and experience

All appointments to the Board follow a robust decision-making process, which may include conducting an external

search where appropriate. Our view is that the Board possesses the right balance of skills and experience to navigate

the challenges ahead and to deliver long-term, sustainable growth. The effectiveness of the Board and its committees

has been assessed this financial year by an internal approach led by the Company Secretary, which confirmed that the

Board and its committees continue to be effective. The findings of the annual Board evaluation can be found on pages

115 and 116. The number of Non-executive Directors possessing in-depth experience in each area as at the date of

publication is shown in the chart below.

¢ Number of Non-executive Directors with extensive

experience / distinctive strength

¢ Number of Non-executive Directors with good

experience and knowledge

Strategic report

Governance report

Financial statements

107

Banking and financial services

Finance, audit and accounting

Risk management

Regulatory framework and engagement

Sustainability and ESG

Technology, digital and data

Strategy and business planning

Listed company governance

Major change, transformation and operations

Mergers, acquisitions and divestments

Chair, CEO or CFO experience

Capital management and treasury

The Board

Nomination and

Governance

Committee

Monitors the

composition of the

Board and its

committees, ensures

orderly succession

planning and leads the

Board appointments

process.

See page 122

Audit Committee

Oversees and

independently

challenges the

management of

financial reporting and

maintenance of an

effective internal

control environment.

See page 126

Risk Committee

Assists the Board in its

oversight of risk and

ensures a supportive

risk culture is fully

embedded.

See page 134

Remuneration

Committee

Assists the Board in its

oversight of the

group's remuneration

framework,

remuneration of the

Board and senior

executives, and key

remuneration decisions

See page 137

Disclosure Committee

Responsible for

overseeing the timely

and accurate disclosure

of sensitive information

and ensuring that

adequate procedures

and controls are in

place to enable

compliance with legal

and regulatory

disclosure obligations.

Executive Committee

Management committees

Board of Directors

Committee membership

Chair

Nomination and Governance

Audit

Risk

Remuneration

Mike Biggs

Chairman

Appointed: Non-executive Director

March 2017; Chairman May 2017. Will

not seek re-election at the 2026 AGM

Experience and competencies

Mike has more than 50 years’

experience within the financial services

sector, gained in both executive and

non-executive roles. He has extensive

experience as a listed company

chairman and uses his broad skills and

deep knowledge to lead the Board and

ensure that it operates effectively.

Mike’s considerable experience of

engaging with key stakeholders,

including major shareholders and

regulators, makes him well placed to

serve as Chairman and drive the

strategy and culture of the group. Mike

is an Associate of the ICAEW.

External roles

• Current – none

Past

• Direct Line Insurance Group plc,

Chairman1

• Resolution Limited, Chairman

• Resolution plc, Chief Executive

Officer and Group Finance Director1

• Aviva plc, Finance Director1

Mike Morgan

Chief Executive

Appointed: Executive Director

November 2018; Chief Executive

January 2025

Experience and competencies

Mike was appointed Chief Executive in

2025. Prior to this, Mike served as

Finance Director since 2018. Mike

brings deep experience of the group to

this role, having held a number of

senior roles within the group and bank

since joining Close Brothers in 2010.

Mike is a chartered accountant and his

combined extensive experience of

financial services and financial

leadership, as well as his strong

understanding of the group and its

businesses, make him suitable to serve

as Chief Executive.

External roles

Current

• Member of the finance, audit and

risk committee of Battersea Dogs &

Cats Home

Past

• ICAEW Financial Services Faculty

Board, Chair

• RBS, Divisional Finance Director

• Scottish Provident, various senior

roles

Fiona McCarthy

Group Chief Finance Officer

Appointed: Executive Director August

2025; Group Chief Finance Officer

January 2025

Experience and competencies

Fiona was appointed as Chief Finance

Officer of the group in January 2025

and was appointed to the Board on

29 August 2025. Fiona has over 40

years of financial services experience,

gained across the retail, commercial,

corporate and investment banking

sectors. She joined Close Brothers in

2019 as Group Financial Planning &

Analysis Director and prior to this

worked at UBS, most latterly as interim

CFO for the global investment bank.

Fiona started her career at NatWest,

where she undertook a number of

senior finance roles.

External roles

• Current – none

Past

• NatWest, various senior finance

roles

• UBS, interim CFO for the global

investment bank

1. Directorship of publicly listed organisation.

Close Brothers Group plc Annual Report 2026

108

Mark Pain

Senior Independent Director

Appointed: Non-executive Director and

Senior Independent Director (“SID”)

January 2021. Appointed as Chair with

effect from 19 November 2026, subject

to shareholder re-election.

Experience and competencies

Mark brings to the Board more than 30

years’ finance, risk management and

commercial experience. He has held

executive and non-executive roles in

both listed and private financial services

companies, including in retail banking

and insurance. Mark has experience as a

SID and makes a highly valuable

contribution to the Board. He was

previously Finance Director of Barratt

Developments plc and Abbey National

plc and this has equipped him to support

the Chairman as SID during the year.

External roles

Current

• AXA UK plc, Chairman

Past

• Barratt Developments plc,

Finance Director1

• Abbey National plc, Finance

Director1

• Yorkshire Building Society, SID

• London Square Limited,

Non‑executive Chairman

• Ladbrokes Coral Group plc,

Non-executive Director1

• Punch Taverns plc, Non‑executive

Director1

• Spirit Pub Company plc,

Non‑executive Director1

• Johnston Press plc, Non‑executive

Director1

• Aviva Insurance Limited,

Non‑executive Director

• Empiric Student Property plc,

Non-executive Chairman1

1. Directorship of publicly listed organisation.

Tracey Graham

Independent Non-executive Director

Appointed: March 2022. Appointed as

SID with effect from 19 November 2026,

subject to shareholder re-election.

Experience and competencies

Tracey brings to the Board significant

executive leadership experience from

organisations in the financial and business

services sectors, both in the UK and

internationally. She is an experienced

Non-executive Director, having served on

a number of listed company boards

across a range of financial services

sectors and is experienced in leading

large commercial transactions. She is an

experienced remuneration committee

chair and has extensive experience

serving as a SID. Tracey’s significant

commercial, operational and customer

service insights are of great benefit to the

Board.

External roles

Current

• Nationwide Building Society, SID

• Virgin Money UK plc,

Non-executive Director

• Clydesdale Bank plc,

Non-executive Director

• Pension Insurance Corporation plc,

Non-executive Director and SID

• Pension Insurance Corporation

Group Limited, Non-executive

Director and SID

Past

• Royal London Mutual Insurance

Society Limited, Non-executive

Director

• Ibstock plc, SID1

• AXA Insurance plc, Director of

Customer Services

• Talaris Limited, Chief Executive Officer

• De La Rue plc, various executive roles

• HSBC, various senior positions

• LINK Scheme Limited,

Non‑executive Director

• DiscoverIE Group plc, SID1

Kari Hale

Independent Non-executive Director

Appointed: June 2023

Experience and competencies

Kari brings to the Board extensive

audit and commercial expertise and a

deep understanding of the audit and

governance environment, drawing on

his many years in senior audit roles at

Deloitte, including membership of its

financial services industry board. His

expertise includes leading sensitive

and complex audits of high-profile

organisations. Kari has deep

experience of the financial services

sector and served as a senior adviser

to the FRC, having previously been an

executive director at the Financial

Services Authority. Kari also brings

experience of chairing audit

committees at large financial services

organisations, making him qualified to

chair the Audit Committee of the

group.

External roles

Current

• AXA UK plc, Non-executive Director

Past

• Deloitte, Senior Audit Partner

• FRC, Senior Adviser

• Financial Services Authority,

Executive Director

Strategic report

Governance report

Financial statements

109

Committee membership

Chair

Nomination and Governance

Audit

Risk

Remuneration

Patricia Halliday

Independent Non-executive Director

Appointed: August 2021

Experience and competencies

Patricia brings considerable risk and

commercial expertise to the Board.

She has more than 30 years’

experience in risk management across

the investment, corporate and retail

banking sectors, including serving as

Chief Risk Officer in financial services

organisations. Her deep understanding

of the regulatory, risk and governance

environment is immeasurably valuable

and supports the Board’s leadership of

the group. Her experience qualifies her

to chair the Risk Committee.

External roles

Current

• State Street Corporation, director1

• TD Bank Europe Limited, Non-

executive Director

Past

• Santander UK, Chief Risk Officer

• GE Capital International Holdings

Limited, Chief Risk Officer

• Deutsche Bank, Credit Risk

Managing Director

• Barclays Capital, various senior risk

management roles

1. Directorship of publicly listed organisation.

Tesula Mohindra

Independent Non-executive Director

Appointed: July 2021

Experience and competencies

Tesula brings to the Board extensive

finance and commercial expertise,

drawing on over 25 years’ experience

which includes senior executive and

advisory roles in the banking,

insurance and pension fund sectors.

Tesula qualified as a chartered

accountant with PwC and held

managing director roles at JP Morgan

and at UBS, specialising in corporate

finance for financial institutions and

pension fund risk management. She

was a founding member of the

management team of Paternoster, the

specialist bulk annuity insurer, where

she was a member of the executive

committee. She has worked as an

independent financial consultant

advising on business plans and capital

raising. Tesula’s considerable financial

services expertise gained in a broad

range of organisations, from

investment banks to start-ups,

supports the Board’s leadership of the

group and makes her well positioned

to serve the Board.

External roles

Current

• RAC Group, Non-executive Director

• NHBC (National House Building

Council), Non-executive Director

• Variety, the Children’s Charity,

Trustee

Past

• JP Morgan, Managing Director

• UBS, Managing Director

Sally Williams

Independent Non-executive Director

Appointed: January 2020

Experience and competencies

Sally brings extensive risk, regulatory

and governance experience to the

Board, having held senior executive

positions at Marsh, National Australia

Bank and Aviva. Prior to that, Sally

held roles at PwC in both their risk

management and audit teams, over a

period of 15 years. She is a chartered

accountant, and also has significant

experience chairing audit committees.

The Board benefits from Sally’s

considerable experience of the broader

UK financial services and insurance

sectors, and her understanding of risk

management, compliance and audit

matters.

External roles

Current

• Lancashire Holdings Limited,

Non-executive Director1

• Ovarian Cancer Action, Trustee

• NFU Mutual Insurance Society

Limited

Past

• Marsh Limited, Director of Risk and

Governance

• National Australia Bank, Head of

Risk, London

• Aviva, Group Risk and Governance

Director

• PwC, Director, Risk Management

• Family Assurance Friendly Society

Limited (OneFamily), Non-executive

Director

Board of Directors continued

Close Brothers Group plc Annual Report 2026

110

Executive Committee

Mike Morgan

Chief Executive

Fiona McCarthy

Group Chief Finance Officer

Ian Cowie

Chief Executive

Officer Retail

Rebekah Etherington

Group Head of

Human Resources

Phil Hooper

Chief Executive

Officer Property

Nazrul Kazi

Group Head of

Internal Audit

Sarah Peazer-Davies

General Counsel and

Company Secretary

Matt Roper

Chief Executive

Officer Commercial

Tim Renshaw

Group Head of Non-

Financial Risk

Robert Sack

Group Chief Risk Officer

Yogesh Sholapurkar

Group Chief

Technology Officer

The biographies of the Executive Committee members can be found at https://www.closebrothers.com/s/who-we-are/our-

leadership. The role of the Executive Committee is described on page 115, and the process for succession planning and

appointments is overseen by the Nomination and Governance Committee as described on page 123.

Strategic report

Governance report

Financial statements

111

Corporate governance report

Board governance

Governance framework

The Board agrees that effective governance is key to

supporting the successful development and implementation

of the group's strategy which helps drive sustainable long-

term returns for shareholders and contributes positively to

society as a whole. Our governance framework is set out on

page 107 of this report.

Certain matters are reserved for the Board, primarily in

relation to:

• setting and monitoring strategy for the group;

• corporate structure, capital and ensuring adequate

financial resources;

• financial reporting and controls;

• oversight of risk management, regulatory compliance,

internal controls and whistleblowing;

• significant financial matters including acquisitions,

disposals and investments;

• shareholder, market and regulatory communications;

• Board and committee membership;

• delegation of authority; and

• corporate governance matters.

The matters reserved for the Board, which are reviewed

annually, are available at https://www.closebrothers.com/s/

who-we-are/corporate-governance. In discharging its

responsibilities, the Board operates within the framework of

applicable legislative and regulatory requirements and has

due regard at all times to the Directors' duties under the

Companies Act 2006. This includes the duty under Section

172 to promote the long-term success of the company for

the benefit of its members as a whole. Consideration of

stakeholder interests remains central to the Board's

decision-making process, with further details provided on

pages 119 to 121.

The Board is supported in its work by its committees. Each

committee has terms of reference, which are available at

https://www.closebrothers.com/s/who-we-are/corporate-

governance. The chair of each committee reports at each

subsequent Board meeting on matters discussed at

committee meetings. All Non-executive Directors have

access to committee papers and have a standing invitation

to attend any committee meeting. Reports from the Board’s

committees are set out later in this Annual Report 2026 and

they include further detail on each committee’s role and

responsibilities, along with a summary of the activities

undertaken during the year.

While the Board retains oversight of the group's strategic

direction, responsibility for the delivery of the strategy and

the day-to-day management of the business rests with the

Executive Committee, under the leadership of the Chief

Executive and with the support of management committees.

Strong governance practices are embedded throughout the

organisation, supported by management committees that

oversee operational activities. These committees play a key

role in ensuring any issues are thoroughly assessed and

constructively challenged prior to escalation.

Board leadership

The Board is responsible for providing effective leadership

and oversight of the group, ensuring that its activities and

performance consistently align with stakeholder

expectations. It establishes the group's purpose and

strategic objectives, and monitors management's execution

against these objectives to ensure alignment with the

group's culture and core values. Furthermore, the Board,

supported by the Audit Committee, maintains oversight of

the group's risk management framework and internal control

systems, thereby supporting the appropriate identification,

assessment and management of risk.

This year, the Board has continued to focus on

reshaping and simplifying the group to position it well for

growth and to enable it to deliver sustainable shareholder

returns. Strategic decision-making is informed by

comprehensive insights provided by senior management,

together with advice from our external advisers. The Board

also takes into account the perspectives and interests of key

stakeholder groups including employees, customers,

shareholders and regulators when reaching its decisions.

Risk management, internal controls

and whistleblowing

The Board, supported by the Risk and Audit Committees,

retains ultimate responsibility for the group's risk

management and internal control framework and actively

monitors its effectiveness. It reviews a range of risk-related

matters throughout the year, supported by reports from the

Group Chief Risk Officer, who attends all scheduled Board

meetings to provide oversight and updates on risk

management activities across the group.

During the year under review, the Board considered and

approved:

• the group’s ICAAP and ILAAP statements;

• the annual compliance plan;

• the Enterprise Risk Management Framework;

• the principal and emerging risks facing the group; and

• the group risk appetite statements.

Further information on the Board’s work throughout the year

can be found on pages 117 and 118.

Effectiveness of risk management and internal control

framework

The Board defines the level of risk the group is willing to

accept in achieving its strategic goals and ensures that

effective risk management and internal control systems are

in place. These systems are designed to provide reasonable,

not absolute, assurance against material misstatement, loss,

and fraud.

Controls aim to manage, not eliminate, risks to business

objectives, support efficient operations, ensure reporting

integrity, and maintain regulatory compliance. Key controls

are regularly reviewed for design and operational

effectiveness and to seek to ensure compliance with

applicable laws and regulations.

Close Brothers Group plc Annual Report 2026

112

The Risk Committee and the Audit Committee monitor

effectiveness of the systems of risk management and internal

control through regular updates and reviews by the second

line of defence, internal audit, and external auditors. The Risk

Committee also reviews the Enterprise Risk Management

Framework to maintain alignment of the group’s risk appetite

and regulatory requirements. Based on the oversight and

assurance activity undertaken during the year, the Board

considers that the group’s overall risk management and

internal control framework remained appropriate and

effective in supporting the group’s strategy, risk profile and

risk appetite during the period. Where control weaknesses

were identified, these were subject to management action

plans and ongoing oversight.

Detailed information in respect of the risk management and

internal control systems is provided within the Risk Report

on pages 60 to 70 and the Risk Committee report on pages

134 to 136.

Principal and emerging risks

The Board has undertaken a robust assessment of the

principal and emerging risks facing the group, including

those that would threaten the group’s business model, future

performance, solvency or liquidity. These risks are subject to

ongoing review and challenge by the Risk Committee and at

management-level governance forums informed by risk

profile performance against risk appetite, an evaluation of

emerging risks at group level and the mitigating actions in

place to support preparedness should such risks materialise.

The identification, management and mitigation of these risks

form a fundamental component of the Enterprise Risk

Management Framework, with further details set out in the

Risk Report on pages 60 to 70.

The Board confirms that robust risk management processes

were in place throughout the year ended 31 July 2026 and

up to the approval of this Annual Report 2026 to support the

identification, assessment and management of the group's

principal and emerging risks. In undertaking its review, the

Board has assessed both the probability of risks crystallising

and the cost of implementing controls, having regard to the

Financial Reporting Council's Guidance on Risk

Management, Internal Control and Related Financial and

Business Reporting.

Further information on the group’s principal and emerging

risks can be found in the Risk Report on pages 65 to 100.

The Board, supported by the Audit Committee, oversees the

group's whistleblowing arrangements. The arrangements are

designed to support a culture in which colleagues and others

connected with the group feel able to raise concerns in

confidence, anonymously where preferred, and without fear

of retaliation.

Whistleblowing arrangements

The group's Whistleblowing Policy sets out the channels

available for raising concerns, including internal escalation

routes, direct contact with the group's Whistleblowing

Champion, reporting to the FCA or PRA, and access to an

independent external confidential helpline facility available

24/7. The policy applies to all employees, including

temporary staff and relevant non-employees, and is

supported by clear guidance on the types of concerns that

may be raised and the protections available to those who

speak up.

A designated Director, currently Kari Hale, acts as the

group's Whistleblowing Champion and is responsible for

overseeing the integrity, independence and effectiveness of

the group's Whistleblowing Policy, Standard and supporting

procedures. The Whistleblowing Champion engages

regularly with the Group Head of Non-Financial Risk on

whistleblowing matters and provides oversight of the

operation of the framework.

Concerns raised under the whistleblowing arrangements are

assessed and investigated independently and

proportionately, with appropriate action taken where

required. The Board received half-yearly updates on

whistleblowing activity, including themes, investigations,

outcomes and actions arising.

Whistleblowing awareness is embedded through annual

mandatory training and colleague communications, including

guidance on how to speak up which is readily available to all

employees. During the year, further enhancements were

made to whistleblowing communications and guidance to

provide greater clarity on escalation channels and reinforce

the group's commitment to openness, accountability and

speaking up.

Meetings of the Board

Attendance at scheduled Board and committee meetings during FY 2026

Mike Biggs

8/8

4/4

–

5/5

Mike Morgan

8/8

–

Fiona McCarthy

8/8

–

Mark Pain

8/8

4/4

7/7

–

5/5

Tracey Graham

8/8

4/4

7/7

–

5/5

Kari Hale

8/8

4/4

7/7

5/5

–

Patricia Halliday

8/8

–

7/7

5/5

4/51

Tesula Mohindra

8/8

–

7/7

5/5

–

Sally Williams

8/8

–

7/7

5/5

–

Board

Nomination and

Governance

Committee

Risk Committee

Audit Committee

Remuneration

Committee

1. The date of the meeting was changed at short notice and Ms Halliday was therefore unable to attend. Ms Halliday had a full briefing with the Committee

Chair ahead of the meeting and provided her feedback on the agenda items.

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113

The Board and committee meeting calendar is designed to

provide an appropriate number of meetings for each forum,

aligned with key milestones during the financial year.

Alongside the scheduled Board and committee meetings set

out in the table, 17 additional ad hoc Board meetings were

held during the year to provide oversight of key emerging

matters, including the FCA's motor finance consumer

redress scheme.

Meeting dates for the Board and its committees are planned

well in advance to support full Director participation. In the

event that a Director is unable to attend, they receive the

relevant papers as usual and have the opportunity to

communicate their views, comments and questions before

the meeting, and to follow up subsequently with the Chair of

the Board, the Company Secretary or the relevant

Committee Chair as appropriate.

Board and committee meeting agendas are agreed by the

Chairman and Committee Chairs, working closely with the

Company Secretary and informed by contributions from the

Chief Executive and relevant members of the executive team.

Management representatives are invited to attend meetings

where appropriate. Time is routinely reserved at each

scheduled meeting for discussions among the Non-executive

Directors in the absence of Executive Directors and

management.

Board and committee materials are distributed in advance of

meetings to facilitate informed discussion and decision-

making and include reporting on stakeholder considerations

as well as management-led assessments of employee and

customer sentiment and organisational culture.

The Board also utilises a range of additional engagement

mechanisms to inform its consideration of key matters and

guide the strategic direction of the group, including:

• The annual Board strategy day (refer to page 118).

• Workforce engagement opportunities as detailed on page

121.

• Meetings with investors and significant shareholders,

including at the corporate governance roadshow.

• Separate informal Board sessions to explore important

topics with management in the form of deep dives.

Roles and responsibilities

In line with the Code, the role of the Chair of the Board is

distinct and separate from that of the Chief Executive and

there is a clear division of responsibilities between the two.

The roles of the Chair of the Board, Chief Executive and SID,

as approved by the Board in July 2026, can be found on the

company’s website at https://www.closebrothers.com/s/

who-we-are/corporate-governance. A summary of various

Board roles is set out on the following page.

In addition, the Chair of the Board, Chief Executive and each

of the Committee Chairs have various prescribed

responsibilities under the Senior Managers and Certification

Regime ("SMCR"), overseen by the FCA. Other Board

members also take on additional responsibilities required by

legislation, such as Whistleblowing Champion, although

responsibility for oversight of these matters remains with the

whole Board.

Division of responsibilities

Board

• Responsible for guiding the company towards long-term sustainable growth, creating value for

shareholders and supporting positive outcomes for stakeholders.

• Determining the group’s strategic direction and overseeing its execution, establishing an

appropriate risk appetite and control framework.

• Maintaining strong standards of corporate governance, and ensuring that the company’s

purpose, culture, values and ethics remain embedded throughout the organisation.

Mike Biggs

Chairman

• Leading the Board and its overall effectiveness in directing the company.

• Promoting an open and inclusive environment that supports and encourages constructive

debate and challenge between Directors.

• Ensuring Directors receive accurate, timely and clear information.

Mark Pain

Senior Independent

Director

• Provides a sounding board for the Chairman and serves as an intermediary to other Directors

and shareholders when necessary.

• Maintains appropriate engagement with major shareholders, as required, to understand their

perspectives and concerns, ensuring these are communicated to the Board.

• Leads the appraisal of the Chair's performance at least annually.

Non-executive

Directors

• Expected to exercise independent judgement through constructive challenge and scrutiny of

management's performance.

• Assisting in the development of strategy and must satisfy themselves that financial controls

and systems of risk management are robust.

• Monitoring and assessing management and Executive Directors' performance against agreed

performance objectives.

Role

Responsibilities

Corporate governance report continued

Close Brothers Group plc Annual Report 2026

114

Executive Team

Mike Morgan

Chief Executive

• Ensures that the group's business is conducted with the highest standards of integrity and is

aligned with the group's strategy and the appropriate culture, values and behaviours.

• Manages the group's risk exposure in line with Board policies and risk appetite.

• Leads the group's investor relations activities.

Fiona McCarthy

Group Chief Finance

Officer

• Overall responsibility for the group’s financial management.

• Plays a key role in supporting the Chief Executive in the formulation and delivery of the group’s

strategy.

Sarah Peazer-Davies

General Counsel and

Company Secretary

• Ensures an effective flow of information between management and the Board.

• Advises the Board on governance matters and facilitates the Board evaluation process,

induction programme and ongoing development.

• Organises all Board and committee meetings as well as the AGM.

Group Executive

Committee

• The Group Executive Committee comprises senior executives who, under the authority of the

Chief Executive, are responsible for the oversight and management of their respective

business areas and functions.

Role

Responsibilities

Directors’ independence

The Board has determined that each Non-executive Director

satisfied the independence criteria set out in Provision 10 of

the Code. The Chairman, Mike Biggs, was considered

independent at the time of his appointment in accordance

with the Code. The independence of each Director is

reviewed annually, with due consideration given to the

factors specified in Provision 10 and any other relevant

circumstances.

Conflicts of interest

With the assistance of the Company Secretary, the Board

regularly monitors Directors' interests to ensure that any

actual or potential conflicts are appropriately identified and

managed. Directors are responsible for notifying the Chair of

the Board and Company Secretary of any changes in their

circumstances that may give rise to a conflict.

As required by the Code, the Board evaluates proposed

external appointments before Directors take on additional

commitments, with full consideration given to the following

factors:

• whether the external appointment could result in any

actual or perceived conflicts of interest;

• how any identified conflicts could be appropriately

managed or mitigated; and

• whether the proposed external appointment would be

compatible with the Director's existing commitments and

responsibilities to the group.

Time commitment

The letters of appointment for the Non-executive Directors

specify the expected time commitment and Directors are

required to obtain the Board's approval before accepting any

significant additional commitments. The Directors'

attendance at scheduled meetings is on page 113.

During the year, Sally Williams was appointed to the board of

NFU Mutual Insurance Society Ltd. In advance of the

appointment, the Board assessed the potential for conflicts

of interest and the impact of the role on Sally Williams'

independence and time commitments. Having undertaken

this review, the Board concluded that any conflicts could be

effectively managed and that Sally Williams would continue

to have sufficient capacity to fulfil her responsibilities to the

company.

Election and re-election of Directors at the

2026 AGM

Under the Code, all Directors are subject to annual election

or re-election at the AGM. The Board will recommend

Directors for election or re-election only where it is satisfied

that they remain effective, are suitable for the role, are able

to devote sufficient time to their duties and to continue

making an effective contribution to the Board.

Having assessed the performance and commitment of each

Director, the Board is satisfied that all Directors continue to

contribute effectively and devote sufficient time to their

duties. Accordingly, the Board, on the recommendation of

the Nomination and Governance Committee, will recommend

that shareholders re-elect all serving Directors at the 2026

AGM with the exception of the current Chairman, Mike

Biggs, who will step down at the conclusion of the 2026

AGM. Please see page 104 for further information.

Board performance review,

training and induction

Board performance review

In line with recognised best practice and the

recommendations of the Code, the Board undertakes a

formal and rigorous review of its performance annually to

assess the effectiveness of the Board and its committees,

and to identify areas for improvement. In 2026, the

performance review was conducted internally. The next

external performance review will be conducted during 2027,

having last been undertaken in 2024.

The Nomination and Governance Committee is responsible

for overseeing the annual Board performance review and

considered and approved the proposals for the 2026 review.

Findings of the performance review

The review found that the Board and its committees continue

to operate effectively. There is a strong relationship between

the Board and management, which received particularly

positive feedback from both Board members and

management. There were a number of priorities identified for

the upcoming year, including:

• Greater strategic focus in FY 2027: the Board would like to

see the continuation of regular transformation programme

updates, along with new strategy deep dives and a focus

on the growth agenda, to track against objectives.

• Review of Board and committee composition and skills.

• Enhanced stakeholder engagement, including targeted

deep dives: greater targeted business and customer

engagement, focused on areas of strategic importance.

• Sharp prioritisation of key issues, with achievable targets:

establishment of a small number of priority areas for the

Board in FY 2027, with clear milestones and target

outcomes. The Company Secretary will support with

tracking these objectives throughout the year.

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115

A detailed review of the findings will be undertaken, including

a comparison to the findings of last year's Board

performance review. The Board, together with the Company

Secretary, will develop an action plan to build on and

address the recommendations of the performance review.

Stages of the 2026

performance review

Stage 1

Planning (January-April)

In January, the Board discussed the 2025

recommendations and progress against

agreed actions. In April, the Company

Secretary presented the proposal for the

2026 review to the Nomination and

Governance Committee. Interview

questions were then prepared by the

Company Secretary.

Stage 2

Interviews (May-June)

One-to-one interviews were conducted

with the Company Secretary and all Board

members as well as select members of

senior management.

Stage 3

Board discussion and

presentation (July)

In advance of discussion at the Board

meeting, findings were shared with the

Chair and Committee Chairs as

appropriate. At the July Board meeting,

findings were shared with and discussed

by the full Board, and actions were agreed

for implementation and monitoring.

Implementation of the findings of the FY 2025

evaluation

The Board has also considered its progress against the

findings of the FY 2025 evaluation:

Better balance between strategic focus and risk

Increased focus on strategic matters during FY 2026,

including the May strategy day. In addition, risk-related

matters have, where appropriate, been directed to the Board

Risk Committee, to support a more balanced Board agenda.

Focus on Board succession

The Board has continued to consider future composition and

skills requirements, with succession planning remaining an

ongoing area of focus for the Nomination and Governance

Committee.

Streamlining of Board materials

Fulsome review of Board paper templates undertaken in FY

2026, and guidance issued to paper authors across the

group, to streamline materials and further enhance insights

as presented to the Board.

Review meeting cadence and governance framework

Amendments made to meeting schedules to better suit

business cycles. Fewer meetings were held in FY 2026, which

has encouraged greater focus on how Board time is spent.

Directors’ performance

In addition to overseeing the Board performance review

process, the Chairman maintains an ongoing dialogue with

each Director through regular individual meetings. These

discussions, combined with the Chairman's observations of

Directors' performance and engagement throughout the

year, provide a basis for assessing their effectiveness,

commitment and contribution to Board and committee

activities. This assessment informs recommendations for

election and re-election at the AGM and supports the

Board's consideration of its overall balance, skills and

composition.

Chairman’s performance

In line with established practice, the SID, Mark Pain,

conducted the annual review of the Chairman's performance.

The review drew on feedback obtained from individual

meetings with the Non-executive Directors, held in the

Chairman's absence, as well as consultation with the Chief

Executive. Following completion of the review, feedback was

provided directly to the Chairman.

Directors’ fitness and propriety

In accordance with its regulatory requirements, the group

conducts annual assessments of the fitness and propriety of

all individuals performing Senior Manager Functions,

including the company's Directors and certain other senior

executives. This process includes an assessment of each

individual's honesty, integrity and reputation, financial

soundness, competence and capability, as well as their

commitment to continuing professional development. This

year's reviews have confirmed the fitness and propriety of all

of the company's Directors and other senior executives who

perform senior management functions. Consideration of

matters relating to fitness and propriety also constitute a key

element of the Board's process for the recruitment and

appointment of Non-executive Directors.

Ongoing training and development

On an annual basis, the Nomination and Governance

Committee reviews the group's strategy and operating

environment, together with the results of the Board

performance review and the assessment of Directors' skills

and experience to identify opportunities for Board

development. A bespoke programme of strategic, regulatory

and operational briefings is approved and scheduled

accordingly. The Company Secretary is also available to

provide guidance and advice to Directors on all aspects of

corporate governance.

Director induction programme

Each newly appointed Director receives a comprehensive

induction programme designed to reflect their existing

knowledge, experience and understanding of Close Brothers.

The programme provides detailed insight into the group's

strategy, financial and operational performance, governance

framework, risk management processes and regulatory

environment. It also includes access to recent Board and

committee materials, meetings with members of senior

management, and introductions to the group's internal and

external auditors.

During the year, Fiona McCarthy received a bespoke

induction programme, reflecting her existing and extensive

knowledge of the group. Mark Pain and Tracey Graham will

receive tailored inductions for their new roles in due course.

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116

Annual General Meeting

The Board held the AGM at the group’s head office in

London. This provided the opportunity for our

shareholders to attend in person and for the Board to

provide an update on the group’s performance and

the continuing engagement with the FCA following the

publication of their consultation in respect of the

motor finance consumer redress scheme.

Board activities

August 2025

The Board considered both the outcome of the Supreme

Court decision and the FCA's subsequent statements of

intent with respect to a proposed motor finance consumer

redress scheme.

September 2025

Board and committee meetings, which included the

approval of the Full Year 2025 results, 2025 results

announcement and Notice of AGM, approval of refreshed

risk appetite statements in alignment with the revised

strategy and approval of the risk management and internal

controls statement.

October 2025

On 7 October 2025, the FCA published a consultation

paper on a proposed industry-wide compensation scheme

for motor finance customers who were treated unfairly.

Following detailed analysis of the proposed redress

scheme, the Board agreed to update the total provision to

c.£300 million. In response, a Group Head of Non-

Financial Risk was appointed to the Executive Committee

in a Senior Manager Function to oversee the group's

redress scheme.

The Board approved the AT1 coupon payment.

Training

The Board received a presentation from Deloitte covering

the UK Corporate Governance Code 2024 reporting

requirements and readiness for compliance with Provision

29, sustainability reporting developments, credit market

trends, and IFRS 9 provisioning considerations.

November 2025

Employee engagement

The Chairman participated in a Q&A session with members

of the group legal and company secretariat teams,

providing insight into the role of the Chairman, and the

manner in which the Board had navigated the challenges

faced during the year and the key issues currently affecting

the group.

December 2025

Board meeting held to review and agree the group’s

proposed response to the FCA’s consultation paper on the

motor finance consumer redress scheme.

The Board agreed to launch Tier 2 refinancing.

Strategy

The sale of Winterflood Securities to Marex Group plc was

completed, representing a key milestone in the group's

strategy and supporting the simplification of the group's

organisational structure.

January 2026

Board and committee meetings, which included the review

and approval of the group’s ICAAP and ILAAP, the

Enterprise Risk Management Framework and the group’s

Modern Slavery Statement. Further, the Board considered

succession planning in light of the Chairman's tenure and

received updates on whistleblowing arrangements through

the Audit Committee.

February 2026

The Board received an update on operational readiness in

anticipation of the publication by the FCA of its final Policy

Statement for the motor finance consumer redress

scheme.

March 2026

Board and committee meetings, which included the

approval of the Half Year 2026 results and results

announcement.

On the 30 March 2026, the FCA published its Policy

Statement PS26/3: Motor finance consumer redress

scheme and the Board met to consider the potential

impacts and agree next steps. Following scrutiny and

challenge, it was agreed that the provision amount would

be increased to £320 million.

The Board continued to review succession planning for the

Chair of the Board, alongside the wider talent pipeline in

each business and functional area.

Training

The Board received training from an external specialist on

developments in AI, technology and digitalisation. The

training helped strengthen the Board's understanding of

the opportunities that these technologies present to

enhance productivity, improve efficiency and support

strategic growth initiatives across the group.

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117

Communities and environment

Investors

Colleagues

Customers and partners

Suppliers

Regulators and government

The Board considered the financial impact assessment of

the FCA's motor finance consumer redress scheme and

took the decision not to challenge the scheme.

The Board also gave approval for the launch of the 2026

Save As You Earn scheme which aims to align employee

interests with those of the group's external shareholders.

Refresher training session

The Board received an update on SMCR to further

enhance understanding of the regime.

May 2026

The Board held its annual strategy day to review progress

against the delivery of strategic priorities and agreed

forward-looking priorities.

Refresher training

The Board received refresher training from external counsel

on Directors’ duties and Market Abuse Regulation.

June 2026

Board and committee meetings, which included an update

on the group’s transformation programme and the

approval of the reappointment of PwC as external auditor

following a robust tender process led by the Audit

Committee. For further detail on the tender process see

page 133.

The PRA attended the Board meeting to discuss the

findings from the annual Periodic Summary Meeting,

providing the Board with direct regulatory feedback and an

opportunity to discuss key supervisory themes.

Stakeholder engagement

The Chairman undertook the annual corporate governance

roadshow, with strong engagement across shareholders,

meeting with 12 of our largest shareholders, representing

c.50% of the share register.

The Board reviewed the results of the group’s employee

opinion survey, which continued to show a strong culture

across the group.

The Board discussed the findings of the internal Board

performance review, considering progress made against

prior year objectives, and agreed the objectives for 2027.

In line with ongoing succession planning, the Board

approved the appointments of Mark Pain, as Chair of the

Board, and Tracey Graham as SID, which will take effect

from the conclusion of the AGM on 19 November 2026,

subject to re-election.

Employee engagement

The Board held its July meeting at the group’s

Manchester office, which serves as a key location

for a number of colleagues within the Commercial

and Property divisions. As part of the two-day visit,

the Board engaged with employees based in

Manchester, including representatives from the

Invoice Finance, Property Finance and Energy

Finance businesses, through a series of informal

discussions. In addition, members of the Employee

Engagement Forum were also in attendance in

Manchester, and had a dedicated session with the

Board, to discuss employee sentiment and culture.

For further information see page 121. These

interactions provided valuable insight into the

employee experience and enabled the Board to

hear directly from colleagues on a range of topics,

including organisational culture, career

development opportunities and work/life balance.

Deep dive

The Board attended a deep dive session from the

Commercial business, covering strategy, proposed

growth and optimisation initiatives.

Event held by the Professional Women of

Colour Group for South Asian Heritage month:

Tesula Mohindra, Non-executive Director, was

interviewed by two summer interns and shared her

inspiring career journey and reflections of the power

of unity in diversity.

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Close Brothers Group plc Annual Report 2026

118

2026 Board strategy day

The Board strategy day held in May 2026 focused on

three key areas:

• Maximising growth opportunities across our three

Banking divisions.

• The next phase of the group's transformation

programme, including the next steps of our cost

savings plan.

• Opportunities for capital and funding optimisation.

Following review and challenge of the strategy, key

strategic priorities for the group were determined. For

further details on the outcomes please see the

Strategic Report on pages 10 and 11.

April 2026

July 2026

Stakeholder engagement

The Board recognises that the group’s stakeholders have

different values and priorities. It is important for the Board to

understand and consider the interests of stakeholders.

Further information about the company’s key stakeholder

groups, as well as the company’s Section 172 Statement,

can be found in the Strategic Report on pages 23 to 26.

The Board assesses stakeholder views and takes them into

account when making decisions. On the following page is a

practical example of how the Board takes into account the

company’s different stakeholders as an integral part of its

decision-making process.

Engagement with shareholders

The Board recognises the importance of maintaining strong

and constructive engagement with shareholders, supported

by the provision of reliable and timely communications.

Examples of engagement and consultation with our

shareholders undertaken by the Chairman and Chief

Executive during the year include:

• The AGM, held in November, which is an opportunity for

shareholders to engage with and question the Directors

and senior management.

• The Chairman met with a number of institutional

shareholders, covering c.50% of the share register by

shareholding, to discuss matters such as the motor

finance consumer redress scheme, strategy, the

transformation programme, corporate governance and

succession planning.

• In March, alongside our Half Year results, we also hosted a

deep dive business update, which provided an opportunity

for shareholders to hear directly from the divisional Chief

Executives on the business and market opportunity for

each of our businesses, alongside further detail on the

group's strategy and investment case.

• Frequent shareholder engagement and investor feedback

is received by the Chief Executive and Chief Finance

Officer as part of scheduled investor roadshows and

through ad hoc meetings throughout the year.

• Additionally, the Remuneration Committee Chair is

available to discuss remuneration matters with

stakeholders, and the SID is available to meet with

shareholders when required. During the year Tracey

Graham engaged with a number of significant

shareholders in respect of the proposed extension of the

restricted stock incentive model for the 2027 financial year.

For further detail please see the Directors' Remuneration

Report, page 151.

Culture and workforce engagement

Culture and values

The Board recognises that the group's unique and distinctive

culture is fundamental to its long-term success. It plays a

central role in establishing, overseeing and evaluating how

that culture is embedded throughout the organisation, while

setting the tone from the top and leading by example. The

Board regularly reviews and assesses the alignment between

the group's purpose, values, strategy and culture, ensuring

these elements remain closely connected and support the

delivery of the group's objectives.

Throughout the year, the Board undertook a range of

activities to monitor, assess and reinforce the group's

culture, including the following:

• The Board considered updates from the Group Head of

HR on the outcomes of the employee opinion survey and

the quarterly culture dashboard, which together track

cultural indicators, employee sentiment and external

stakeholder perspectives. This reporting helps the Board

evaluate the effectiveness of the group's culture and the

extent to which expected behaviours are consistently

demonstrated across the organisation.

• The Board received divisional-level reporting on people

and culture through the Chief Executive's updates,

providing insight into cultural trends and issues across the

group, supporting informed oversight.

• The Non-executive Directors continued to engage with

colleagues across the group through site visits, employee

events and attendance at management committee

meetings. Structured site visits included dedicated

employee engagement sessions, enabling the Board to

gain deeper insight into employee perspectives.

• The Remuneration Committee reviewed culture and

conduct-related matters and considered the role of

culture-focused objectives in evaluating the performance

of the Executive Directors. Additional details are provided

in the Directors' Remuneration Report on page 137.

• The Board reviewed the group’s whistleblowing

arrangements. See page 113 for further detail.

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Financial statements

119

Delivering the transformation

programme

Key Board decision

The group is undertaking a material transformation

programme as part of the wider "optimise" pillar of the

group's strategy. The multi-year programme is designed

to transform the group's operating model, improve

efficiency and create a more scalable platform for

future growth.

During the year, the Board considered and approved the

initiation and subsequent phases of both the design and

execution of the group’s transformation programme.

In March 2026, the group announced a series of cost

initiatives expected to result in a reduction of

approximately 600 full-time equivalent roles by the end of

2027 and to deliver c.£25 million of annualised cost

savings in FY 2026 (revised from the original target of c.

£20 million in FY 2026), with further savings in FY 2027.

The changes are being delivered through a combination

of centralisation and rationalisation of shared services,

increased use of outsourcing and offshoring, and further

reductions in third-party spend and the property footprint.

In support of its decision-making to approve the design

and execution of the significant programme, the Board

received regular updates from management covering

financial performance, operating efficiency, customer

outcomes, colleague engagement and implementation risk.

How stakeholder perspectives informed the

Board's decision

In considering the transformation programme, the Board

sought to protect the long-term interests of the group and

its shareholders. The Board considered how the

programme would support the group’s future

competitiveness, growth and financial resilience, while

recognising the potential impact of the changes on

colleagues, customers, suppliers and local communities.

For shareholders, the Board focused on the programme's

role in strengthening the business and laying the

foundations for a recovery in returns going forward.

The Board considered how the programme would support

acceleration of the group’s cost savings plans to set the

group on the path to double-digit returns by 2028, and

rising thereafter.

For customers, the Board's focus has been on ensuring

that service quality, customer outcomes and operational

resilience were not compromised and would be

maintained throughout implementation. The Board

challenged management on the pace and sequencing of

change, including how disruption would be minimised and

how customer impacts would be identified, monitored and

addressed. As would be expected of a regulated financial

services firm, the Board has engaged as appropriate with

the regulator regarding the transformation programme to

ensure that all legal and regulatory obligations continue to

be met, notwithstanding the scale of the programme.

For colleagues, the transformation programme prioritises

organisational capability with a focus on increased agility,

and the creation of a culture that supports transformation

and long-term success through employee engagement.

The Board recognises the significance of the proposed

organisational changes from a colleague perspective and

therefore the importance of maintaining a strong sense of

engagement and culture while also supporting wellbeing

during a period of heightened change.

Particular consideration was given to the support available

to affected colleagues, the need for clear and timely

communication, and the role of employee feedback in

shaping implementation and execution.

The Board also considered the potential impact on wider

stakeholders, including suppliers and communities, which

has been particularly relevant with respect to changes to

operating locations or outsourcing arrangements. In doing

so, the Board considered the importance of balancing the

interests of all stakeholder groups while seeking to ensure

that the group remains able to deliver sustainable

performance over the long term.

Outcome

Having considered the likely long-term consequences of the

decision to initiate the transformation programme, together

with the interests of relevant stakeholders, the Board

concluded that the transformation programme was

necessary in achieving the group's strategic objectives. The

Board approved the programme on the basis that execution

and implementation would be undertaken with appropriate

safeguards to protect and enhance the group's competitive

strengths and customer proposition, maintain service quality

for customers, support colleagues, preserve operational

resilience and risk management capabilities and maintain

compliance with applicable legal and regulatory

requirements throughout the transition.

Following Board discussion and challenge, management

adopted a phased approach to implementation, supported by

measures designed to minimise disruption to customers and

colleagues, monitored through the regular customer

outcomes reporting via the Risk Committee. The Employee

Engagement Forum ("forum") was also established as a

trusted channel for colleague feedback and communication,

supporting outreach across the business and helping

management to understand how the transformation

programme was landing locally and address any areas of

concern. Feedback from the forum is considered by the

Board and the Executive Committee and is used to inform

key decisions to ensure that they reflect the culture of the

group and remain aligned with the group’s value and

purpose. Further information on the forum and its work during

the year can be found on the following page.

The Board continues to monitor delivery of the transformation

programme to ensure that it remains aligned with the group’s

strategy, purpose and culture, with particular focus on the

implications for key stakeholders and the group’s long-term

success. The Board receives regular updates covering

colleague engagement and sentiment, customer outcomes,

cost savings, operational performance and execution, and

implementation risk. To support effective oversight,

management has enhanced the programme governance

framework, including the establishment of a sub-committee of

the Executive Committee dedicated to transformation

activities. Annualised cost savings of c.£36 million have been

delivered in FY 2026, ahead of the original target of c. £25

million, reflecting the acceleration of cost-saving initiatives.

We now expect the programme to exceed our target of c.£60

million of annualised cost savings by the end of the 2027

financial year, primarily through streamlining of businesses

and functions, increased use of outsourcing and offshoring

and reduction in our property footprint and third-party spend.

Link to strategy

Optimise: creating a competitive platform for efficient

growth.

Corporate governance report continued

Close Brothers Group plc Annual Report 2026

120

Engagement with employees

The Board's engagement with employees delivers mutual

value, enabling it to monitor and assess the group's culture

while fostering an engaged and motivated workforce that

supports the delivery of excellent customer outcomes. Our

values of service, expertise and relationships remain

fundamental to our identity and guide the way we conduct

our business.

In accordance with the Code, the Board has established its

own arrangements for engaging with colleagues throughout

the group. Oversight of these arrangements is provided by

the Nomination and Governance Committee, with the

Company Secretary coordinating a programme of activities

designed to facilitate Board engagement. Through the work

of the Committee, the Board regularly reviews its workforce

engagement arrangements to ensure they remain effective

and appropriate for the group.

The Board places significant importance on engaging with

colleagues at all levels of the organisation and across

different locations. During the year, the Board engaged with

and consulted employees through a range of formal and

informal channels. These activities provided valuable

opportunities to understand employee perspectives, gather

feedback on matters affecting the workforce and assess

employee sentiment. Examples of engagement and

consultation undertaken during the year are shown in the

Board activities calendar on pages 117 and 118, and

included:

• In July 2026, the Board held its meetings in Manchester

and met with employees from the Commercial and

Property divisions based in the Manchester office.

• Non-executive Directors’ participation at local governance

fora and events which are attended by significant numbers

of employees and can include Q&A sessions.

• Informal networking events hosted by the Directors and

which are open to smaller groups of employees to attend.

• Regular all-employee town halls run by the Executive

Directors and Executive Committee, providing updates on

the performance and operations of the group.

The Board considers its employee engagement activities

during the year to have been effective providing Directors

with opportunities to engage extensively with colleagues

across a variety of settings and forums while gaining

valuable insights into employee sentiment to help ensure that

employee interests are reflected in Board decision-making.

Strategic report

Governance report

Financial statements

121

Employee engagement during

transformation

The Board recognises the important contribution

employees make to the group’s success and how by

listening closely to colleagues, we are able to support

their wellbeing and gain valuable insights into customer

needs. This, in turn, enables the group to ensure that it

can continue to evolve to meet those needs.

In light of the heightened levels of change being

undertaken in the organisation as a result of the

transformation programme, an Employee Engagement

Forum, led by the Chief Executive, has been

established. The forum brings together elected

colleagues from across the group, and provides a direct

channel between the wider workforce, the Chief

Executive and the Board. It meets regularly with the

Chief Executive and has become an important source of

colleague insight during a period of significant

organisational change. It supports colleague outreach,

provides feedback on transformation activity and plays

an important role in building support for change

initiatives.

During the year, the forum has strengthened visibility

and understanding of what is happening across the

business and provided a view of employee sentiment

regarding the transformation programme. It has helped

shape transformation communications, assisted

colleagues by contributing to the launch of specific

wellbeing workshops designed to provide support

through the change curve, and acted as a key partner to

the development of the employee opinion survey. It also

provided valuable input into the creation of the group’s

new cultural attributes, which will be launched in the

upcoming financial year. In July 2026, the Board met

with the forum to discuss progress, employee sentiment

and feedback received from colleagues. These insights

are key considerations for the Board and the Executive

Committee to help ensure that decision-making remains

aligned with the group’s culture.

Nomination and Governance

Committee report

Michael N. Biggs

Chair of the Nomination and Governance Committee

Dear shareholder

On behalf of the Board, I am pleased to present the report of

the Nomination and Governance Committee for the financial

year ended 31 July 2026. The report sets out the work of the

Committee over the year and the key responsibilities of the

Committee.

Succession planning was again a key priority for the

Committee in FY 2026. As announced in July 2026, I will be

standing down as Chairman of the Board and Chair of the

Committee and will not seek re-election at the 2026 AGM.

The Committee recommended, and the Board subsequently

approved, the appointment of my successor, Mark Pain, as

well as the appointment of Tracey Graham as Senior

Independent Director ("SID"), with each of myself, Mark and

Tracey being recused from the relevant appointment process

as appropriate. These appointments will be effective from the

conclusion of the 2026 AGM. Mark and Tracey already

provide invaluable expertise and support to the Board, and I

am sure they will continue to do so in their new roles.

In addition, the Committee continued to monitor talent and

succession planning at an executive level in 2026, including

overseeing the appointment of Tim Renshaw to the

Executive Committee, in the newly created role of Group

Head of Non-Financial Risk.

The Committee remains focused on ensuring the highest

standards of corporate governance are embedded at Board

level and across the wider group. The Committee has

consistently considered the UK Corporate Governance Code

2024 (the "Code"), and the applicability of the provisions of

the Code to the group.

The Committee has had oversight of workforce engagement,

Board performance, and diversity and inclusion. As the

group looks forward, the Committee will continue to ensure

that the group has effective leadership in place to deliver on

our strategy and act in the interests of all stakeholders.

Michael N. Biggs

Chair of the Nomination and Governance Committee

29 September 2026

Close Brothers Group plc Annual Report 2026

122

Meetings

• Number of scheduled meetings: Four

• For details of attendance, see page 113

Role of the Committee

To monitor the composition of the Board and its

committees, ensure orderly succession planning and

lead the Board appointments process.

Membership

Mike Biggs (Chair), Tracey Graham, Kari Hale and Mark

Pain.

Other regular attendees by invitation

Chief Executive, Group Head of Human Resources and

General Counsel and Company Secretary.

Interaction with other committees

The Nomination and Governance Committee makes

recommendations to the Board and all other

committees regarding the appointment and removal of

their members and chair.

2026 activities

• The appointment of Mark Pain as Chair of the Board

and Nomination and Governance Committee,

effective from conclusion of the 2026 AGM.

• The appointment of Tracey Graham as Senior

Independent Director, effective from the conclusion of

the 2026 AGM.

• Reviewed the group’s executive succession plans

and looked at the talent pipeline at a business/

functional level through the year.

• Considered the group's corporate governance

arrangements, ensuring compliance with the UK

Corporate Governance Code.

Key responsibilities of the Committee

• Regularly review the structure, size and composition of the

Board and its committees, recommending any changes to

the Board.

• Assess the group's current and future leadership needs

and overseeing succession planning for Directors and

senior management, to ensure the continued development

of a diverse talent pipeline.

• Review the ongoing independence of the Non-executive

Directors, and the Board's collective balance of skills,

knowledge and experience, particularly when making

Board appointments.

• Oversee compliance with the Code, corporate governance

standards and best practice.

• Facilitate the Board's annual performance review,

including the appointment of an external Board evaluator

when required.

Board succession

As announced in July 2026, following nine years of service

since joining the Board in 2017, Mike Biggs will not seek re-

election at the 2026 AGM and will step down from his role at

the conclusion of that meeting.

Following external consultation and an executive search, as

well as internal consideration of the composition of the

Board, the Board approved the appointments of Mark Pain

as Chair of the Board and the Nomination and Governance

Committee, and Tracey Graham as SID, with effect from the

conclusion of the 2026 AGM.

As the outgoing Chair and incoming Chair and SID were

members of the Nomination and Governance Committee, the

Board assumed oversight of the succession process to

manage any potential conflicts of interest that could arise.

The Committee subsequently reviewed the final proposal

and, with Committee members recusing themselves from the

relevant vote as required, recommended the appointments to

the Board, which were approved in July 2026.

Executive-level succession planning

The Committee also focused on senior management

succession planning, reviewing the annual plan for each

Executive Committee role. The plan identifies emergency,

three-year and five-year successors and highlights areas

where the group may face a medium-term shortage of

internal talent.

In light of the Board changes, and noting the tenure of some

Non-executive Directors, succession planning at both Board

and executive levels remains a regular item on the

Committee's agenda for FY 2027.

Further information on talent and succession planning can be

found in the Sustainability Report on pages 39 to 40.

Corporate governance

The Committee continued to monitor compliance with

revised UK Corporate Governance Code. The Committee

performed an assessment of compliance against the

applicable principles and provisions of the Code, and

concluded that for FY 2026, the group discharged its

governance responsibilities effectively under the Code.

Enhancements made to the internal controls in line with the

revised Code were overseen by the Audit and Risk

Committees.

Board effectiveness and performance

The Committee has oversight of the Board effectiveness

review process and in 2026 this review was conducted

internally. The Committee considered the 2026 review

proposal at its April meeting, and led the review process,

which took place through a series of one-to-one interviews

with each of the Directors and the Company Secretary. The

findings of the review were collated and shared with the

Chairman and the Board in July 2026.

Throughout the year, the Committee considered the

recommendations of the 2025 Board effectiveness review,

incorporating these recommendations into the activities of

the Board and its committees, including with respect to

meeting agendas, business and workforce engagement and

Board training.

More information on the Board performance review process

and outcomes can be found on pages 115 to 116.

Skills, development and time commitment

The Committee also conducted its annual review of the

individual and collective skills possessed by members of the

Board, which reaffirmed that the Non-executive Directors

continue to possess the relevant skills and expertise to be

effective in their roles. The Committee considered the

findings of this review when assessing the Board training and

development proposals for the year.

The chart on page 107 sets out the key skills expected of the

Board and held by the Non-executive Directors. Further

details of each Non-executive Director's background and

experience are also provided in their biographies on pages

108 to 110. As the group operates in a regulated

environment, all Directors completed an annual fitness and

propriety assessment under the Senior Managers and

Certification Regime.

During the year, the Committee reviewed each Director's

expected time commitment, taking into account committee

memberships, other board roles and industry benchmarks.

The Committee concluded that each Director can devote

sufficient time to the company's business.

Board roles and responsibilities

In 2026, the Committee reviewed and updated the statement

of responsibilities of the Chair of the Board, SID and Chief

Executive, to ensure that they remain fit for purpose and

aligned with the expectations of each role. In accordance

with the Code, a statement of responsibilities is available on

the company's website, with further information on page

114.

Board and committee composition

The composition of each committee is as follows:

Mike Biggs

Chair

•

Mark Pain

•

Tracey

Graham

•

Chair

Kari Hale

•

Chair

•

Patricia

Halliday

•

Chair

•

Tesula

Mohindra

•

Sally Williams

•

Nomination

and

Governance

Committee

Audit

Committee

Risk

Committee

Remuneration

Committee

Strategic report

Governance report

Financial statements

123

Election and re-election of Directors at the

2026 AGM

The Committee considers and recommends to the Board

whether Directors should be elected or re-elected, taking

account of their performance, suitability, time commitment

and ongoing contribution. Following this year's review, the

Committee recommended that all serving Directors, with the

exception of the Chairman, Mike Biggs, be re-elected at the

AGM.

You can read more about the Board’s recommendation that

all Directors be elected or re-elected at the 2026 AGM on

page 115.

Diversity and inclusion

Diversity and inclusion ("D&I") remained a key priority for the

Committee during the year. The Committee recognises that

diversity throughout the organisation is essential to the

delivery of the group's long-term strategy and its ability to

respond effectively to stakeholder needs and expectations.

At Board level, diversity of thought supports constructive

challenge and effective decision-making.

During the year, the Committee completed its annual review

of the Board Diversity Policy, which applies to the Board and

its committees. The policy sets objectives for diversity and

inclusion in the boardroom, the recruitment of new Directors

and longer-term representation, together with the related

governance responsibilities. The Committee concluded that

the policy remained appropriate and that no amendments

were required. The Board Diversity Policy is available at

https://www.closebrothers.com/s/who-we-are/corporate-

governance

The Committee also reviewed the group's performance

against the diversity targets and disclosure requirements set

out in Listing Rule 6.6.6(9). At 31 July 2026, the Board met all

targets in Listing Rule 6.6.6(9).

At least 40% of the individuals

on its board of directors are

women

Exceeded: 56% of the

Board are women

At least one of the following

senior positions (Chair, CEO,

SID, CFO) on its board of

directors is held by a woman

Met: Female Chief Finance

Officer

At least one individual on its

board of directors is from a

minority ethnic background

Met: one Director is from an

ethnic minority background

Listing Rule 6.6.6(9) Requirement

Position at 31 July 2026

In accordance with Listing Rule 6.6.6(9), the information

above reflects the data disclosed by the relevant individuals

as at 31 July 2026.

The Committee considers that the Board has an appropriate

level of diversity, with Directors drawn from a range of

backgrounds. It will continue to seek opportunities to

enhance Board diversity, while ensuring that the

appointments reflect the skills, experience and expertise

required by the group.

The following tables set out the gender and ethnic diversity

of the executive management population, comprising the

Executive Committee for the purposes of Listing Rule

6.6.6(10).

The Committee continued to oversee the development of a

diverse pipeline for senior management roles, recognising

the contribution of diversity and inclusion to the company's

purpose and strategic objectives. During the year, the

Committee received updates on the progress made against

the D&I strategy and action plan. In addition, in its oversight

of Board training and development, the Committee proposed

dedicated sessions with Close Brothers D&I networks,

further cementing the Board's commitment to D&I initiatives

across the group.

Gender identity reporting1 under LR6.6.6(10)

Men

44%

73%

Women

56%

27%

Not specified/prefer not to say

–

Number of

Board

members

Percentage

of the Board

Number of senior

positions on the

Board (CEO, CFO

SID and Chair)

Number in

executive

management

Percentage

of executive

management

Ethnic background reporting1 under LR6.6.6(10)

White British or other White (including minority-white groups)

89%

73%

Mixed/Multiple ethnic groups

–

Asian/Asian British

11%

–

18%

Black/African/Caribbean/Black British

–

Other ethnic group, including Arab

–

Not specified/prefer not to say

–

Number of

Board

members

Percentage

of the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage

of executive

management

1. The numerical data detailing gender identity and ethnic background is as self-disclosed by the relevant individuals at 31 July 2026, being the chosen

reference date for the purposes of LR6.6.6(9) and LR6.6.6(10), and reflects the composition of the Board and executive management at that date.

Nomination and Governance Committee report continued

Close Brothers Group plc Annual Report 2026

124

Board diversity

n Male

44%

n Female

56%

Senior management1

n Male

63%

n Female

37%

Workforce diversity2

n Male

53%

n Female

47%

1. Comprises all members of the Executive Committee as shown on page 111, as well as their direct reports, excluding administrative support.

2. Comprises all employees of the group including senior management.

The Committee continues to monitor the approach to

diversity and inclusion across the group. Please see the

charts above for a breakdown of the group’s gender

diversity. More detail on the group’s approach to diversity

and inclusion can be found in the Sustainability Report on

pages 40 to 41.

Workforce engagement

The Committee keeps the Board's workforce engagement

arrangements, described on page 121, under review. During

the year, the Committee assessed the arrangements and

concluded that they remain effective and appropriate for the

group's size and structure.

Committee effectiveness

An internally led evaluation of the effectiveness of the Board

and its committees was undertaken during the year in line

with the requirements of the UK Corporate Governance

Code, as described on pages 115 to 116. The evaluation

found that the Committee continues to operate effectively.

The Committee considers that it has access to all necessary

resources to enable it to carry out its duties and it has

continued to perform effectively.

Strategic report

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Financial statements

125

Meetings

• Number of scheduled meetings: Five

• For details of attendance, see page 113

Audit Committee report

Kari Hale

Chair of the Audit Committee

Dear shareholder

On behalf of the Board, I am pleased to present the report of

the Audit Committee for 2026, outlining how the Committee

has discharged its responsibilities during the year.

The Committee has worked through a busy agenda this year

and I thank my fellow Committee members for their

commitment and contribution. On top of ensuring that our

business-as-usual terms of reference were being fully and

properly discharged, we have continued to oversee both the

external reporting and internal controls related responses to

the ongoing elevated challenges that we face and the

group’s related strategic responses, with particular focus on

the key accounting judgments and estimates set out later in

this report, assessing the integrity and presentation of the

group’s financial reporting and the effectiveness of internal

controls. Overall, the Committee was satisfied with the

robustness of management’s analysis and the quality of

information presented and recommended the final position to

the Board. In particular, the Committee scrutinised and

challenged the accounting and reporting implications of the

FCA’s motor finance consumer redress scheme and the

subsequent legal challenges to the scheme.

Further, we ensured that management and our external

auditors developed appropriately coordinated robust plans

for the year end audit. In addition we led the required tender

for our external audit as we approach 10 years from the initial

appointment of PwC, which concluded with the decision to

reappoint PwC.

The implementation of the UK Corporate Governance Code

2024 remained a key focus. The Committee considered

management’s preparations for the new Provision 29

requirements relating to the effectiveness of material

controls, including work to identify, test and monitor material

controls ahead of requirements applying to the group for the

financial year commencing 1 August 2026.

Looking ahead to 2027, we will continue to monitor the credit

risk environment, which has been mixed this year, and its

impact on impairments. Developments in respect of historical

motor finance commission arrangements, and the group’s

provisions for them, will remain under close review as further

clarity emerges in relation to the outcome of the legal

challenges and any further legal, regulatory, or industry

developments. The Committee will also continue to oversee

the ongoing enhancement and embedding of internal control

processes to support compliance with Provision 29.

Kari Hale

Chair of the Audit Committee, 29 September 2026

Close Brothers Group plc Annual Report 2026

126

Role of the Committee

To oversee and independently challenge

the management of financial reporting and maintenance

of an effective internal control environment.

Membership

Kari Hale (Chair), Patricia Halliday, Tesula Mohindra and

Sally Williams.

Other regular attendees by invitation

Chair of the Board, Executive Directors, Group Head of

Internal Audit, Group Chief Risk Officer, Group Financial

Reporting, Control and Change Director, Group Financial

Planning and Analysis Director, Group Financial Controller,

General Counsel and Company Secretary, Group Head of

Non-Financial Risk, external auditor.

Interaction with other committees

The Audit Committee oversees, along with the Risk

Committee, the recommendations of the group’s internal

and external auditors and the effectiveness of the group’s

internal control and risk management systems.

2026 activities

• Challenging key accounting judgements with focus on

expected credit loss provisions, impairment

assessments of goodwill and other assets, revenue

recognition, the implications of the FCA's motor

finance consumer redress scheme and the potential

outcomes of the legal challenges to the scheme.

• Reviewing the integrity of the group’s financial

reporting and considering key disclosure matters,

including the going concern and viability statements.

• Monitoring readiness for compliance with the material

controls declaration under Provision 29 of the revised

Code.

• Completing a competitive external audit tender process.

• Reviewing the group’s whistleblowing arrangements.

Key responsibilities

The Committee’s key responsibilities, on behalf of the Board,

are to:

• monitor significant accounting judgements and estimates;

• monitor the integrity of financial reporting including

recommending to the Board whether it is fair, balanced

and understandable;

• oversee the effectiveness of the group’s internal controls;

• review the activities and effectiveness of the group internal

audit function;

• review the effectiveness and quality of the external audit

process and the independence of the external auditor;

• recommend the external auditor of the group and approve

their fees;

• review the plan and findings of the audit with the external

auditor; and

• oversee the effectiveness of the group's whistleblowing

arrangements.

The Committee reports to the Board on how it discharges its

responsibilities and makes recommendations to the Board,

all of which have been accepted during the year.

Committee composition, operation

and effectiveness

The Committee operates independently of management to

ensure the interests of shareholders are properly protected in

relation to financial reporting and internal controls.

The Committee is composed entirely of independent Non-

executive Directors, bringing a diverse range of experience in

finance, risk, control and business, with particular experience

in the financial services sector. The Board has confirmed that

the members of the Committee have the necessary expertise

to provide effective challenge to management; this includes

the Chair, whom the Board considers to have significant

recent and relevant financial experience. The qualifications of

each of the members are outlined on pages 108 to 110.

Other Non-executive Directors may attend meetings should

they wish to do so, and senior management and the external

auditor also attend meetings as appropriate. During the

course of the year, the Committee held separate private

sessions with the internal and external audit teams, without

management present.

The Committee continues to work closely with the Risk

Committee to ensure that matters spanning both

committees’ remits are considered in a coordinated and

consistent manner. This alignment is supported by the Audit

Committee Chair’s membership of the Risk Committee and

the Risk Committee Chair’s membership of the Audit

Committee.

In accordance with the UK Corporate Governance Code, the

performance of the Audit Committee was assessed as part

of the Board performance review, described on pages 115

and 116, which concluded that the Committee continues to

operate effectively and has executed its responsibilities in

line with its terms of reference. It is considered appropriately

constituted and has access to sufficient resources to carry

out its duties.

During the year, the Committee operated in accordance with

the Audit Committees and the External Audit: Minimum

Standard published by the Financial Reporting Council

("FRC") in May 2023 and the UK Corporate Governance

Code 2024 (the "Code"), save for Provision 29, where the

group has complied with its equivalent from the 2018 version

of the Code. This report explains the activities undertaken to

meet the requirements of this Standard and the Code.

External audit

The Committee oversees the relationship with

PricewaterhouseCoopers LLP (“PwC”), the group's external

auditor, including the terms of engagement, audit fees,

independence and objectivity. PwC has been auditor to the

group since August 2017, following the group’s last

competitive tender in the financial year ended 31 July 2017.

Taking into consideration partner rotation requirements, in

March 2026, Heather Varley stepped down as the group’s

lead audit partner, and was succeeded by Luke Hanson.

Either Heather or Luke attended all meetings of the

Committee. Matters discussed with PwC are set out in its

auditor’s report on pages 156 to 163.

During the year, the Committee reviewed PwC’s audit plan,

including the proposed audit scope, methodology,

materiality and approach to risk identification, and received

regular updates from management and PwC on

preparedness for the year-end reporting and audit process. It

approved the audit fees for the year, received regular

updates from PwC on the progress of the audit and

considered key matters arising from PwC's work, including

PwC’s assessment of internal controls over financial

reporting and areas of challenge in relation to significant

judgements.

The Committee also monitored the external auditor’s

independence and objectivity throughout the year, including

consideration of any potential threats to independence and

the safeguards in place to mitigate them. PwC confirmed

that no matters had been identified during 2026 that could

reasonably be considered to affect its independence or

objectivity in relation to the group.

The Committee continued to hold private sessions with the

external auditor without the presence of Executive Directors

or management. These sessions facilitate open dialogue and

provide PwC with the opportunity to raise any matters

directly with the Committee. In addition, the Chair met

periodically with the audit partner during the year.

External auditor effectiveness and appointment

The Committee reviews the effectiveness of the audit

throughout the year and, on an annual basis, assesses the

external auditor’s independence, objectivity, qualifications

and effectiveness. This assessment informs the Committee’s

recommendation on the reappointment of the auditor to the

Board and includes consideration of the audit plan, the

scope of work, coverage of significant and emerging risks,

the quality of reporting to the Committee, the timeliness of

reporting and execution of the audit, and the robustness of

challenge provided to management.

The assessment for 2026 was conducted through a group-

wide survey completed by key stakeholders across the

group who have regular interaction with PwC. The review

considered feedback on the PwC senior audit team, the

quality of audit planning and execution, the timeliness of

auditor reporting, the effectiveness of communication with

management and the Committee, and the auditor’s

independence and objectivity. Feedback and scores from the

review were shared with PwC and an action plan agreed to

address remediation of any issues identified. The Committee

has concluded that PwC remains independent, and it was

satisfied with the effectiveness of the external audit process

and PwC’s performance. The Committee therefore

recommended to the Board that PwC be proposed for

reappointment at the AGM. Subject to shareholder approval,

PwC will undertake the audit of the company and the group

for the year ending 31 July 2027.

Strategic report

Governance report

Financial statements

127

As FY 2026 will represent PwC's ninth year as external

auditor, in conformance with the required provisions and the

Code in respect of audit tendering and rotation, the group

has completed a formal competitive audit tender process,

taking into account shareholder interests as well as the

FRC’s “Audit Committees and the External Audit: Minimum

Standard”. Further details on the process undertaken are

provided later in this report.

Financial reporting and critical accounting

judgements and estimates

The Committee reviewed the Half Year results, the Annual

Report and the external auditor reports. The Committee

noted that there were no new material standards, or

amendments to standards, relevant to the group that

became effective for the reporting period. It considered and

challenged the key accounting judgements and estimates

applied by management in preparing the financial

statements, including the appropriateness of accounting

policies and whether the related disclosures were fair,

balanced and understandable. The principal areas

considered by the Committee included:

• the levels of impairment provision against loan assets

under IFRS 9;

• provisions relating to historical motor finance commission

arrangements and the appropriateness of the related

disclosures;

• the assessment of impairment in relation to the valuation

of goodwill having regard to the latest forecasts for the

relevant businesses;

• revenue recognition and the controls in place to mitigate

risks relating to error or fraud;

• the going concern assessment undertaken in connection

with the preparation of the financial statements; and

• the Viability Statement required under the Code.

Each matter was discussed with the external auditor and,

where appropriate, has been addressed in the auditor’s

report. In each case, the Committee considered whether

disclosures were clear and adequate, including whether

appropriate sensitivities had been provided for significant

estimates.

The Committee received detailed papers prepared by

management setting out the accounting treatment adopted,

the underlying market conditions and assumptions, the

methodologies applied and any changes in approach from

prior periods. These were reviewed in detail and considered

alongside the results of the external auditor’s work. The

Committee was satisfied that the judgements and estimates

applied were appropriate and noted that there were no

material disagreements between management and the

external auditor.

The Committee maintained oversight of the year end

reporting timetable throughout the period, receiving regular

updates from management and the external auditor on

progress against key milestones and actions to support

timely delivery of the group's financial reporting.

In July 2026, the FRC's Corporate Reporting Review ("CRR")

team carried out a limited scope review of the group's

disclosures linked to the FCA's review of motor finance

commissions in the Annual Report for the year ended 31 July

2025 in accordance with Part 2 of the FRC CRR Operating

Procedures. Based on this review, the FRC raised no

questions or queries and required no formal response.

Summary of financial reporting and critical accounting judgements and estimates

Expected credit loss

(“ECL”) provision

31 July 2026: £264.4 million

31 July 2025: £249.7 million

The group’s ECL provision is

dependent on management’s

judgements and estimates.

The Committee monitors management’s judgements in relation to ECL, ensuring that the

group’s ECL models and related IFRS 9 judgements and disclosures are appropriate.

Regular IFRS 9 updates were provided to the Committee throughout the year. The

Committee challenged the level of provisions held by the group, and the judgements and

estimates used to calculate these provisions. There was macroeconomic volatility with

sector-specific risks, which were reflected in post model adjustments ("PMAs") and

scenario weights. Particular focus was given to:

• changes/updates to ECL models or methodology, in particular the deployment of

updated models in the Motor Finance business;

• the impact of the macroeconomic environment and the extent to which models are able

to capture these risks;

• the use of PMAs, including the retention or release of PMAs;

• whether coverage levels continue to reflect the economic risks for customers and the

credit risk in the loan book; and

• single name loss risks and appropriateness of specifically assessed provisions.

Credit risk and provision disclosures were discussed to ensure they give a balanced

articulation of the group’s credit risk profile, and key drivers of the ECL charge.

Conclusion: the Committee was satisfied that the impairment provision and the

disclosures provided in the financial statements are appropriate.

Key issue

Committee review and conclusion

Audit Committee report continued

Close Brothers Group plc Annual Report 2026

128

Goodwill and assets

held under operating

leases

31 July 2026: goodwill £34.1

million and assets held

under operating leases

£131.1 million

31 July 2025: goodwill £34.1

million and assets held under

operating leases £166.3

million

Goodwill and assets held

under operating leases in the

Close Brothers Vehicle Hire

("Vehicle Hire") business are

the key items tested for

impairment. The assessments

are based on management

judgement.

The Committee was presented with goodwill and Vehicle Hire operating lease assets

impairment assessments at both the half year and the year end. The Committee challenged

the appropriateness of the assessment, conclusions and resulting disclosures.

During the year, enhancements have been made to the process for assessing goodwill

impairments, with a focus on simplifying the process, formalising existing controls and

strengthening the end user computing tools used in the process.

Committee updates on goodwill included comprehensive information on the impairment

assessment methodology, results and sensitivity analysis. The methodology and

assumptions were discussed and challenged, including the approach to cash flows which

takes into account a longer forecast period for certain CGUs, discount rate used, and

calculation of carrying values.

In the prior year, the group recognised an impairment charge of £30 million in relation to the

operating lease assets of the Vehicle Hire business, which the group has decided to exit.

The assets have been assessed for impairment this year with the value in use calculated

based on management’s exit plan and no further impairment has been identified. The

methodology and assumptions (including utilisation and disposal values) were presented to

the Committee for discussion and challenge.

Conclusion: The Committee was satisfied that there was no impairment and the

disclosures provided in the financial statements are appropriate.

Revenue recognition

The group offers a range of

products and services for

which revenue is recognised

under IFRS 9, IFRS 15 and

IFRS 16. Appropriate

recognition is a key focus of

the Committee.

The Committee reviewed management’s approach to revenue recognition, highlighting the

key areas where judgement is required across interest, fee and commission income. The

Committee noted the more granular approach taken in comparison to prior years, reflecting

lessons learned from prior risk events (including the event relating to the early settlement of

loans in Motor Finance), and the detailed assessment that is performed by management.

Conclusion: The Committee was satisfied that revenue recognition for each of the

group’s key businesses is appropriate.

Motor finance

commission

arrangements

Since the 2024 financial year

end, the accounting

judgements surrounding the

FCA’s review of historical

motor finance commission

arrangements were identified

as a critical accounting

judgement and estimate.

Following the publication of the FCA’s Policy Statement PS26/3: Motor finance consumer

redress scheme (the "scheme") on 30 March 2026, the group increased its provision by

£165 million, and it now stands at c.£320 million. The £320 million provision is the group’s

best estimate of the cost of the scheme as published, including an assumption of delayed

implementation due to legal challenges to the scheme brought by a number of parties.

The Committee scrutinised the accounting judgements, disclosures and sensitivities

relating to the provision, taking into account all available information and noting the

uncertainty that remains around the scheme. The judgements reviewed by the Committee

include the use of a single scenario based on the scheme as published, in contrast to the

probability-weighted multi-scenario approach taken in the prior year. The ultimate cost to

the group remains subject to the outcome of the legal challenges to the scheme and any

further legal, regulatory or industry developments including court claims and complaints

from consumers.

Conclusion: The Committee was satisfied that the provision judgement and related

disclosures provided in the financial statements are appropriate.

Key issue

Committee review and conclusion

Strategic report

Governance report

Financial statements

129

Key issue

Committee review and conclusion

Going concern and

Viability Statement

The Directors are required to

confirm whether they have a

reasonable expectation that

the company and the group

will be able to continue to

operate and meet their

liabilities as they fall due for a

specified period. The Viability

Statement must also disclose

the basis for the Directors’

conclusions and explain why

the period chosen is

appropriate.

The Committee assisted the Board in determining the appropriateness of adopting the

going concern basis of accounting and in performing the assessment of the viability of the

group.

The Committee reviewed the going concern statements in the Half Year results and the

Annual Report, together with the Viability Statement in the Annual Report. In doing so, it

considered the work undertaken by management, including the assessment of plausible

downside scenarios reflecting the group’s principal risks and potential uncertainties, and

considered the appropriateness of the viability assessment period.

The Committee reviewed and challenged management’s supporting analysis for both the

going concern assessment and the longer-term viability of the group. This analysis took into

account the group’s strategy and three-year strategic plan, and included consideration of

realistic downside and stressed going concern scenarios. These scenarios are designed to

assess the potential impact of headwinds arising from the wider macroeconomic

environment, reduced benefits from the transformation programme, and an additional

conduct risk event consistent with the group’s ICAAP approach, applying a further stress to

both profitability and capitalisation in the stressed downside scenario.

The Committee considered management's assessment that under each scenario the group

would continue to operate with sufficient levels of capital during the assessed period,

supported by sound funding and liquidity positions. The Committee also reviewed the

related disclosures, including the information provided in respect of the severe but

plausible scenario.

Conclusion: The Committee concluded that it remained appropriate to prepare the

accounts on a going concern basis, advised the Board that three years was a suitable

period of review for the Viability Statement, and recommended the Viability Statement

to the Board for approval, as set out on pages 102 to 103.

Fair, balanced and

understandable

Under the UK Corporate

Governance Code, the Board

is required to perform an

assessment of fair, balanced

and understandable

reporting.

On behalf of the Board, the Committee considered whether, in its opinion, the draft Annual

Report 2026, when taken as a whole, is fair, balanced and understandable and whether it

provides the information necessary for shareholders to assess the group’s position,

performance, business model and strategy.

The production of the Annual Report 2026 was managed by the Group Chief Finance

Officer, with overall governance and coordination provided by a cross-functional team led

by the Group Financial Reporting, Control and Change Director. Ahead of presentation to

the Committee, a robust review process was conducted, and content was assessed to

ensure disclosures, taken as a whole, were accurate, balanced and verifiable.

The Committee reviewed drafts throughout the process, considering consistency of

messaging, areas of significant judgement, estimation and uncertainty, and emerging

issues as set out in the Financial Statements.

During its appraisal of the Annual Report 2026, the Committee considered whether the

report gave an appropriate reflection of the group’s strategy, performance and risk profile,

with particular attention given to the continued uncertainties surrounding the FCA’s motor

finance consumer redress scheme and any potential outcomes of the legal challenges to

the scheme brought by other parties. In addition, the Committee considered the disclosure

of the group's transformation programme in the context of the broader group strategy.

Challenge was given regarding the use of adjusted measures, areas of significant

judgement and estimation uncertainty, and emerging issues.

The Committee challenged management on the balance of disclosures, including the

prominence given to significant matters affecting the group, and considered the views of

the external auditor, including any feedback with regard to areas where disclosures could

be enhanced.

Conclusion: The Committee was satisfied that the Annual Report 2026, taken as a

whole, is fair, balanced and understandable and recommended this assessment to

the Board.

Audit Committee report continued

Close Brothers Group plc Annual Report 2026

130

Financial reporting controls

Risk management and internal controls

The Board is required to make a statement in the Annual

Report 2026 relating to the effectiveness of risk management

systems and internal controls.

In considering the effectiveness of internal controls, the

Committee received and discussed reports from internal

audit and the external auditor. At each meeting, the

Committee is presented with a report from the Group Head

of Internal Audit, and reviews significant findings relating to

control weaknesses and management’s response. The

Committee challenged management where appropriate on

the timeframe for delivery of actions. In addition, metrics and

updates are provided to the Committee throughout the year

covering the group financial control framework.

The Committee has spent time considering enhancements to

internal controls over financial reporting as described later in

this report. In conjunction with the Risk Committee, we have

satisfied ourselves that the group’s internal financial control

framework is effective and adequately aligned with the

group’s risk profile. Controls aim to manage, not eliminate,

risks to business objectives, support efficient operations,

ensure reporting integrity, and maintain regulatory

compliance. Notwithstanding, through regular reviews of key

controls for design and operational effectiveness, we are

also satisfied that internal financial controls are appropriately

designed and effective in identifying risks faced by the

group, with any identified weakness subject to management

action plans and ongoing oversight. Full details of the

internal control framework are given within the Risk Report

on pages 60 to 70. Specific related matters that the

Committee considered for the year included:

• the effectiveness of systems for internal controls, financial

reporting and risk management;

• the extent of the work undertaken across the group to

ensure that the control environment continued to operate

effectively;

• the significant findings of internal investigations into

control weaknesses, fraud or misconduct and

management's response, along with any deficiencies

identified through the assessment of the effectiveness of

the internal controls over financial reporting; and

• the findings from internal audit assurance work to assess

the enhancements to the control framework and to identify

and test the material and dependent key controls.

Preparation for compliance with Provision 29 of the UK

Corporate Governance Code 2024

During the year, the Committee devoted significant time to

overseeing the group’s continued preparations for the

revised UK Corporate Governance Code 2024 and the

associated internal control disclosure requirements, which

will apply to the group for the financial year ending 31 July

2027. The revised Provision 29 requires the Board to include

an annual declaration in the Annual Report on the

effectiveness of all material controls as at the balance sheet

date, covering controls over financial and non-financial

reporting, operational activities and compliance. The

declaration must also describe any material controls that

have not operated effectively at the balance sheet date, the

actions taken or proposed to improve them, and any actions

taken to address matters previously reported.

The Committee reviewed and challenged management’s

proposed approach to defining, identifying and monitoring

material controls for this purpose. This included a detailed

review of the controls library and its alignment to the group’s

principal risks. As a result of this review, a number of

controls were refined and additional material controls were

identified and added.

To ensure readiness, comprehensive early testing of the end-

to-end control framework and operating model was

undertaken, supported by a focused review by internal audit.

The Committee considered the outcome of this exercise,

which confirmed that the framework is operating as designed

and is capable of differentiating clearly between stronger and

weaker controls. It also provided a clear view of the areas

where further improvement is required ahead of

effectiveness testing in FY 2027.

Whistleblowing arrangements

The Committee supports the Board in overseeing the group’s

whistleblowing arrangements and considers the adequacy of

these arrangements to allow colleagues to raise concerns in

confidence and anonymously without fear of retaliation.

During the year, it reviewed management reports on

whistleblowing and considered the speak up culture across

the group and any potential trends. The Committee

encouraged management to consider ways in which to

enhance the guidance to provide greater awareness on

escalation channels and reinforce the group’s commitment

to openness, accountability and speaking up. The

Committee reported on its consideration of whistleblowing

arrangements to the Board.

Group internal audit

The Committee oversees the role, activity and effectiveness

of group internal audit, including its independence,

resourcing and delivery of the annual audit plan. The

Committee maintained regular oversight of group internal

audit through reports provided to the Committee and

through one-to-one meetings with the Group Head of

Internal Audit. During the year, the Committee:

• Approved the updated Audit Charter, which sets out the

purpose, role and mandate of internal audit.

• Challenged and approved the annual audit plan and

budget, including the resources required to deliver the

plan.

• Considered and confirmed the independence of the

internal audit function.

• Monitored progress against the plan through regular

updates from the Group Head of Internal Audit.

• Reviewed the annual audit opinion on the effectiveness of

the group’s governance, and risk and control framework.

• Considered the significant findings arising from internal

audits, management’s response and any thematic

observations.

• Assessed the effectiveness of the group internal audit

function through an annual internal effectiveness review.

The Committee received regular reports on internal audit

activities across the group and evaluated management’s

progress and response in addressing audit findings. Where

appropriate, the Committee challenged management on the

timing for delivery of remediation actions and invited relevant

members of management to attend the Committee to

provide updates on progress. Internal audit reports were also

made available to the Board. During the year, the Board

received reports covering themes including: cloud migration

and cyber threat management, artificial intelligence ("AI") and

robotics, treasury and financial control framework, the

transformation programme, as well as business-focused

audits. At its June meeting, the Committee received an

update on enhancements being adopted within group

internal audit to support greater efficiency in audit planning,

including the use of data analytics and AI.

Strategic report

Governance report

Financial statements

131

On an annual basis, group internal audit reports to the

Committee on its assessment of the effectiveness of the

group’s governance, and risk and control framework,

including thematic observations arising from internal audit

work performed during the year. The Committee reviewed

this assessment and concluded that the group’s governance,

risk management and control framework was generally

effective, supported by strong Board oversight and challenge

in relation to strategy, culture, operations and risk

management.

The Committee completed its annual review of the

effectiveness and independence of the internal audit

function. Following the external quality assessment

undertaken in the prior year, an internal review was carried

out this year to assess conformance with the required

standards and to benchmark the function against market

practice. The review, informed by feedback from the Audit

Committee, the Board and the Executive Committee,

concluded that the function was operating effectively and in

accordance with applicable standards.

Non-audit services

To safeguard the auditor’s independence and objectivity, the

Committee oversees the group’s policy on the provision of

non-audit services by the external auditor, which

incorporates the FRC's Revised Ethical Standard published

in January 2024. The policy sets out the type of non-audit

services that the auditor is permitted to carry out, with

certain services for which the fee is above a certain threshold

requiring Committee approval before work can commence.

All other permitted service requests are deemed pre-

approved by the Committee, subject to compliance with

policy requirements.

The group’s policy is that permission to engage the external

auditor will always be refused where there is an actual or

potential threat to independence. However, the Committee

will give permission where the service complies with the

group policy and where work is closely related to the audit, a

detailed understanding of the group is required and the

external auditor can provide a higher quality and/or better

value service. The group follows the mandatory regulatory

cap requirement of 70% which compares the annual value of

non-audit services to the average of three years’ audit fees.

The policy is reviewed by the Committee on a biennial basis

to ensure that it is fit for purpose and reflects applicable rules

and guidelines.

Information on fees in respect of audit and non-audit

services carried out by the external auditor can be found in

Note 5 of the Financial Statements. The non-audit services

not required by legislation carried out in the year

predominantly relate to the review of the group's interim

financial statements and funding assurance work.

The Committee was satisfied that the non-audit fees,

individually and in aggregate, were consistent with the non-

audit services policy and did not believe that they posed a

threat to the external auditor’s independence.

Statutory audit services order compliance

The company confirms compliance with the provisions of the

Statutory Audit Services for Large Companies Market

Investigation (Mandatory Use of Competitive Tender

Processes and Audit Committee Responsibilities) Order 2014

for the year to 31 July 2026.

Audit Committee report continued

Close Brothers Group plc Annual Report 2026

132

External audit tender

In accordance with applicable UK legislation, the group is

required to tender its statutory audit at least every 10 years

and rotate its statutory auditor at least every 20 years.

PwC was first appointed as the group’s external auditor in

August 2017 for the financial year ended 31 July 2018.

During the year, the Audit Committee completed a formal

competitive tender process on behalf of the Board.

Following the conclusion of that process in June 2026, the

Board approved the reappointment of PwC as the group’s

statutory auditor for a period of up to 10 years, with effect

from the financial year ending 31 July 2028. The

reappointment will be subject to shareholder approval at

the 2027 AGM.

Scope

The primary objective of the tender was to run a fair,

objective and transparent process and to identify the audit

firm best placed to provide a high-quality, independent

and effective audit that meets the group’s future needs.

The audit tender process was led by the Audit Committee,

with direct involvement from the Committee Chair at each

stage. Management supported the process and provided

input to the Committee on an advisory basis.

Participating firms were assessed against detailed criteria

which considered audit quality, independence and

technical capability, including sector expertise.

Process

The tender followed a structured, multi-stage process. An

initial Request for Information (“RFI”) process was

conducted to identify a shortlist of firms, including

challenger firms, that met the group’s minimum

requirements in relation to audit quality, credibility,

technical capability and relevant sector experience.

Shortlisted firms were invited to participate in a Request

for Proposal (“RFP”) stage, which consisted of a series of

management meetings, technical workshops and

engagement with members of the Audit Committee, the

Committee Chair and senior stakeholders across finance,

risk and technology. These sessions were designed to test

each firm’s audit approach, delivery capability,

understanding of the group and ability to support the

group through its future priorities. Firms were internally

scored using structured scorecards to assess each firm

across core areas with equal weighting applied to each

dimension to ensure a balanced assessment.

A selection panel comprising the Audit Committee Chair,

members of the Committee and the Group Chief Finance

Officer supported the process and considered the outputs

from each stage.

Evaluation

Firms were assessed against a range of criteria, including:

• audit quality and audit approach;

• independence and objectivity;

• sector expertise and understanding of the group’s

business, systems, risk profile and regulatory

environment;

• quality and experience of the proposed audit team;

• use of technology, data analytics and innovation; and

• cultural fit and stakeholder engagement.

Technical workshops were used to assess the depth of

each firm’s expertise, the strength of its proposed

approach and its ability to respond to the group’s evolving

organisational requirements and risk profile. Each firm was

assessed using structured scorecards. Qualitative factors

were also considered, including execution and transition

risk.

The selection panel attended the final presentations

from the firms shortlisted to the RFP stage.

Decision

The Committee considered and discussed the scorecard

outputs, panel observations and qualitative assessment

of each firm’s proposal. In reaching its recommendation,

the Committee placed particular weight on audit quality,

independence, the strength of the proposed audit team

and the importance of maintaining audit effectiveness

during a period of organisational and technology

change.

The Committee recommended two audit firm options to

the Board for consideration, identifying PwC as its

preferred candidate. It concluded that PwC’s proposal

represented the best overall outcome for shareholders,

reflecting its audit quality and independence,

understanding of the group and strength of the

proposed audit team. Transition considerations were

assessed as part of the Committee's overall evaluation.

In June 2026, the Board approved the reappointment of

PwC as auditor of Close Brothers Group plc from FY

2028, subject to shareholder approval at the 2027 AGM.

Summary of tender process

RFI and RFP process

Evaluation

Decision making

Strategic report

Governance report

Financial statements

133

Invitation to

participate and RFI

Management

meeting and

technical

workshops

Committee

recommendations

Board selection and

approval

RFP issued and

data room opened

Evaluation of

written

proposals

Presentation

to selection

panel

Risk Committee report

Patricia Halliday

Chair of the Risk Committee

Dear shareholder

I am pleased to present the report of the Risk Committee for

2026. The report outlines how the Committee discharged its

responsibilities during the year, including its oversight of the

group’s risk profile, risk management framework, risk appetite

and internal control environment.

The external environment remained complex and uncertain

throughout the year. Macroeconomic challenges, geopolitical

uncertainties and ongoing cost-of-living pressures continue to

shape the risk landscape faced by the group, our customers

and the wider economy. Against this backdrop, the Committee

maintained a full and forward-looking agenda. It provided

robust oversight and challenge of management's assessment

of current and emerging risks, including the actions being

taken to manage risk within the Board-approved risk appetite.

The FCA's motor finance consumer redress scheme, which

was announced by the FCA earlier in the year, remained a

significant area of focus. The Committee reviewed the

potential impact of the scheme, the implications of ongoing

legal challenges and management's operational readiness

plans. While uncertainty remains around the conclusion of

the legal challenges, and the detailed implementation of any

scheme, the Committee has spent considerable time

assessing potential outcomes, their impact on the group's

risk profile and the associated operational implications. This

work is intended to prepare the group to meet final requirements

in line with regulatory and customer expectations.

The Committee regularly reviewed the group's principal risks,

with particular focus on credit risk, operational risk, including

cyber security, and conduct risk and customer outcomes.

The Committee also maintained oversight of key strategic and

regulatory matters, such as the strategic risks associated with

transformation and Basel 3.1 readiness. The Committee

received comprehensive reporting and management information

to support effective scrutiny, guidance and challenge.

Looking ahead, the risk environment is expected to remain

challenging. Further clarity on the FCA's motor finance

consumer redress scheme, continued regulatory

developments, macroeconomic volatility and the change

execution risk associated with modernising our IT estate and

simplifying our operating model are likely to remain key areas of

focus. The Committee will continue to oversee management's

actions to simplify processes and systems, enhance control

effectiveness and support the group's resilience.

Patricia Halliday

Chair of the Risk Committee

29 September 2026

Close Brothers Group plc Annual Report 2026

134

Role of the Committee

To assist the Board in its oversight of risk and ensure a

supportive risk culture is fully embedded.

Membership

Patricia Halliday (Chair), Kari Hale, Tracey Graham,

Tesula Mohindra, Mark Pain and Sally Williams.

Other regular attendees by invitation

Chairman of the Board, Executive Directors, Group Head

of Internal Audit, Group Chief Risk Officer, General

Counsel and Company Secretary, Group Head of Non-

Financial Risk, external auditor.

2026 activities

• Ongoing oversight of the implication of the FCA’s

motor finance consumer redress scheme, including

operational readiness plans.

• Continued oversight of FCA requirements and their

impact on regulated lending portfolios.

• Further strengthening the group’s operational

resilience, with enhancements made to enhance

incident response and reduce customer impact.

• Review of capital adequacy and oversight of the

group's readiness for implementation of the Basel 3.1

final rules.

• Continued oversight of the planning of the group’s

technology strategy.

Meetings

• Number of scheduled meetings: Seven

• For details of attendance, see page 113

Key responsibilities

The Risk Committee’s principal roles and responsibilities are

to support the Board in its oversight of risk management

across the group. The identification, management and

mitigation of risk is fundamental to the success of the group.

The Risk Committee also plays an important role in setting

the tone and culture that promotes effective risk

management across the group. The Risk Committee’s key

responsibilities are to:

• oversee the maintenance and development of a supportive

culture and “tone from the top” in relation to the

management of risk;

• review the group's risk appetite and recommend to the

Board for approval;

• monitor the group’s risk profile against the prescribed

risk appetite;

• review the effectiveness of the risk management

framework in ensuring that key risks are identified and

appropriately managed;

• provide risk input to the alignment of remuneration with

performance against risk appetite (through the

Remuneration Committee);

• undertake a robust assessment of both the principal and

emerging risks facing the group; and

• review reports from the risk and compliance functions on

the effectiveness of the processes that support the

management and mitigation of those risks.

Interaction with other committees

The Risk Committee jointly oversees, along with the Audit

Committee, the recommendations of the group’s internal and

external auditors and the effectiveness of the group’s internal

control and risk management systems. It also provides

advice and input to the Remuneration Committee on

remuneration policies and performance objectives.

Overview of main activities during the year

The Committee receives a report from the Chief Risk Officer

at each meeting to focus discussion on the key strategic,

principal and emerging risks. A clear forward-looking agenda

is maintained, with meetings structured to facilitate effective

debate, challenge and oversight of key risk matters.

At each regular meeting, the Committee has:

• reviewed and assessed the group’s emerging and principal

risks;

• reviewed and discussed any material risk events;

• reviewed and monitored the group’s risk profile in respect

of performance against risk appetite, risk trends, consumer

outcomes, emerging risks and risk concentrations; and

• received updates in relation to compliance and regulatory

matters.

During the year, the Committee considered the wide range of

evolving risks facing the group to help ensure that risks were

managed within the Board-approved risk appetite while

supporting delivery of the group’s strategic objectives.

Focused reviews were undertaken throughout the year to

examine key risk topics in greater detail and assess

associated management actions, controls and areas for

further enhancement. The Committee continued to align its

agenda with supervisory priorities and relevant regulatory

initiatives. It oversaw delivery of actions arising from the

FCA’s Premium Finance Market Study, which assessed the

premium finance market in relation to consumer outcomes

and fair value rules. These actions have been materially

completed, with embedding of the changes ongoing.

The Committee also maintained oversight of the risk profile

associated with strategic initiatives and transformation

activity across the group. This included change execution

risk, technology transformation and business simplification

programmes, with the aim of keeping the risk and control

environment aligned to risk appetite as the group delivers its

strategy.

The Committee and the Board have continued to assess the

potential impacts of the FCA’s motor finance consumer

redress scheme and the possible outcomes of legal

challenges to that scheme. In parallel, management

progressed preparations to support operational readiness for

the scheme.

Credit risk remained a core area of focus, with the

Committee receiving focused analysis as part of a rolling

programme of portfolio reviews. Oversight of key lending

portfolios, including motor, property, premium finance,

energy and invoice finance, has been a regular feature of the

Risk Committee agenda. While there remains a risk that the

continued macroeconomic uncertainty could lead to higher

future credit losses, the credit quality of the loan book

remains robust, supported by disciplined application of

prudent lending criteria and risk appetite.

Good customer outcomes remained a primary activity of the

Committee throughout the year. The Committee oversaw the

effectiveness of conduct risk controls, received additional

deep dives on developing conduct risk matters and reviewed

regular monitoring reports on customer outcomes. On behalf

of the Board, it reviewed and approved management’s

annual assessment of consumer outcomes and associated

improvement plans.

The Committee has also spent time this year considering

enhancements to the overall control environment to

strengthen alignment with Provision 29 of the UK Corporate

Governance Code 2024, which will apply for the financial

year commencing 1 August 2026. These enhancements

provide an uplift in the maturity of the group’s systems for

identifying, managing and reporting risk.

The Committee oversaw the group’s readiness for

implementation of the Basel 3.1 final rules, including

management’s assessment of the potential impact on the

group’s CET1 capital ratio.

Operational resilience remained an important area of

oversight. The Committee reviewed management’s progress

against regulatory expectations relating to important

business services and impact tolerances. The year’s self-

assessment demonstrated continued progress in embedding

operational resilience into business-as-usual activity,

including enhanced management information and improved

visibility of planned change to support faster incident

response and reduce customer impact.

Similarly, given the increasing sophistication of cyber threats,

the Committee maintained enhanced oversight of cyber

security and cyber resilience. This included reviewing the

group’s cyber security priorities against the external threat

environment and control maturity, and monitoring

refinements to security incident and event monitoring. These

activities are intended to strengthen the group’s ability to

prevent, detect and respond to cyber events, while

supporting continued progress in control effectiveness,

cloud security and rationalisation of the security vendor

landscape.

The Committee received updates on the group's framework

for the governance and oversight of AI capabilities and

reviewed management's approach to ensuring that AI-

related risks remain appropriately identified, assessed and

Strategic report

Governance report

Financial statements

135

controlled as the group explores opportunities to deploy AI-

enabled solutions in support of its strategic objectives.

Climate and sustainability-related risks remained areas of

focus. During the year, the Committee approved

management’s assessment of the materiality of climate risks

and the associated action plan, aligned to PRA supervisory

expectations. The assessment demonstrated progress in

embedding climate risk considerations within the group’s

wider risk management framework. The Committee also

continued to consider the links between culture, risk and

remuneration, providing input to the Remuneration

Committee so that risk behaviours and the management of

operational risk incidents are appropriately reflected in

performance and reward decisions.

Looking ahead to 2027

Looking ahead, the Committee will continue to support the

Board in overseeing the group’s risk profile and the ongoing

embedding of the risk management and internal control

framework.

Key areas of focus are expected to include motor finance

consumer redress, Basel 3.1 implementation, credit quality,

customer outcomes, operational resilience, cyber security,

strategic transformation, regulatory change, change

execution risk and the continued enhancement of the

group’s control environment.

The Committee will maintain its commitment to robust

governance, proactive risk management and effective

challenge, helping to ensure that the group remains resilient

and well positioned to respond to emerging risks while

supporting delivery of its strategic objectives.

Committee effectiveness

In accordance with the UK Corporate Governance Code, the

performance of the Risk Committee was assessed as part of

the Board performance review, which concluded that the

Committee continues to operate effectively and has

executed its responsibilities in line with its terms of

reference. It is considered appropriately constituted and has

access to sufficient resources to enable it to carry out its

duties. A full report on the Board performance review is on

pages 115 and 116.

Risk Committee report continued

Close Brothers Group plc Annual Report 2026

136

Directors’ remuneration report

Tracey Graham

Chair of the Remuneration Committee

Dear shareholder

I am pleased to present the Directors’ Remuneration Report

for the 2026 financial year. I would like to thank my fellow

Committee members for their support and contribution to the

work of the Committee during the year.

This report sets out the pay decisions that the Committee

has taken for the year, including how we implemented the

Remuneration Policy ("the Policy") this year, and how we

intend to operate the Policy over the coming year.

In 2024 we implemented a Director’s Remuneration Policy

that included flexibility to operate an interim restricted stock

incentive model, replacing both the annual bonus and

performance share award grant under the Long-Term

Incentive Plan. We adopted this approach given the difficulty

of setting meaningful performance targets in the context of

the FCA’s review of historical motor finance commission

arrangements. This interim pay model was strongly

supported by our shareholders when introduced at the 2024

AGM. Our Policy was approved with a 94.9% vote in favour

at the 2024 AGM, with support on our advisory remuneration

vote at the 2025 AGM of 99.8%.

Recognising the ongoing uncertainty posed by the legal

challenges to the FCA's redress scheme, setting robust and

meaningful performance metrics for our ‘business as usual’

annual bonus and performance-based LTIP remains a

challenge. The Remuneration Committee therefore decided

to continue operating our interim restricted stock incentive

model for the 2027 financial year. We consulted on the

proposed extension of the restricted stock model for the

2027 financial year by engaging a number of our significant

shareholders, with the feedback received supporting the

proposed approach.

Our Remuneration Policy is due for renewal at the 2027

AGM, at which point we intend to revert to a model which

includes performance-based incentive plans to align with

shareholders.

Strategic report

Governance report

Financial statements

137

Meetings

• Number of scheduled meetings: Five

• For details of attendance, see page 113

Role of the Committee

To assist the Board in its oversight of the group’s

remuneration framework, remuneration of the Board and

senior executives, and key remuneration decisions.

Membership

Tracey Graham (Chair), Mike Biggs, Mark Pain and

Patricia Halliday.

Other regular attendees by invitation

Chief Executive, Group Head of Human Resources,

Head of Reward & HR Infrastructure, General Counsel

and Company Secretary, external advisor.

Interaction with other committees

The Remuneration Committee works with the Audit

Committee and Risk Committee chairs on the design

and implementation of remuneration policies and the

determination of remuneration outcomes.

This report sets out our approach to remuneration for

the group’s Executive Directors and employees for the

2026 financial year.

The Directors’ Remuneration Report is divided into

three sections:

• Annual Statement from the Remuneration Committee

Chair – pages 137 to 139

• Annual Report on Remuneration – pages 140 to 148

• Summary of Directors’ Remuneration Policy – pages

149 to 151

2026 activities

• Consulted over 20 of our major shareholders on the

proposed extension of the restricted stock model.

• Conducted the 2026 annual compensation review for

Executive Directors and the wider workforce.

• Undertook regulatory matters including Material Risk

Takers framework, annual internal audit of

remuneration and group risk adjustment.

How the group performed during the 2026

financial year

Overall, the group reported a statutory operating loss before

tax of £60.3 million (2025: statutory operating loss before tax

of £122.4 million), reflecting a number of adjusting items, in

particular, an increase to the provision in respect of motor

finance commissions by £164.7 million, which now stands at

c.£320 million and increased restructuring costs of £14.3

million (2025: £2.3 million).

On an adjusted basis, excluding the impact from adjusting

items and discontinued operations, the group's operating

profit decreased 17% to £120.3 million (2025: £144.3

million), and return on average tangible equity ("RoTE"),

reduced 160 basis points to 5.5% (2025: 7.1%), largely

reflecting the repositioning of the business and prevailing

market conditions. The group achieved a CET1 capital ratio

of 14.1%, significantly above our applicable regulatory

minimum of 10.3%.

This year progress has been made in transformation

activities as the group exited non-core activities, and

repositioned business lines. The executive team remain

focused on delivering the strategic priorities: simplify,

optimise, and grow. With the simplification of the business

largely complete, Close Brothers are firmly in the

optimisation and growth stage.

Close Brothers continues to serve their customers, deliver

excellent service, provide specialist expertise and build

strong, lasting relationships. They are a trusted partner to UK

SMEs and millions of customers.

Executive Director remuneration outcomes for

the 2026 financial year

The Committee decided to keep the interim restricted stock

incentive model in place for the 2026 financial year.

Therefore, the Executive Directors were not eligible for an

annual bonus for 2026.

The 2023 LTIP awards were based on return on average

tangible equity (“RoTE”) (30%), adjusted EPS growth (20%),

relative TSR (20%) and a scorecard of risk management

objectives (30%). The financial metrics were not met,

reflecting the impact of the legacy issues and strategic

change that crystallised in the performance period. The risk

management objectives over the three years to 2026 were

partially met. This would have resulted in an LTIP vesting of

16.7% of the maximum opportunity. However, in recognition

of the shareholder experience, and in agreement with a

recommendation from the Chief Executive, the Committee

has determined that there will be nil vesting on the

2023-2026 LTIP. Further details are set out on page 143.

The Committee decided to continue operating our interim

restricted stock incentive model for the 2026 financial year.

Our approach to the structure of the award will be

unchanged from the 2025 financial year:

• The restricted stock award replaces both the annual bonus

and performance share award under the LTIP;

• The award will be subject to performance underpins as

detailed on page 145;

• The restricted stock award will vest 100% after year three,

subject to assessment against the performance underpins;

The entire award will then be subject to a two-year holding

period; and

• Clawback periods will continue to be seven years,

extendable to 10 years.

The Committee reviewed the award value for both Mike

Morgan and Fiona McCarthy and determined that Mike

Morgan's will be 80% of salary (£774,400), and Fiona

McCarthy's will be 70% of salary (£350,000). These awards

are at or below the maximum level of 80% of salary included

within the Policy. For reference, the “ordinary course”

incentive opportunity under the annual bonus and LTIP is

220% of salary.

The Committee believes this approach will continue to

achieve the following objectives:

• retain and motivate the Executive Directors in their roles

and ensure they are focused on executing our strategy and

protecting our valuable franchise;

• incentivise and reward stewardship of the business during

this period of uncertainty; and

• increase the Executive Director’s equity stake in the

business in the long-term interests of all of our

stakeholders.

As set out in our shareholder consultation during the year,

the Remuneration Policy is due for renewal at the 2027 AGM,

at which point we intend to revert to a model which includes

performance-based incentive plans to align with

shareholders.

Notwithstanding the strong performance of the Executive

Directors in the year, the Committee agreed that they will not

receive salary increases for the 2027 financial year.

Supporting the wider workforce

The Committee’s aim is to always consider the wider

workforce, our shareholders and other stakeholders by

taking a fair, prudent and balanced approach to remuneration.

The Committee is particularly focused on ensuring that Close

Brothers supports its broader workforce and demonstrates

its ethos as a responsible business. We are committed to

paying all staff at or above the national living wage, which is

in excess of the national minimum wage.

Directors’ Remuneration report continued

Close Brothers Group plc Annual Report 2026

138

While remaining focused on ensuring a balanced cost profile

across the group, the average salary increase for the wider

workforce for the 2027 financial year is 2.4%. Larger base

salary uplifts were targeted at more junior staff to ensure

those most susceptible to the economic environment are

being protected.

In 2026 we have remained mindful of the need to retain and

motivate our talented workforce to continue to protect the

franchise, support our customers and to operate the

business within our risk appetite. As such, the Committee

decided to continue to fund the bonus pool for wider

colleagues albeit at a lower level than prior years. While the

Committee recognises the shareholder context, including the

suspension of the dividend, the Committee agreed

maintaining some level of bonus is important for the

sustainable retention of colleagues and to support growth in

the future.

We recognise the benefits and improved corporate decision

making in a diverse and balanced workforce. Our

commitment to closing the gender pay gap centres on

increasing female representation at all levels, supported by

targeted representation goals and development

programmes. This commitment extends to broader inclusion

initiatives to ensure fairness and equality for all. We actively

participate in various inclusion charters and partnerships,

leveraging external expertise to inform our strategies. Eight

executive-sponsored inclusion networks organise internal

events and initiatives to deliver on our broader inclusion

commitments. Employee feedback consistently reflects a

positive perception of our inclusive environment, with 92% of

colleagues in our 2026 opinion survey stating they feel

included, and we remain dedicated to fostering a workplace

where everyone feels valued and proud to work for us.

Looking ahead – key focus areas for the

Remuneration Committee for 2027

The Committee intends to continue its openness to dialogue

with shareholders in the coming year, recognising that pay

remains a focus for our investors.

We will continue to consider the experiences of colleagues,

our shareholders and other stakeholders and to remunerate

executives fairly and appropriately. We remain committed to

a responsible approach to executive pay, as I hope this

Directors’ Remuneration report demonstrates.

I hope that you will find this report on the Directors’

remuneration accessible and clear, and that you agree with

the decisions we have taken, which balance the interests of

all stakeholders. I look forward to receiving your support on

the Directors’ Remuneration report at the forthcoming AGM.

Tracey Graham

Chair of the Remuneration Committee

29 September 2026

Strategic report

Governance report

Financial statements

139

Annual Report on Remuneration

Key responsibilities

The Committee’s key responsibilities are to:

• review and determine the total remuneration packages of Executive Directors and other senior executives, including group

Material Risk Takers and senior control function staff in consultation with the Chairman and Chief Executive and within the

terms of the agreed Policy;

• approve the design and targets of any performance-related pay schemes operated by the group;

• review the design of all-employee share incentive plans;

• ensure that contractual terms on termination and any payments made are fair to the individual and the group, that failure is

not rewarded and that a duty to mitigate risk is fully recognised;

• review any major changes in employee benefits structures throughout the group;

• ensure that the remuneration structures in the group are compliant with the rules and requirements of regulators, and all

relevant legislation;

• ensure that provisions regarding disclosure of remuneration are fulfilled; and

• seek advice from group control functions to ensure remuneration structures and annual bonuses are appropriately aligned to

the group’s risk appetite.

Remuneration Committee effectiveness

In accordance with the UK Corporate Governance Code, the performance of the Committee was assessed as part of the

Board performance review, described on pages 115 and 116, which concluded that the Committee continues to operate

effectively and has executed its responsibilities in line with its terms of reference. It is considered appropriately constituted and

has access to sufficient resources to carry out its duties.

Membership activity in the 2026 financial year

There were five meetings of the Committee held during the year. There is a standing calendar of items which is supplemented

by other significant issues that arise during the year. The key matters addressed during the year were as follows:

Remuneration Policy and disclosures

Approve the annual remuneration governance model

•

Approve Total Reward Principles

•

Approve Remuneration Policy Statement for 2025

•

Approve Directors’ Remuneration Report and the remuneration

section of the Pillar 3 disclosure for 2025

•

Review and approve of Directors’ Remuneration Policy for 2025

•

Approve UK Gender Pay Gap submission

•

Risk and reward

Review and approve risk-adjustment process/outcomes

•

Approve Material Risk Takers for 2026

•

Annual remuneration discussions

Approve executive director compensation for 2025

•

Approve proposed 2025 compensation for Material Risk Takers

•

Approve year-end all-employee group-wide salary and bonus

proposals for 2025

•

Approve 2022 group LTIP vesting

•

Approve of medium and long-term awards

•

Review group LTIP non-financial targets for 2026

•

Approve bonus funding approach to year-end compensation

•

Approve group LTIP financial and non-financial targets for 2026

•

Approval of executive directors compensation for 2026

•

Review year-end all-employee group-wide salary and bonus

proposals for 2026

•

Review risk management objectives for 2023 group LTIP vesting

•

Review formulaic incentive schemes and approval of schemes for

2027

•

Committee remit and effectiveness

Review terms of reference

•

August

2025

September

2025

January

2026

May

2026

July

2026

Directors’ Remuneration Report continued | Annual Report on Remuneration

Close Brothers Group plc Annual Report 2026

140

UK Corporate Governance Code

We continue to be compliant with the executive pay provisions of the 2024 UK Corporate Governance Code. Our pay

arrangements are also consistent with the following principles set out in the Code:

Clarity

This Directors’ Remuneration Report provides open and transparent disclosure of our executive

remuneration arrangements for our internal and external stakeholders.

Predictability

Our incentive arrangements contain maximum opportunity levels with outcomes varying depending on

the level of performance achieved against specific measures. The charts on page 160 of the 2024

Annual Report provides estimates of the potential total reward opportunity for the executive directors

under the Policy.

Simplicity and

alignment to

culture

Under our ordinary course Policy, incentive arrangements for our executives are straightforward, with

individuals eligible for an annual bonus and, at more senior levels, a single performance-based long-

term incentive plan. As part of the Policy approved at the 2024 AGM, an interim pay model based on

restricted stock may be operated in lieu of an annual bonus and a grant of performance-based LTIP.

Performance measures or underpins used in these plans are designed to support delivery of the group’s

key strategic priorities and our commitment to adopt a responsible, sustainable business model, in line

with our purpose and values.

Proportionality

and risk

Our variable remuneration arrangements are designed to provide a fair and proportionate link between

group performance and reward. In particular, partial deferral of the annual bonus into shares, five-year

release periods for LTIP awards and stretching shareholding requirements that apply during and post-

employment provide a clear link to the ongoing performance of the group and therefore long-term

alignment with stakeholders. We are also satisfied that the variable pay structures do not encourage

inappropriate risk-taking. Notwithstanding this, the Committee retains an overriding discretion that

allows it to adjust formulaic annual bonus and/or LTIP/restricted stock outcomes so as to guard against

disproportionate out-turns. Malus and clawback provisions also apply to both the annual bonus and

LTIP/restricted stock and can be triggered in circumstances outlined in the Policy.

Advice

During the year under review and up to the date of this report, the Committee consulted and received input from the Chairman

of the Board, the Chief Executive, the Group Head of Human Resources, the Head of Reward & HR Infrastructure, the Group

Chief Risk Officer and the General Counsel and Company Secretary. Where the Committee seeks input from employees, this

never relates to their own remuneration.

The Committee’s remuneration advisers are Deloitte LLP (a member of the Remuneration Consultants Group) who were

appointed by the Committee following a competitive tendering process. During the year, separate teams within Deloitte

provided advice and support in a range of areas, including regulatory compliance. The Committee is satisfied that the provision

of these other services does not affect the objectivity and independence of the remuneration advice provided by Deloitte as the

other services are unrelated to reward matters. Total fees paid to Deloitte in respect of remuneration advice were £42,350

during the 2026 financial year, calculated on a time and material basis.

Statement of voting on the Directors’ Remuneration Policy at the 2024 AGM

For

Against

Number of

abstentions

Directors’ Remuneration Policy

94.9%

5.1%

85,931

Statement of voting on the Directors’ Remuneration Report at the 2025 AGM

For

Against

Number of

abstentions

Directors’ Remuneration Report

99.8%

0.2%

25,915

Implementation of the Policy in 2026

The single total figure of remuneration for Executive Directors for the years ended 31 July 2026 and 31 July 2025 is set out in

the tables below. (Audited1)

Mike Morgan

968

–

1,091

Fiona McCarthy3,4

460

–

533

2026

Salary

£’000

Acting up

allowance

£’000

Benefits

£’000

Pension

£’000

Annual

bonus2

£’000

Performance

awards

£’000

Total

remuneration

£’000

Strategic report

Governance report

Financial statements

141

Salary

£’000

Acting up

allowance

£’000

Benefits

£’000

Pension

£’000

Annual

bonus2

£’000

Performance

awards5

£’000

Total

remuneration

£’000

Mike Morgan5

807

137

–

1,044

Adrian Sainsbury6

418

–

472

2025

1. All disclosures in the Directors’ Remuneration Report are unaudited unless otherwise stated.

2. 60% of Executive Directors annual bonus is deferred into shares.

3. Fiona McCarthy joined the board on 29 August 2025. Her salary, benefits and pension have been pro-rated accordingly.

4. Fiona McCarthy's performance awards were granted before she was appointed to the board. The shares were conditional on achieving a minimum

performance rating of strong and the company achieving a CET1 of at least 1% above the regulatory minimum, calculated on a standardised basis.

5. Mike Morgan received an annual acting up allowance of £423,500, that was time pro-rated whilst in the interim Chief Executive role for the period

10 September 2024 to 6 January 2025. Mike received an annual salary of £583,000 and £968,000 whilst in the roles of Group Finance Director and

Chief Executive respectively that were time pro-rated accordingly.

6. Adrian Sainsbury stepped down as Group Chief Executive and an Executive Director of the group on 6 January 2025; his remuneration including salary,

benefits and pension has been time pro-rated accordingly.

Link between reward and performance

During the 2026 financial year, the group reported a statutory operating loss before tax of £60.3 million (2025: statutory

operating loss of £122.4 million), reflecting a number of adjusting items, in particular, an increase to the provision in respect of

motor finance commissions of £164.7 million, which now stands at c.£320 million, and increased restructuring costs of £14.3

million (2025: £2.3 million). On an adjusted basis, excluding the impact from adjusting items and discontinued operations, the

group’s operating profit decreased 17% to £120.3 million (2025: £144.3 million), and return on average tangible equity

("RoTE"), reduced 160 basis points to 5.5% (2025: 7.1%), largely reflecting the repositioning of the business and prevailing

market conditions.

Across our lending divisions, net interest margin remained robust at 6.9%, in line with guidance of slightly below 7% (2025:

7.2%), and credit performance remained resilient, with a bad debt ratio of 1.0% (2025: 1.0%), in line with guidance of below

our long-term average of 1.2%.

The Group maintained strong capital, funding and liquidity positions. The group’s CET1 capital ratio was 14.1% at 31 July

2026, comfortably above our medium target of 12-13%, and significantly above our applicable regulatory minimum of 10.3%.

This year, progress has been made in transformation activities as the group exited non-core activities, and repositioned

business lines. The executive team remain focused on delivering our strategic priorities; simplify, optimise, and grow. With the

simplification of the business largely complete, Close Brothers are firmly in the optimisation and growth stage. The group

delivered c.£36 million of annualised cost savings in the 2026 financial year, ahead of schedule and substantially higher than

the c.£25 million latest target. During the course of the year, the loan book reduced in the first half, and returned to growth in

the second half, closing the year flat on the 2025 financial year and reflecting the planned exit of selected personal lines in

Premium Finance, and challenging conditions within Property, offset by growth across the other lending divisions.

Given the continued uncertainty regarding the outcome of the legal challenges to the FCA’s motor finance consumer redress

scheme and any potential financial impact, the group will not pay a final dividend on its ordinary shares for the 2026 financial

year.

With regard to the 2023 LTIP, applying the performance conditions would have resulted in the LTIP vesting at 16.7% of the

maximum opportunity. However, in recognition of the shareholder experience, and in agreement with a recommendation from

the chief executive, the Committee determined that the award should not vest.

Additional disclosures on the single total remuneration figure for Executive Directors table (Audited)

The per annum salaries paid during the year are as shown in the single total remuneration figure table above. When reviewing

salary levels, the Committee takes into account the individual’s role and experience, pay for the broader employee population,

market and external factors, where applicable. For the 2026 financial year, the Committee decided not to apply a salary

increase to the executive directors, in line with other members of the Executive Committee. The average salary increase

approved for the wider employee population was 2.3%.

Mike Morgan received an £18,000 allowance in lieu of a company car. Fiona McCarthy does not receive an allowance in lieu of

a company car. They also received private health cover. The discount to the share price on grant of SAYE options is included

in the year of grant. In line with disclosure requirements, taxable expenses are included.

Mike Morgan received a pension allowance and Fiona McCarthy received a combination of pension allowance and pension

contributions equivalent to 10% of base salary, in line with the upper limit contribution the general employee population can

elect to receive.

Directors’ Remuneration Report continued | Annual Report on Remuneration

Close Brothers Group plc Annual Report 2026

142

Salary

Benefits

Pension

The overall vesting of the 2023 LTIP grant is outlined in the table below.

Details of the overall vesting for the LTIP

RoTE2 (30% weighting)

10%

18%

7.3%

0.0%

Adjusted EPS growth3 (20% weighting)

10%

30%

(14.0)%

0.0%

Relative TSR (20% weighting)

at median

quartile4

at or above

upper quartile

below median

0.0%

Risk management objectives (“RMO”) (30% weighting)

n/a

55.6%

16.7%

Overall vesting assessment

16.7%

Discretionary adjustment

(100)%

LTIP overall vesting outcome

0.0%

Performance measure

Threshold target1

Maximum target

Actual achieved

Overall vesting

1. 25% of the awards vest for satisfying the threshold target.

2. Average over three-year performance period.

3. Over three years.

4. The peer group is FTSE 250 financial services companies.

As explained in the Committee Chair's letter, the financial metrics were not met and the risk management objectives over the

three years to 2026 were partially met. In recognition of the shareholder experience, and in agreement with a recommendation

from the Chief Executive, the Committee determined that there should be nil vesting on the LTIP.

Details of the assessment of the risk management objectives for the LTIP

The Committee considers it to be of critical importance that remuneration arrangements continue to incentivise discipline in the

management of the firm’s capital and balance sheet and in the delivery of the business model. The Committee undertakes a

robust assessment of performance against the risk management objectives to ensure that payments to Executive Directors are

fair and appropriate with consideration for individual and corporate performance. In doing so, the Committee assesses

performance against a number of key measures in making its determination.

Performance was assessed after each of the three years of the LTIP performance period, with each year’s review carrying a

weighting of one-third towards the overall vesting for the award, ensuring a fair assessment of progress over the three-year

period.

Year one and year two assessments were set out in the 2024 and 2025 Directors’ Remuneration Reports respectively. The year

three performance assessment is detailed below.

Year three performance assessment against risk management objectives

Risk and operational resilience: 10% of 30%

75%

Consumer

Duty

• Continued annual achievement

of outcome reviews and

maintenance to long-term goals.

• The Board supported annual assessment of outcomes,

informed by conduct monitoring and reporting.

On track

Corporate

governance

reforms

• Enhance the group’s internal

controls framework and make

material progress on alignment

with UK Corporate Governance

Code 2024 requirements.

• Work progressed well across multiple workstreams to

address Corporate Governance Code 2024

requirements.

• Company-wide investment in enhancing internal

controls documentation, testing and associated

attestations on track to enable relevant attestations.

On track

Cyber

security

• Achieve cyber security targets

for the group in line with rolling

target.

• Sustained the maturity and effectiveness of our cyber

security controls, with assessment confirming the

relevant scores remained in line with agreed targets.

• Conducted risk and threat-led prioritisation of further

investment areas to enable sustained capability.

On track

Operational

resilience

• Ensure full regulatory

compliance with operational

resilience requirements.

• Continue resilience testing and

ensure any new vulnerabilities

are addressed for FY 2026.

• Annual operational resilience self-assessment continues

to be in line with regulatory requirements.

• Republic of Ireland annual assessment also in place as

per local requirements.

• Previously identified vulnerabilities closed, in line with

UK regulatory requirements.

On track

Objective

Measured through reference to

Progress

Objective

achieved?

Strategic report

Governance report

Financial statements

143

Long-term performance awards

ESG: 10% of 30%

50%

Sustainability

• Define and publish transition

pathways to meet our net zero

ambition.

• Demonstrate measured

emissions reductions progress

towards 2030 net zero

intermediate targets.

• Green initiatives to materially

contribute to growth.

• In our efforts to align our climate positioning more

closely with our business-led strategy of supporting our

customers in their sustainability journeys, we continue

to:

– move away from intermediate emissions reduction

targets and instead, focus on providing support,

finance and expertise to help customers decarbonise

in ways that are practical and aligned to their own

pathways.

• Growth in the renewable energy and battery electric

vehicles market continues to be led by customer

demand, ensuring our ambitions align closely with our

customers’ transition journeys.

On track

People

• Maintain diversity through

meeting defined representation

targets for female senior

managers and managers from

an ethnic minority background:

– 36% female senior managers.

– 14% managers from an

ethnic minority background.

• 35% female senior managers at 31 July 2026.

• 15% managers from an ethnic minority background at

31 July 2026.

On track

Financials: 10% of 30%

75%

Capital

• To maintain a strong and

prudent capital position, in line

with the group's medium-term

CET1 capital target range of

12% to 13%.

• The group's CET1 capital ratio was 14.1% at 31 July

2026 (31 July 2025: 13.8%), significantly above our

applicable regulatory minimum of 10.3%.

Ahead of

track

Dividend

• Maintain a progressive dividend

that is sustainable over the

medium term.

• Given the continued uncertainty regarding the outcome

of the legal challenges to the FCA's motor finance

consumer redress scheme and any potential financial

impact, the group will not pay a final dividend on its

ordinary shares for the 2026 financial year.

Behind

track

Liquidity

• Maintain a prudent amount of

liquid assets over the period to

FY 2026.

• Maintain a prudent level of

headroom to LCR.

• Treasury assets reduced 37% to £1.8 billion at 31 July

2026 (31 July 2025: £2.8 billion).

• We continue to exceed the LCR regulatory

requirements, with a 12-month average LCR to 31 July

2026 of 1,113% (31 July 2025: 1,012%).

Ahead of

track

Funding

• Maintain a prudent amount of

term funding.

• Maintain an appropriate net

stable funding ratio.

• We have continued to maintain a prudent maturity

profile, with surplus tenor of allocated funding of four

months at 31 July 2026.

• The four-quarter average NSFR to 31 July 2026 was

144.0% (31 July 2025: 145.9%).

On track

Objective

Measured through reference to

Progress

Objective

achieved?

The table below summarises the Committee’s assessment of performance against the risk management objectives after each

of the three years of the LTIP performance period.

Capital and balance sheet management

37.5%

75.0%

62.5%

Risk and operational resilience

75.0%

50.0%

75.0%

66.7%

ESG

37.5 %

25.0%

50.0%

37.5%

Overall vesting1

50.0%

66.7%

55.6%

Element

Year one

assessment

Year two

assessment

Year three

assessment

Overall

vesting

1. The overall vesting percentage is calculated on the average of the overall vesting per element per year.

Implementation of the Policy in 2027

Chief Executive – Mike Morgan

£968,000

Group Chief Finance Officer – Fiona McCarthy

£500,000

Salary effective

from 1 August

2026

Increase

Base salaries were determined with reference to the Executive Director’s role, increases for the broader population and

external factors. For the 2027 financial year, the Committee has decided not to apply a salary increase to the Chief Executive

Directors’ Remuneration Report continued | Annual Report on Remuneration

Close Brothers Group plc Annual Report 2026

144

Base salary

and Group Chief Finance Officer, in line with other members of the Executive Committee. The average salary increase

approved for the wider employee population is 2.4%.

Mike Morgan’s allowance in lieu of pension and Fiona McCarthy’s combination of pension allowance and employer pension

contributions will be 10% of base salary, in line with the upper limit contribution the general employee population can elect to

receive. The Executive Directors will also receive benefits in line with those outlined in the Remuneration Policy table on page

149. There will be no other increases to allowances or benefits other than any potential increase in the cost of providing them.

2026 restricted stock award (for the 2027 to 2029 cycle)

The proposed 2026 restricted stock award due to be granted in October 2026 is shown in the table below.

2026 restricted stock award

£774,400

£350,000

2026 restricted stock award as a percentage of 2027 salary

80%

70%

Chief Executive

Mike Morgan

Group Chief

Finance Officer

Fiona McCarthy

As advised in the Committee Chair’s letter, in lieu of the “ordinary course” annual bonus and performance share LTIP, for 2026,

a restricted stock award will be granted over shares with a value at grant of £774,400 for the Chief Executive and £350,000 for

the Group Chief Finance Officer. These are at or below the maximum opportunity of 80% of their base salary at 80% and 70%

respectively. For reference, the combined “ordinary course” annual bonus and performance share LTIP opportunity is 220% of

salary.

The award will be subject to the following performance underpins:

• Individual: At least strong personal performance rating as rated by the Chairman of the Board in consultation with the Board;

• Financial: Company achieving a CET1 of at least 1% above regulatory requirement, calculated on a standardised basis;

• Non-financial: Satisfactory progress against strategic objectives designed to promote the long-term success of the business,

as judged by the Chairman of the Board in consultation with the Board; and

• Risk: No material regulatory censure relating to the Executive Director’s time in office.

Consistent with the current Policy and risk adjustment framework, the Committee will continue to have overriding discretion to

adjust vesting outcomes where it considers this appropriate taking into account the wider stakeholder experience. While the

significant discount is intended to proactively address the risk of potential windfall gains, the Committee will nonetheless retain

discretion on vesting outcomes in the event of a significant increase in our share price to ensure the value delivered to the

Executive Directors is appropriate in the context of the overall business performance and the wider stakeholder experience.

The restricted stock awards will vest 100% after year three subject to assessment against the performance underpins. 100%

of the award will also be subject to a two-year holding period.

Clawback periods will continue to be seven years, extendable to 10 years.

Relative spend on pay

The following table shows the total remuneration paid compared to the total distributions to shareholders. No dividend will be

paid in 2026, and the decrease in remuneration paid to employees reflects the reduction in headcount and performance-driven

bonuses.

Remuneration paid

230.6

238.4

(3.3)%

Distributions to shareholders1

–

2026

£ million

2025

£ million

Percentage

change

1. For the 2025 and 2026 financial years, no dividend was paid.

Pay ratios

The table below compares the Chief Executive’s single total remuneration figure to the remuneration of the group’s UK

employees at 31 July, over the last seven financial years. The Committee is satisfied that the median ratio is consistent with the

pay, reward and progression policies for our employee population.

The ratio for 2026 has marginally decreased since 2025; however, the median pay ratio has been similar over the last four

years. This year’s reduction is largely as a result of no 2023 LTIP award vesting.

2026

26:1

16:1

11:1

£42,324

£36,850

£66,323

£57,000

£99,953

£86,700

2025

27:1

17:1

11:1

£39,952

£33,635

£63,995

£57,096

£98,687

£80,836

2024

31:1

19:1

12:1

£38,440

£31,500

£61,270

£55,700

£96,856

£61,730

2023

29:1

18:1

11:1

£36,093

£30,000

£59,000

£50,000

£92,969

£72,600

2022

48:1

28:1

17:1

£33,571

£26,314

£56,952

£40,983

£93,459

£85,000

2021

79:1

37:1

29:1

£32,437

£28,820

£54,729

£38,500

£89,927

£70,000

2020

64:1

38:1

23:1

£32,194

£27,167

£54,245

£36,950

£90,029

£75,000

Year

Method

25th

percentile

Median

75th

percentile

Lower quartile employee

Median employee

Upper quartile employee

Total

remuneration

Salary

Total

remuneration

Salary

Total

remuneration

Salary

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Financial statements

145

Our ratios have been calculated using the most robust methodology option “A” prescribed under the UK Companies

(Miscellaneous Reporting) Regulations 2018. Under this option, the ratios are calculated using the following:

• the full-time equivalent salaries and allowances for employees in the UK;

• pensions and benefits paid during the financial years;

• annual bonus awarded for the financial years;

• actual and projected gains realised from exercising awards from taxable employee share plans;

• sales incentives paid during the financial years; and

• projection of vested performance awards.

The Chief Executive’s total remuneration over the past 10 years

The chart below illustrates the Chief Executive’s single total remuneration figure over the past 10 years and compares it to the

total shareholder return of the company’s shares and the FTSE 250 over this period. Further detail on the single total

remuneration figure outcomes and how variable pay plans have paid out each year is shown in the table below.

Preben Prebensen

Adrian Sainsbury

Mike Morgan

Close Brothers

FTSE 250 Index

Value of £1000 invested

on 31 July 2016

Chief Executive's single

total remuneration figure (£'000)

Single figure of

total remuneration

(£’000)

£3,995

£3,337

£2,541

£2,770

£2,043

£860

£1,720

£1,602

£1,053

£1,182

£472

£625

£1,091

Annual bonus

against maximum

opportunity

95 %

91%

86%

82%

40%

78%

47%

LTIP, SMP and

Matching Share

Award vesting6

68 %

51%

19%

30%

42%

40%

21%

22%

Preben Prebensen

Adrian Sainsbury

Mike Morgan

2016

2017

2018

2019

2020

2021¹

2021²

2022³

2023

2024

2025⁴

2025⁵

2026

1. Preben Prebensen’s remuneration for the 2021 financial year was time pro-rated to 21 September 2020, the day he stepped down as Chief Executive.

2. Adrian Sainsbury was appointed Chief Executive on 21 September 2020 and his remuneration included in the single figure for the 2021 financial year

was time pro-rated accordingly.

3. The 2019 LTIP award vested in the 2022 financial year at 20.6%; the assessed outcome before the 25% discretionary reduction was 27.5%.

4. Adrian Sainsbury’s remuneration for the 2025 financial year was time pro-rated to 6 January 2025, the day he stepped down as Chief Executive.

5. Mike Morgan was appointed Chief Executive on 7 January 2025 and his remuneration included in the single for the 2025 financial year was time pro-

rated accordingly.

6. SMP and Matching Share Awards were last granted in the 2016 financial year.

Scheme interests granted during the year (Audited)

The face value and key details of the share awards granted in the 2026 financial year are shown in the table below. These were

all delivered as nil cost options. The share price used to calculate the number of shares was £4.9298, the average of the

middle market quotations for the five business days from and including the date of the company’s preliminary results

announcement on 30 September 2025.

Mike Morgan

PSA2,3

3 years

Yes

726

N/A

147,268

7 October 2028

Fiona McCarthy

PSA2,3

3 years

Yes

310

N/A

62,883

7 October 2028

Name

Award type1

Vesting period

Performance

conditions

Face value

£‘000

Percentage

vesting at

threshold

Number of

Vesting end date

1. The awards are all delivered as nil cost options.

2. Performance underpins are detailed in the 2025 Annual Report on page 155.

3. PSAs have an additional two-year holding period.

External appointments

Mike Morgan is a non-executive director of Battersea Dogs & Cats Home and did not receive any fees during the Close

Brothers 2026 financial year.

Directors’ Remuneration Report continued | Annual Report on Remuneration

Close Brothers Group plc Annual Report 2026

146

31 July

2016

31 July

2017

31 July

2018

31 July

2019

31 July

2020

31 July

2021

31 July

2021

31 July

2022

31 July

2023

31 July

2024

31 July

2025

31 July

2025

31 July

2026

300

200

100

6,000

3,000

2,000

1,000

5,000

4,000

Payments to departing Directors and past Directors (Audited)

Adrian Sainsbury continued to receive his base salary, car and pension allowances and benefits until his notice period and

gardening leave ended on 8 April 2026. During the 2026 financial year, the value of his salary and car and pension allowances

was £746,854 and the value of his holiday pay and benefits were £111,916 and £4,005 respectively.

During the 2026 financial year, Adrian Sainsbury has called for his outstanding Deferred Annual Bonus Award relating to 2022

to cover tax liabilities. The total value of the awards on calling was £40,453 and the dividend paid was £9,960. In line with our

Remuneration Policy, Adrian will continue to build his shareholding and will be unable to sell shares until he either has reached

the minimum shareholding of 200% of base salary or after the two-year hold period following stepping down as an Executive

Director.

There were no other payments made to past Directors during the year other than vesting of outstanding share awards as

disclosed in previous remuneration reports.

Executive Directors’ shareholding and share interests (Audited)

The interests of the Directors in the ordinary shares of the group at 31 July 2026 are set out below:

Mike Morgan

454,888

125,778

5,232

10,611

389,639

295,473

Fiona McCarthy

234,963

4,308

8,996

–

80,196

–

Name

Shareholding

requirement1

Number of

shares owned

outright2

Outstanding options not subject

to performance conditions3

Outstanding options subject to

performance conditions4

2026

2025

2026

2025

1. Based on the closing mid-market share price of 425.6p on 31 July 2026.

2. This includes shares owned outright by closely associated persons and Share Incentive Plan.

3. This includes DSA and SAYE options.

4. This includes PSA and LTIP awards.

No Executive Director held shares that were vested but unexercised as at 31 July 2026. There were no changes in notifiable

interests between 1 August 2026 and 16 September 2026, other than the purchase of shares by Fiona McCarthy within the

Share Incentive Plan which increased her shareholding to 4,344 shares.

Executive Directors’ shareholding (Audited)

The chart below compares the current Executive Directors shareholding versus shareholding policy, as a percentage of salary.

At the end of the 2021 financial year, Mike Morgan exceeded the minimum requirement under the Directors’ Remuneration

Policy. Following the implementation of the compensation mix adjustments in response to CRD V in the 2022 financial year and

being promoted to Chief Executive in January 2025, Mike is building up his shareholding over a reasonable timeframe to meet

the revised minimum requirement. Mike has not sold shares since taking office, except to cover tax liabilities, and has no ability

to do so, until the threshold is met.

Following Fiona McCarthy's appointment to an Executive Director on 29 August 2025, she will build her shareholding up over a

reasonable timeframe to meet the minimum requirement under the Directors' Remuneration Policy.

Mike Morgan

Fiona McCarthy

Details of Executive Directors’ share exercises during the year (Audited)

Mike Morgan

2023 DSA

5,379

–

923.1

517.3

27,823

5,998

Fiona McCarthy

2021 LTIP

1,423

–

1,545.8

503.0

7,158

2,497

Name

Award type

Held at

1 August

2025

Called1

Lapsed

Market price on

award

Market price on

calling

Total value

on calling1

Dividends paid

on vested

1. These are the actual number of shares and values realised on calling. Any variances in totals are due to rounding.

Notes to the details of Executive Directors’ share exercises during the year

The Deferred Share Award (“DSA”) is a mandatory deferral of a portion of the annual bonus.

The DSA and LTIP give Executive Directors the right to call for shares in the company from the employee benefit trust or

Treasury Shares, at nil cost, together with a cash amount representing accrued notional dividends thereon. They may be called

for at any time up to 12 months from the date of vesting. The DSA and LTIP awards may be forfeited in certain circumstances if

the Executive Director leaves employment before the vesting date. The value of the awards is charged to the group’s income

statement in the year to which the award relates for the DSA and spread over the vesting period for the LTIP award.

Details of Executive Directors’ option exercises during the year (Audited)

No Executive Director exercised options during the 2026 financial year.

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Governance report

Financial statements

147

200%

55%

Policy

Actual

200%

Policy

Actual

Single total figure of remuneration for Non-executive Directors (Audited)

Mike Biggs

300

–

313

300

–

321

Sally Williams

–

Mark Pain

–

120

–

120

Tesula Mohindra

–

Patricia Halliday

–

120

–

120

Tracey Graham

–

113

–

113

Kari Hale

–

113

–

115

Name

2026

2025

Basic

fee1

£’000

Committee

chair

£’000

Committee

member

£’000

Senior

Independent

Director

£’000

Benefits2

£’000

Total

£’000

Basic

fee1

£’000

Committee

chair

£’000

Committee

member

£’000

Senior

Independent

Director

£’000

Benefits2

£’000

Total

£’000

1. Non-executive Director fees were last increased with effect from 1 August 2021.

2. Benefits include travel-related expenses in respect of attendance at Board meetings which are taxable. Amounts disclosed have been grossed up using

the appropriate tax rate as the company pays the Non-executive Directors’ tax.

Notes to the single total figure of remuneration for Non-executive Directors

The fees payable to Non-executive Directors for the 2026 financial year are detailed in the below table. The Non-executive

Directors fees were reviewed during the 2026 financial year and no increases were determined. The Non-executive fees are

subject to a review during the 2027 financial year.

Chairman1

£300,000

Non-executive Director

£71,000

Supplements

Senior Independent Director

£34,000

Chair of Audit Committee

£34,000

Chair of Remuneration Committee

£34,000

Chair of Risk Committee

£34,000

Committee membership2

£7,000

Role

2026

1. The Chairman receives no other fees for chairmanship or membership of Board committees.

2. No fees are payable to the Chairman, or for membership, of the Nomination and Governance Committee.

Non-executive Directors’ share interests (Audited)

The interests of the Non-executive Directors in the ordinary shares of the company are set out below:

Mike Biggs

15,000

Sally Williams

17,529

5,910

Mark Pain

12,898

4,000

Tesula Mohindra

500

Patricia Halliday

500

Tracey Graham

1,000

Kari Hale

5,017

–

Name

Shares held

beneficially at

31 July 2026

Shares held

beneficially at

31 July 2025

There were no changes in notifiable interests between 1 August 2026 and 16 September 2026.

This report was approved by the Board of Directors on 29 September 2026 and signed on its behalf by:

Tracey Graham

Chair of the Remuneration Committee

Directors’ Remuneration Report continued | Annual Report on Remuneration

Close Brothers Group plc Annual Report 2026

148

Directors’ Remuneration Policy

The Directors’ Remuneration Policy was approved by shareholders at the 2024 AGM on 21 November 2024. The policy will

apply for three years up to the 2027 AGM.

The Remuneration Policy included the ability to make awards of Restricted Shares, reflecting the difficulty the business had in

setting targets.

In developing the Policy, input was sought from the management team, while ensuring that conflicts of interest were suitably

mitigated. An external perspective was provided by our major shareholders and independent advisers.

The policy can be read in full on pages 154 to 164 of the 2024 Annual Report, which is available at www.closebrothers.com/

investor-relations/investor-information/results-reports-and-presentations. A summary of the main elements of the

Remuneration Policy is set out in the table below.

Information on how the Remuneration Policy was applied in 2026 is included in the Annual Report on Remuneration section, on

pages 141 to 144.

Remuneration Policy for Executive Directors (“EDs”)

The below table sets out the “ordinary course” Directors’ Remuneration Policy

Base salary

Attracts and retains high

calibre employees.

Reflects the employee’s role

and experience.

Reflects the individual’s role and experience and external factors, as applicable. Paid

monthly in cash. Increases will generally not exceed those for the broader employee

population unless there is a change in role, responsibility or the regulatory environment.

Performance framework, recovery and withholding: Not applicable

Benefits

Enables the EDs to perform

their roles effectively by

contributing to their

wellbeing and security.

Provides competitive

benefits consistent with the

role.

Benefits may include private medical cover, health screening, life assurance, income

protection cover and an allowance in lieu of a company car. Other benefits may also be

provided in certain circumstances, such as relocation expenses.

Performance framework, recovery and withholding: Not applicable

Pension

Provides an appropriate and

competitive level of personal

and dependent retirement

benefits.

EDs receive a level of pension contribution (in the form of a cash allowance or contribution

to a pension arrangement) that is in line with the wider workforce.

Performance framework, recovery and withholding: Not applicable

Annual bonus

Rewards good performance.

Motivates employees to

support the group’s goals,

strategies and values over

both the medium and

long‑term.

Aligns the interests of senior

employees and executives

with those of key

stakeholders, including

shareholders, and increases

retention for senior

employees, through the use

of deferrals.

60% of the annual bonus will usually be deferred into shares (in the form of nil cost options

or conditional awards) and will usually vest in equal tranches over three years, subject to

remaining in service. The remaining annual bonus will be delivered immediately in cash. The

annual bonus is capped at 95% of base salary. At the Remuneration Committee’s

discretion, dividend equivalents will usually be paid in cash or additional shares when the

deferred awards vest.

Performance framework, recovery and withholding: Individual bonuses are determined

based on both financial and non-financial performance measures in the financial year,

including adherence to relevant risk and control frameworks. At the Remuneration

Committee’s discretion, an element of the bonus may also be based on personal

performance. At least 60% of the annual bonus opportunity will be based on financial

performance. The non-financial element will be determined based on performance

measured against a balanced scorecard, including (but not limited to):

• strategic objectives; and/or

• people and customer metrics; and/or

• risk, conduct and compliance measures.

The Remuneration Committee has overriding discretion to adjust vesting outcomes where it

considers appropriate. The cash element is subject to clawback and the deferred element is

subject to malus and clawback conditions.

Element and how it supports the

group’s short-term and long-term

strategic objectives

Operation and maximum payable

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149

Long-Term Incentive

Plan

Motivates executives to

achieve the group’s longer-

term strategic objectives.

Aids the attraction and

retention of key staff.

Aligns executive interests

with those of shareholders.

Awards are made in the form of nil cost options or conditional awards and usually vest after

three years subject to achieving performance conditions and remaining in service. On

vesting, awards will usually be subject to a further two-year post-vesting retention period

before options can be exercised by, or conditional awards paid to, EDs. EDs are eligible to

receive an annual award of shares with a face value of up to 125% of base salary, excluding

dividend equivalent.

Performance framework, recovery and withholding: Individual awards vest based on

performance against both financial and non-financial performance measures. At least 70%

of the award will be based on performance against financial measures. The remainder will

be based on non-financial performance. The Remuneration Committee has overriding

discretion to adjust vesting outcomes where it considers appropriate. LTIP awards are

subject to malus and clawback provisions.

Shareholding

requirement

Aligns the interests of

executives with those of

shareholders through building

a shareholding.

EDs are expected to build and maintain a holding of company shares equal to at least

200% of base salary. EDs will normally be expected to maintain a minimum shareholding of

200% of base salary for the first two years after stepping down as an ED.

Performance framework, recovery and withholding: Not applicable

Malus and clawback

Malus and clawback provisions apply to the variable pay that can be earned by EDs. The

specific circumstances in which malus and clawback can be applied are set out in our full

Policy on page 159 of the 2024 Annual Report, which is available on our website.

Element and how it supports the

group’s short-term and long-term

strategic objectives

Operation and maximum payable

Interim Remuneration Policy features – extraordinary circumstances

Restricted stock

Interim arrangement to retain

and motivate the EDs during this

period of uncertainty. Restricted

stock will increase the EDs’

equity stake and promote

stewardship to protect our

valuable franchise. This would

be in lieu of the normal course

annual bonus and performance

award LTIP grant in the financial

year.

Awards are made in the form of nil cost options or conditional awards and usually vest

after three years subject to achieving performance underpins and remaining in service. On

vesting, 100% of awards will usually be subject to a further two-year post-vesting

retention period before options can be exercised by, or conditional awards paid to,

executive directors. EDs are eligible to receive an annual award of shares with a face

value of up to 80% of fixed pay, excluding pension and benefits.

Performance framework, recovery and withholding:

Awards would be subject to a performance underpin, which would be assessed at

vesting.

The performance underpins will be based on financial and non-financial performance

metrics.

Consistency of Executive Directors’ remuneration with wider employee population

The pay and terms and conditions of employment of employees within the group were taken into consideration when setting

the Policy and pay of the executive directors. The Remuneration Committee does not formally consult with employees when

setting the Policy, although the employee opinion survey conducted every year includes remuneration as one of the topics

surveyed. The Remuneration Committee also receives feedback from engagement with, and communication to, employees on

matters relating to remuneration issues, which it uses to inform its broader approach to remuneration, including with respect to

the alignment between executive remuneration and the approach to compensation for employees across the group. The

Remuneration Committee frequently reviews a “Remuneration Dashboard” containing metrics, analysis and other information,

which the Committee uses as part of its decision-making, including as part of the annual compensation process. It covers a

wide range of areas throughout the year, such as workforce demographics, pay and reward at different levels across the

group, gender pay and SAYE participation.

The principles of remuneration are applied throughout the group and are designed to support the group’s key attributes across

our businesses, which are expertise, service and relationships. Remuneration structures and arrangements for all employees

are based on the individual’s role, experience, performance and relevant market practice.

Annual bonuses are based on role, business performance, market conditions and individual performance. These bonuses are

not capped; except for EDs and group and bank Material Risk Takers.

A limited group of senior employees typically receive performance award LTIP awards, generally on the same basis as the EDs,

but the maximum face value of these awards is generally materially lower. Restricted Stock awards will be granted in the

coming financial year to senior employees to reflect the current uncertainty impacting the group.

Members of the Executive Committee who are not EDs are required to build and maintain shareholdings of at least one times

base salary.

Employees receive the same level of pension contributions (in the form of a cash allowance or contribution to a pension

arrangement) as EDs.

Directors’ Remuneration Report continued | Directors’ Remuneration Policy

Close Brothers Group plc Annual Report 2026

150

All UK employees are eligible to participate in the SAYE and SIP plans.

Dates of Executive Directors’ service contracts1

Mike Morgan

17 March 2025

Fiona McCarthy

1 September 2025

Name

Date of service contract

1. Copies of the Directors’ service contracts are available for inspection at the group’s registered office.

Remuneration Policy for the Chairman and Non-executive Directors

Element and how it supports the

group’s short-term and long-term

strategic objectives

Operation and maximum payable

Fees

Attract and retain a Chairman

and independent Non-

executive Directors who have

the requisite skills and

experience to determine the

strategy of the group and

oversee its implementation.

• Fees are paid in cash and are reviewed periodically.

• Fees for the Chairman and Non-executive Directors are set by the board. The

Non‑executive Directors do not participate in decisions to set their own remuneration.

• The Chairman of the board receives a fee as Chairman but receives no other fees for

chairmanship or membership of any committees.

• Non-executive Directors receive a base fee.

• The Senior Independent Director receives an additional fee for this role.

• Additional fees are paid for chairmanship of each of the Audit, Remuneration and Risk

Committees.

• Additional fees are paid for membership of committees, with the exception of the

Nomination and Governance Committee, for which no additional fees are payable.

• Additional fees may be payable for other additional board responsibilities and/or time

commitments.

• The Chairman and Non-executive Directors are entitled to claim reimbursement for

reasonable expenses and associated tax liabilities incurred in connection with the

performance of their duties for the company, including travel expenses.

• Overall aggregate fees will remain within the limit as authorised within the articles of

association, which may change from time-to-time.

• There is no performance framework, recovery or withholding.

Non-executive Directors’ appointment letters1

Mike Biggs

14 March 2017

21 November 2023

Mark Pain

1 January 2021

1 January 2024

Kari Hale

28 June 2023

26 June 2024

Tracey Graham

22 March 2022

19 June 2026

Patricia Halliday

1 August 2021

19 June 2026

Tesula Mohindra

15 July 2021

19 June 2026

Sally Williams

1 January 2020

1 January 2024

Name

Date of appointment

Current letter of appointment start date

1. Copies of the Non-executive Directors’ appointment letters are available for inspection at the group’s registered office.

Statement of consideration of shareholder views

The Chairman of the Board and the Chair of the Remuneration Committee consult our major shareholders on a regular basis on

key issues, including remuneration, and welcome feedback from shareholders at any point throughout year. Where the

Committee proposes to make any significant changes to the Remuneration Policy, or the manner in which the Policy is

operated, we would seek major shareholders’ views and take these into account.

A formal consultation exercise was undertaken during 2024 with our major shareholders and shareholder advisory bodies,

whereby we implemented a Director’s Remuneration Policy that included flexibility to operate an interim restricted stock

incentive model. This replaced both the annual bonus and the performance share award grant under the LTIP in 2025. During

2026, we consulted over 20 of our major shareholders on our proposal to extend the restricted stock model for 2027.

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Financial statements

151

Directors’ report

The Directors of the company present their report, together

with the audited financial statements, for the year ended 31

July 2026, prepared in accordance with the Large and

Medium-sized Companies and Groups (Accounts and

Reports) Regulations 2008, the Disclosure Guidance and

Transparency Rules ("DTR"), and the UK Listing Rules.

Other sections of the Annual Report have been deemed to

be incorporated into the Directors' Report by reference and

the table below details where required disclosures can be

found. In accordance with section 414C(11) of the Act, some

disclosures have been included in the Strategic Report.

Readers are also referred to the cautionary statement on

page 218 of this Annual Report.

For the purposes of DTR 4.1.5R, the Strategic Report and

the Directors' Report comprise the management report.

Disclosures incorporated by reference

Agreements for loss of office

140 to 148

Board of Directors

108 to 110

Business activities

Corporate governance statement

104 to 121

Credit, market and liquidity risks

77 to 96

Environmental disclosures

30 to 36

Financial instruments

Note 12 “Derivative

financial instruments”

Future developments

10 to 13

Going concern and Viability

Statement

101 and 102

Remuneration, including waiver

of emoluments

137 to 151

Interests in share capital

153

Risk management, including

principal risks

60 to 100

Shareholder dividend waivers

153

Content

Page reference

Results and dividends

The consolidated results for the year are shown on page 164

of the Financial Statements. The Directors do not

recommend a final dividend for the year and did not declare

an interim dividend during the year.

Further information on the Directors’ decision not to pay a

dividend in respect of the financial year can be found on

page 7.

Directors

The names of the Directors of the company at the date of

this report, together with biographical details, are given on

pages 108 to 110. All the Directors listed on those pages

were Directors of the company throughout the year.

In accordance with the UK Corporate Governance Code, all

serving Directors will retire at the 2026 AGM and, with the

exception of Mike Biggs, intend to offer themselves for re-

election at that meeting. As announced by the company on

31 July 2026, Mike Biggs will not be submitting himself for

re-election at the company’s 2026 AGM, having informed the

Board of his decision to step down following nine years’ as a

Director.

During the year, the company announced the following

appointments to the Board, after formal and rigorous

processes overseen by the Nomination and Governance

Committee:

• On 31 July 2026, the company announced that the Board

agreed to appoint Mark Pain as Chair of the Board and

Chair of the Nomination and Governance Committee, with

effect from the conclusion of the company's 2026 AGM.

• On the same date, the company also announced that

Tracey Graham would succeed Mark Pain as Senior

Independent Director, while continuing in her role as Chair

of the Remuneration Committee, with effect from the

conclusion of the company's 2026 AGM.

More information on the process undertaken with respect to

Mark and Tracey's appointments can be found on pages 104

and 123 of this Annual Report.

Powers of Directors

The Directors may exercise all powers of the company,

subject to any directions given by special resolution and the

articles of association. The Directors have been authorised to

allot and issue ordinary shares and to make market

purchases of the company’s ordinary shares by virtue of

resolutions passed at the company’s 2025 AGM.

Appointment and removal of Directors

The appointment and removal of Directors is governed by

the company’s articles of association, the Companies Act

2006 and other applicable regulations and policies. Directors

may be elected by shareholders in a general meeting or

appointed by the Board of Directors in accordance with the

provisions of the articles of association. The company’s

articles of association may only be amended by a special

resolution of the shareholders in a general meeting.

Directors’ indemnities and insurance

In accordance with its articles of association, the company

has granted a deed of indemnity to each of its Directors on

terms consistent with the applicable statutory provisions.

The deeds indemnify the Directors in respect of liabilities

(and associated costs and expenses) incurred in connection

with the performance of their duties as Directors of the

company or any associated company. Qualifying third-party

indemnity provisions for the purposes of section 234 of the

Companies Act 2006 were accordingly in force during the

course of the year and at the date of approval of the

Directors’ Report. The company also maintains directors’

and officers’ liability insurance.

Directors’ interests

The Directors' interests in the shares of the company are

disclosed in the Directors' Remuneration Report on page

148.

During the year, there were no significant contracts of the

company or a subsidiary in which a Director was materially

interested.

Close Brothers Group plc Annual Report 2026

152

Share capital

The company’s share capital comprises one class of ordinary

share with a nominal value of 25p per share.

At 31 July 2026, 152,060,290 ordinary shares were in issue,

of which 1,345,294 were held by the company in treasury

(31 July 2025: 152,060,290 ordinary shares were in issue, of

which 1,569,766 were held by the company in treasury).

Under section 551 of the Companies Act 2006, the

Directors may allot equity securities only with the express

authorisation of shareholders which may be given in general

meeting, but which cannot last more than five years. Under

section 561 of the Companies Act 2006, the Board may not

allot shares for cash (otherwise than pursuant to an

employee share scheme) without first making an offer to

existing shareholders to allot such shares to them on the

same or more favourable terms in proportion to their

respective shareholdings, unless this requirement is waived

by a special resolution of the shareholders.

Details of Directors’ authorities approved by shareholders at

the 2025 AGM can be found in the 2025 Notice of AGM and

subsequent results announcement.

Since the date of the company’s 2025 AGM, with the

exception of the authority to make market purchases, the

Directors have not used these authorities. Details of market

purchases of the company’s ordinary shares during the year

can be found in the purchase of own shares section below.

The existing authorities to allot and purchase shares given to

the company at the last AGM will expire at the conclusion of

the forthcoming AGM. At this AGM, shareholders will be

asked to renew these authorities. Details of the relevant

resolutions to be proposed will be included in the 2026

Notice of AGM.

New issues of share capital

No ordinary shares were allotted or issued during the year.

Specifically, no ordinary shares were allotted or issued

during the year to satisfy option exercises. Full details of

options exercised, the weighted average option exercise

price and the weighted average market price at the date of

exercise can be found in Note 22 “Share-based awards” of

the Financial Statements.

Rights attaching to shares

The company’s articles of association set out the rights and

obligations attaching to the company’s ordinary shares. All of

the ordinary shares rank equally in all respects. On a show of

hands, each member has the right to one vote at general

meetings of the company. On a poll, each member would be

entitled to one vote for every share held. The shares carry no

rights to fixed income. No person has any special rights of

control over the company’s share capital and all shares are

fully paid.

The articles of association and applicable legislation provide

that the company can decide to restrict the rights attaching

to ordinary shares in certain circumstances (such as the right

to attend or vote at a shareholders’ meeting), including

where a person has failed to comply with a notice issued by

the company under section 793 of the Companies Act 2006.

Restrictions on the transfer of shares

There are no specific restrictions on the transfer of the

company’s shares which are governed by the general

provisions of the articles of association and prevailing

legislation. The articles of association set out certain

circumstances in which the Directors of the company can

refuse to register a transfer of ordinary shares.

The company is not aware of any arrangements between its

shareholders that may result in restrictions on the transfer of

shares and/or voting rights.

Directors and employees of the group are required to comply

with applicable legislation relating to dealing in the

company’s shares as well as the company’s share dealing

rules. These rules restrict employees’ and Directors’ ability to

deal in ordinary shares at certain times, and require the

employee or Director to obtain permission prior to dealing.

Some of the group’s employee share plans also contain

restrictions on the transfer of shares held within those plans.

Purchase of own shares

Under section 724 of the Companies Act 2006, a company

may purchase its own shares to be held in treasury

(“Treasury Shares”).

The existing authority given to the company at the last AGM

to purchase Treasury Shares of up to 10% of its issued share

capital will expire at the conclusion of the next AGM.

The Board considers it would be appropriate to renew this

authority and intends to seek shareholder approval to

purchase Treasury Shares of up to 10% of its issued share

capital at the forthcoming AGM. Details of the resolution

renewing the authority will be included in the 2026 Notice of

AGM.

Awards under the company’s employee share plans have

historically been met from shares purchased in the market

(and held either in treasury or in the employee share trust),

however the company’s share hedging procedures are kept

under review.

During the year, the company did not make any market

purchases of Treasury Shares. It transferred 224,472 shares

out of treasury to satisfy share option awards, with an

aggregate nominal value of £56,118 and representing 0.15%

of the company's issued share capital, for a total

consideration of £634,049.36.

At 31 July 2026, the company held 1,345,294 Treasury

Shares with a nominal value of £0.34 million and

representing 0.88% of its issued share capital. The maximum

number of Treasury Shares held at any time during the year

was 1,569,766, with a nominal value of £0.39 million and

representing 1.03% of its issued share capital.

Significant shareholdings

The table below sets out details of the interests in voting

rights notified to the company under the provisions of the

FCA’s Disclosure Guidance and Transparency Rules ("DTR").

Information provided by the company pursuant to the DTR is

publicly available via the regulatory information services and

via the regulatory news feed on the company’s website. The

table reflects interests last notified to the company under

DTR 5 and may not represent current holdings.

FIL Limited

11.03%

15/4/2026

abrdn plc

8.45%

22/9/2025

Jupiter Fund

Management PLC

5.59%

17/1/2025

FMR LLC

5.08%

26/9/2025

Royal London

Asset Management

4.88%

4.88% 31/10/2024

Third Avenue

Management LLC

3.02%

22/4/2026

18 September 2026

Voting rights

31 July 2026

Voting rights

Date of

notification

Substantial shareholders do not have different voting rights

from those of other shareholders.

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Governance report

Financial statements

153

Employee Share Trust

Ocorian Trustees (Jersey) Limited is the trustee of the Close

Brothers Group Employee Share Trust, an independent trust

which holds shares for the benefit of employees and former

employees of the group. The trustee will only vote on those

shares in accordance with the instructions given to the

trustee and in accordance with the terms of the trust deed.

The trustee has agreed to satisfy a number of awards under

the employee share plans. As part of these arrangements the

company funds the trust from time to time, to enable the

trustee to acquire shares to satisfy these awards, details of

which are set out in Note 22 “Share-based awards” of the

Financial Statements. The trustee has waived its right to

dividends on all shares held within the trust. During the year,

the Close Brothers Group Employee Share Trust did not

make any market purchases of ordinary shares.

Significant agreements affected by a change

of control

A change of control of the company, following a takeover

bid, may cause a number of agreements to which the

company is a party to take effect, alter or terminate. These

include certain insurance policies, bank facility agreements

and employee share plan rules.

The group had committed facilities totalling £500 million at

31 July 2026 which contain clauses requiring lender consent

for any change of control. Should consent not be given, a

change of control would trigger mandatory repayment of

those facilities.

All of the company’s employee share plan rules contain

provisions relating to a change of control. Outstanding

awards and options may vest and become exercisable on a

change of control, subject, where applicable, to the

satisfaction of any performance conditions at that time and

pro-rating of awards.

Research and development activities

During the normal course of business, the group continues to

invest in new technology and systems and to develop new

products and services to improve operating efficiency and

strengthen its customer proposition.

Post balance sheet events

There were no material post balance sheet events.

Political donations

No political donations were made during the year (2025: £nil).

Branches

The company has no branches outside the UK.

Auditor

PricewaterhouseCoopers LLP (“PwC”) has expressed its

willingness to continue in office as the company’s external

auditor. Resolutions to reappoint PwC and to determine its

remuneration will be proposed at the forthcoming AGM. The

full text of the relevant resolutions will be set out in the 2026

Notice of AGM.

Following the conclusion of a formal audit tender process,

the Board has approved the proposed reappointment of

PwC as external auditor for another term, to take effect from,

and including, the financial year ending 31 July 2028. The

reappointment is subject to shareholder approval at the 2027

AGM. Further detail on the audit tender process can be

found on page 133.

Disclosure of information to the auditor

Each of the persons who are Directors at the date of

approval of this Annual Report confirms that: so far as the

Director is aware, there is no relevant audit information of

which the company’s auditor is unaware; and they have

taken all the reasonable steps that they ought to have taken

as a Director in order to make themselves aware of any

relevant audit information and to establish that the

company’s auditor is aware of that information.

This confirmation is given and should be interpreted in

accordance with the provisions of section 418 of the

Companies Act 2006.

The Directors’ Report has been approved by the Board and

signed by order of the Board by:

Sarah Peazer-Davies

Company Secretary

29 September 2026

Directors’ report continued

Close Brothers Group plc Annual Report 2026

154

Statement of Directors’ responsibilities in

respect of the Financial Statements

The Directors, whose names and functions are listed on

pages 108 to 110, are responsible for preparing the Annual

Report and the Financial Statements in accordance with

applicable law and regulation.

Company law requires the Directors to prepare Financial

Statements for each financial year. Under that law, the

Directors have prepared the group Financial Statements in

accordance with UK-adopted international accounting

standards and the company Financial Statements in

accordance with United Kingdom Generally Accepted

Accounting Practice (United Kingdom Accounting Standards,

comprising FRS 102 “The Financial Reporting Standard

applicable in the UK and Republic of Ireland”, and applicable

law).

Under company law, Directors must not approve the

Financial Statements unless they are satisfied that they give

a true and fair view of the state of affairs of the group and

company and of the profit or loss of the group and the

company for that period. In preparing the Financial

Statements, the Directors are required to:

• select suitable accounting policies and then apply them

consistently;

• state whether applicable UK-adopted international

accounting standards have been followed for the group

Financial Statements, and United Kingdom Accounting

Standards comprising FRS 102 have been followed for the

company Financial Statements, subject to any material

departures disclosed and explained in the Financial

Statements;

• make judgements and accounting estimates that are

reasonable and prudent; and

• prepare the group and company Financial Statements on

the going concern basis unless it is inappropriate to

presume that the group and company will continue in

business.

The Directors are responsible for safeguarding the assets of

the group and company and hence for taking reasonable

steps for the prevention and detection of fraud and other

irregularities.

The Directors are also responsible for keeping adequate

accounting records that are sufficient to show and explain

the group’s and company’s transactions and disclose with

reasonable accuracy at any time the financial position of the

group and company and enable them to ensure that the

Financial Statements and the Directors’ Remuneration

Report comply with the Companies Act 2006.

The Directors are responsible for the maintenance and

integrity of the corporate and financial information included

on the company’s website. Legislation in the United

Kingdom governing the preparation and dissemination of

Financial Statements may differ from legislation in other

jurisdictions.

Directors’ confirmations

Each of the current Directors, whose names and functions

are listed on pages 108 to 110, confirms that, to the best of

his or her knowledge:

• the group Financial Statements, which have been prepared

in accordance with UK-adopted international accounting

standards, give a true and fair view of the assets, liabilities,

financial position and profit or loss of the group;

• the company Financial Statements, which have been

prepared in accordance with United Kingdom Accounting

Standards comprising FRS 102, give a true and fair view of

the assets, liabilities, financial position and profit or loss of

the company;

• the Strategic Report, together with the Directors’ Report

and the Corporate Governance Report, includes a fair

review of the development and performance of the

business and the position of the group and company,

together with a description of the principal risks and

uncertainties that they face; and

• the Annual Report and Financial Statements, taken as a

whole, are fair, balanced and understandable and provide

the information necessary for shareholders to assess the

group’s and company’s position and performance,

business model and strategy.

Signed on behalf of the Board by:

Mike Morgan

Fiona McCarthy

Chief Executive

Group Chief Finance Officer

29 September 2026

Strategic report

Governance report

Financial statements

155

Opinion

In our opinion:

• Close Brothers Group plc’s group financial statements and company financial statements (the “financial statements”) give a

true and fair view of the state of the group’s and of the company’s affairs as at 31 July 2026 and of the group’s loss and the

group’s cash flows for the year then ended;

• the group financial statements have been properly prepared in accordance with UK-adopted international accounting

standards as applied in accordance with the provisions of the Companies Act 2006;

• the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard

applicable in the UK and Republic of Ireland”, and applicable law); and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report 2026 (the “Annual Report”), which comprise:

• the consolidated and company balance sheets as at 31 July 2026;

• the consolidated income statement for the year then ended;

• the consolidated statement of comprehensive income for the year then ended;

• the consolidated cash flow statement for the year then ended;

• the consolidated and company statement of changes in equity for the year then ended; and

• the notes to the financial statements, comprising material accounting policy information and other explanatory information.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our

responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements

section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our opinion.

Independence

We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the

financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and

we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not

provided.

Other than those disclosed in note 5, we have provided no non-audit services to the company or its controlled undertakings in

the period under audit.

Our audit approach

Overview

Audit scope

• The scope of our audit and the nature, timing and extent of audit procedures performed were determined by our risk

assessment, the financial significance of components and other qualitative factors (including history of misstatement through

fraud or error).

• We performed audit procedures over components considered to be significant due to risk or size comprising either full

scope audits or the audit of specific account balances.

• We performed other procedures including analytical review procedures to mitigate the risk of material misstatement in the

balances not subject to our other audit procedures.

Key audit matters

• Determination of expected credit losses ("ECL") on loans and advances to customers (group)

• Assessment of impairment in relation to valuation of non-financial assets held by the group in relation to the Cash Generating

Units ("CGUs") of Close Brothers Limited (group)

• Assessment of the provision in relation to the Financial Conduct Authority's (“FCA’s”) review of historical motor finance

commission arrangements (group)

• Impairment assessment of investments in subsidiaries (parent)

Materiality

• Overall group materiality: £7.1m (2025: £8.0m) based on 5% of 3-year average adjusted profit before tax ("PBT").

• Overall company materiality: £12.8m (2025: £12.5m) based on 1% of Total Assets.

• Performance materiality: £5.3m (2025: £6.0m) (group) and £9.6m (2025: £9.4m) (company).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial

statements.

Close Brothers Group plc Annual Report 2026

156

Independent auditors’ report to the members of Close Brothers Group plc

Report on the audit of the financial statements

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement (whether or

not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the

allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we

make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a

whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

Impairment assessment of investments in subsidiaries (parent) is a new key audit matter this year. Assessment of the going

concern basis of preparation, specifically in relation to capital (group and parent), which was a key audit matter last year, is no

longer included because of reduced uncertainty over potential capital impacts from motor commissions redress exposures and

given the Group's capital headroom and underlying profitability. Otherwise, the key audit matters below are consistent with last

year.

Key audit matter

How our audit addressed the key audit matter

Determination of expected credit losses ("ECL") on loans

and advances to customers (group)

As at 31 July 2026, the group has gross loans and advances

to customers held at amortised cost of £9,717m, with ECL

provisions of £264m held against them.

The determination of ECL provisions is inherently

judgemental and involves setting assumptions using forward

looking information reflecting the group’s view of potential

future economic events. This gives rise to increased

estimation uncertainty.

ECL provisions by their nature are uncertain, and plausible

fluctuations in the economy may impact the credit

performance of the lending book.

Models are used to collectively assess and determine ECL

allowances on loans and advances. We consider the

following elements of the determination of modelled ECL to

be significant:

• The application of forward-looking economic scenarios

used in the models and the weightings assigned to those

scenarios; and

• The Loss Given Default (“LGD”) component for the Asset

Finance and Leasing business, given that the LGD model

was developed over a period with more benign

macroeconomic conditions than the expected conditions

over the forecast period.

Judgement is also involved in determining the ECL provision

for individually assessed Property loans in default,

specifically on the cash flow assumptions under multiple

probability weighted scenarios.

Relevant disclosure references:

• Audited credit risk disclosures

• Note 2 - Critical accounting judgements and estimates

• Note 10 - Loans and advances to customers

With the support of our credit risk modelling specialists and

economics experts, we performed the following

procedures:

For collectively assessed ECL provisions:

• We understood and critically assessed the

appropriateness of the ECL accounting policy and model

methodologies used by management;

• We independently replicated ECL models for the Asset

Finance, Leasing, Motor Finance, Property and Invoice

businesses, using management’s model methodology and

assumptions and tested the input of critical data elements

into the ECL models;

• We tested model performance through review and

replication of key model monitoring tests. We assessed the

performance of key model elements, and considered if

they indicated that the models continued to perform

appropriately or if any post-model adjustments were

required;

• We critically assessed the reasonableness of

management’s selected economic scenarios and

associated scenario weightings, giving specific

consideration to current and future economic uncertainty.

We assessed their reasonableness against known or likely

economic events;

• We compared the severity and magnitude of the certain

assumptions used in base scenarios to external forecasts

and historic trends;

• We assessed whether the deviations of the downside

scenario assumptions from the base scenario are

reasonable and consistent with generally accepted

economic expectations;

• Based on our knowledge and understanding of the

limitations in management’s models and emerging industry

risks, we evaluated the completeness and sufficiency of

the post model adjustments proposed by management;

and

• We evaluated the LGD model performance for the Asset

Finance & Leasing business and the sufficiency of the

extent to which LGD is impacted by macroeconomic

factors.

Individually assessed provisions:

For a sample of individually assessed loans in default and

related ECL allowances in the Property business, we:

• Evaluated the basis on which the allowances were

determined and the evidence supporting the analysis

performed by management;

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Financial statements

157

Key audit matter

How our audit addressed the key audit matter

• Independently challenged whether the key assumptions

used, such as the recovery strategies, timing of the

expected future cash flows, collateral values and ranges of

potential outcomes were appropriate given the borrower's

circumstances; and

• Re-performed management's provision calculation and

critically assessed key inputs including expected future

cash flows, valuation of collateral held and the weightings

of collateral held and the weightings applied to scenario

outcomes.

We also tested and evaluated the reasonableness of relevant

disclosures made in the financial statements.

Assessment of impairment in relation to valuation of non-

financial assets held by the group in relation to the Cash

Generating Units ("CGUs") of Close Brothers Limited

(group)

The group’s non-financial assets comprise property, plant

and equipment and intangible assets, including goodwill. The

market value of the group was less than the net asset value

which indicated that the assets might be impaired. In

addition, IAS 36 Impairment of Assets ("IAS 36") requires

annual impairment assessment of the goodwill.

Management evaluated the above non-financial assets for

impairment and estimated the recoverable amounts of those

assets. Based on the ability to independently generate cash

flow, assets have been incorporated into CGUs and the

recoverable amount of each CGU has been determined.

Management estimated the recoverable amount using the

value in use ("ViU") and compared this amount for each CGU

with the imputed carrying value of the CGU (including the

goodwill associated with the CGU).

The methodology used to estimate the recoverable amount

is complex and dependent on various assumptions, both

short term and long term in nature. These assumptions,

which are subject to estimation uncertainty, are derived from

a combination of management’s judgement and market data.

There are methodology judgements required in determining

ViU compliance with IAS 36. The group’s strategic plan is

also supported by various assumptions relating to

compliance with regulatory capital requirements.

Management concluded that no impairment existed as at 31

July 2026.

The significant assumptions where we focused our audit

effort were those with greater levels of management

judgement and for which a reasonably possible change in

the assumption resulted in an impairment. These were the

loan book growth, cost assumptions, and discount rate

within the Motor Finance CGU.

Relevant disclosure references:

• Note 2 - Critical accounting judgements and estimates

• Note 13 - Intangible assets

• Note 14 – Property, plant and equipment

We evaluated and challenged management’s assessment in

the context of the requirements of IAS 36. Our work

included the following:

• We tested the mathematical integrity of the impairment

model and agreed the relevant inputs to the Board

approved strategic plan;

• With the support of our valuation and accounting

specialists, we evaluated management’s impairment

methodology with reference to IFRS requirements for a ViU

model. This included adjustments made to the cash flow

forecasts to comply with IAS 36;

• We engaged our valuation specialists in assessing the

reasonableness of the discount rate range determined by

management’s expert;

• We engaged our regulatory experts in assessing the

reasonableness of the risk weighted asset and capital

requirements included in management’s forecasts;

• We performed a look-back analysis comparing the cash

flow projections made in prior years to the actual results

achieved to assess the accuracy of the budgeting and

forecasting process;

• We critically assessed the reasonableness of the

assumptions underlying management’s cash flow

forecasts, in particular relating to loan book growth and

cost assumptions in the Motor Finance CGU. This included

inquiries with management, inspection of business plans,

evaluating external data for the UK motor finance market,

inflation forecasts, and considering other supporting

internal and external third-party evidence.

• We also tested and evaluated the reasonableness of

relevant disclosures made in the financial statements.

Independent auditors’ report to the members of Close Brothers Group plc continued

Close Brothers Group plc Annual Report 2026

158

Key audit matter

How our audit addressed the key audit matter

Assessment of the provision in relation to the FCA’s

review of historical motor finance commission

arrangements (group)

Refer to note 15 (Other assets and liabilities), where the

group has disclosed a provision of £318.5m in accordance

with IAS 37 Provisions, Contingent Liabilities and Contingent

Assets (“IAS 37”) in relation to the FCA review of the motor

commission arrangements.

The group’s provisioning approach reflects one scenario

only, being the FCA's policy statement. The policy

statement includes detailed guidance on how the scheme

should operate, albeit judgement in application is required

for certain fact patterns. Significant assumptions include an

estimated claim rate under the scheme of 75%, and an

estimated delivery cost of c.£63m. Disclosures are provided

including key judgements taken and sensitivity of the

provision to changes in assumptions.

There remains a high degree of estimation uncertainty in

determining the group’s best estimate. As a result, we

consider this a key audit matter.

Relevant disclosure references:

• Note 2 - Critical accounting judgements and estimates

• Note 15 - Other assets and liabilities

We evaluated and challenged management’s assessment in

the context of the requirements of IAS 37. Our work included

the following:

• We understood the risks facing the group in relation to this

matter and the status of the FCA’s proposed scheme;

• We examined relevant correspondence with, and made

inquiries of, the Group’s regulators;

• We reviewed relevant legal advice provided to the group,

and made additional inquiries where necessary;

• We evaluated the appropriateness of management’s

application of one scenario under IAS 37. We also

assessed the group’s approach to provisioning including

the calculation methodology, adoption of a single scenario

and assumptions used, in light of our industry experience;

• We reviewed the specific requirements of the FCA’s policy

statement and evaluated the application of these

requirements by management in their model;

• We tested the key data inputs and mathematical accuracy

of the model, including an independent recalculation of

expected redress payable for the c.720k UK regulated

motor finance loans qualifying for redress under the

scheme;

• We assessed the reasonableness of the key assumptions

within management’s model, including comparison of

management’s claim rate and expected delivery costs to

the FCA’s assumptions and other redress schemes

historically impacting the industry; and

• We assessed whether the disclosures in the financial

statements represent the facts and key sources of

estimation uncertainty.

Impairment assessment of investments in subsidiaries

(parent)

The parent company holds investments in subsidiaries

including its 100% shareholding in Close Brothers Holdings

Limited of £287m.

The parent company performed a review of the carrying

value of the investments in the subsidiaries for indicators of

impairment, in accordance with IAS 36. Indicators of

impairment were identified and an impairment assessment

performed to estimate the recoverable amount, using the

ViU. The ViU is supported by the dividend flows from the

parent company’s subsidiaries, with these dividends

generated from the underlying business operations of the

group.

We determined this area to be a key audit matter given the

primary function of the company is to act as a holding

company.

Relevant disclosure references:

• Note 25 - Investments in subsidiaries

We evaluated and challenged management’s assessment in

the context of the requirements of IAS 36. Our work

included the following:

• We evaluated management’s impairment methodology

with reference to IFRS requirements for a ViU model;

• We obtained evidence of Board approval of the three-year

plan and agreed these plans were appropriately reflected

in management’s model;

• We critically assessed the reasonableness of the key

assumptions underlying management’s forecasts within

the three-year plan;

• We assessed the reasonableness of the dividend payout

rates applied to the forecast profit or loss from the three-

year plan, and timeline which aligns to management’s

strategic plan and dividend policy;

• With the support of our internal experts, we evaluated the

appropriateness of the discount rate range determined by

management’s expert;

• We engaged our regulatory experts in assessing the

reasonableness of the risk weighted asset and capital

requirements included in management’s forecasts; and

• We compared the long term growth rate used to the UK

long term inflation rate.

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial

statements as a whole, taking into account the structure of the group and the company, the accounting processes and

controls, and the industry in which they operate.

We performed a risk assessment, giving consideration to relevant external and internal factors, including economic risks,

relevant accounting and regulatory developments, as well as the group’s strategy. We also considered our knowledge and

experience obtained in prior year audits. We continually assessed the risks and updated the scope of our audit where

necessary.

The group is structured into one (formerly two) primary component, being the Close Brothers Limited Group (also referred to as

the Bank). The sale of Winterflood Securities was completed during the year and the results of this business are now reflected

as Discontinued Operations in the consolidated financial statements. The consolidated financial statements are a consolidation

Strategic report

Governance report

Financial statements

159

of this primary component, and other, less significant components, including Winterflood Securities for the period it remained

part of the group. The Bank is a subgroup of Retail, Commercial and Property business segments.

Components which were considered to be significant due to risk or size in the context of the group’s consolidated financial

statements were considered full scope components. We considered the relative financial significance of other components in

relation to primary statement account balances. Our scoping also considered the presence of any significant audit risks and

other qualitative factors (including history of misstatements through fraud or error).

For our group audit, the Bank and the company are the only significant components due to risk or size. Additionally, we

performed full scope procedures over consolidation adjustments due to the nature of these balances. We performed other

procedures, including analytical review procedures, to mitigate the risk of material misstatement in the balances not subject to

our other audit procedures.

The impact of climate risk on our audit

As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the

Group’s financial statements, and we remained alert when performing our audit procedures for any indicators of the impact of

climate risk. As part of considering the impact of climate change in our risk assessment, we evaluated management's

assessment of the impact of climate risk, which is set out in the Sustainability Report, and their conclusion that there is no

material impact on the financial statements. In particular, we considered management’s assessment of the impact on ECL on

loans and advances to customers, being the financial statement line item we determined to be most likely to be impacted by

climate risk. Management’s assessment gave consideration to a number of matters, including the exposure of underlying

portfolios to transition risk. Management’s conclusion that there is no material impact is consistent with our audit findings.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.

These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and

extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of

misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall

materiality

£7.1m (2025: £8.0m).

£12.8m (2025: £12.5m).

How we

determined it

5% of 3-year average adjusted profit before tax ("PBT")

1% of Total Assets

Rationale for

benchmark

applied

PBT is a primary measure used by the shareholders in assessing the

performance of the group and is a generally accepted benchmark for

determining audit materiality. We have determined it appropriate to select

the 3-year average adjusted PBT from continuing operations as the most

appropriate benchmark given the trading performance and cost volatility

experienced in recent years across the group. We have used PBT from

continuing operations in both the current and prior years when calculating

the average, and removed the impact of certain adjusting items including

restructuring costs; provision in relation to early settlements in Motor

Finance; impairment of operating lease assets in Vehicle Hire and redress

costs, including motor finance commission costs.

We have selected total assets

as an appropriate benchmark

for company materiality, as it is

an investment holding

company, consistent with the

prior year.

Financial statements - group

Financial statements - company

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.

The materiality allocated to the Bank component and other centralised activities was £6.7m. This materiality was then further

disaggregated for work performed at sub-components of the Bank. Certain sub-components were audited to a local statutory

audit materiality that was also less than our overall group materiality.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and

undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of

our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in

determining sample sizes. Our performance materiality was 75% (2025: 75%) of overall materiality, amounting to £5.3m (2025:

£6.0m) for the group financial statements and £9.6m (2025: £9.4m) for the company financial statements.

In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment

and aggregation risk and the effectiveness of controls - and concluded that an amount towards the upper end of our normal

range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.4m

(group audit) (2025: £0.4m) and £0.4m (company audit) (2025: £0.4m) as well as misstatements below those amounts that, in

our view, warranted reporting for qualitative reasons.

Independent auditors’ report to the members of Close Brothers Group plc continued

Close Brothers Group plc Annual Report 2026

160

Conclusions relating to going concern

Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern

basis of accounting included:

• Understanding the Directors’ going concern assessment process, including the preparation and approval of the Board

approved forecast covering the period of the going concern assessment to December 2027. We evaluated the forecasting

method adopted by the Directors in assessing going concern, including considering a severe but plausible downside

scenario and sensitivities to that scenario;

• Evaluating management’s financial and regulatory capital forecasts. We checked the mathematical accuracy of relevant

forecasts and evaluated the key assumptions using our understanding of the group and external evidence where

appropriate. We used our Prudential Regulatory experts to consider the Bank's key risk weighted assets and forecast capital

requirement assumptions. We also considered historic budgeting accuracy;

• Evaluating the appropriateness of management’s severe but plausible scenario using our understanding of the group and the

external environment. Our evaluation included considering the capital capacity projected for the Bank and Group, and the

ability to absorb a severe but plausible outcome and the capacity to absorb losses and increases in risk weighted assets

beyond the impacts modelled;

• Considering management’s stress testing of liquidity. We substantiated the liquid resources held, and liquidity facilities

available to the group, for example, with the Bank of England. We also assessed the risks associated with credit rating

downgrades on the funding structure of the group and considered the group's funding strategy;

• Reviewing correspondence between the group and its regulators, with a focus on communications that may influence the

going concern assessment and highlight potential capital or liquidity concerns. During the audit, we met with the Prudential

Regulatory Authority (“PRA”) to gain an understanding of their views on the group’s risk profile and capital position; and

• Assessing the adequacy of disclosures in the Going Concern statement in the group’s consolidated and company’s

Financial Statements and within the related section of the Strategic Report.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,

individually or collectively, may cast significant doubt on the group's and the company’s ability to continue as a going concern

for a period of at least twelve months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and

the company's ability to continue as a going concern.

In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material

to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors

considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant

sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our

auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does

not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise

explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the

audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material

misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial

statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that

there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based

on these responsibilities.

With respect to the Strategic Report and Directors' Report, we also considered whether the disclosures required by the UK

Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions

and matters as described below.

Strategic Report and Directors' Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and

Directors' Report for the year ended 31 July 2026 is consistent with the financial statements and has been prepared in

accordance with applicable legal requirements.

In light of the knowledge and understanding of the group and company and their environment obtained in the course of the

audit, we did not identify any material misstatements in the Strategic Report and Directors' Report.

Directors' Remuneration

In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the

Companies Act 2006.

Strategic report

Governance report

Financial statements

161

Corporate governance statement

The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part

of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate

Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement

as other information are described in the Reporting on other information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate

governance statement, included within the Corporate Governance Report is materially consistent with the financial statements

and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:

• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging

risks and an explanation of how these are being managed or mitigated;

• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern

basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and company’s

ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;

• The directors’ explanation as to their assessment of the group's and company’s prospects, the period this assessment

covers and why the period is appropriate; and

• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in

operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing

attention to any necessary qualifications or assumptions.

Our review of the directors’ statement regarding the longer-term viability of the group and company was substantially less in

scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement;

checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and

considering whether the statement is consistent with the financial statements and our knowledge and understanding of the

group and company and their environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the

audit:

• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and

provides the information necessary for the members to assess the group’s and company's position, performance, business

model and strategy;

• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems;

and

• The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s

compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the

Listing Rules for review by the auditors.

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of directors’ responsibilities in respect of the Financial Statements, the directors are

responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied

that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to

enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic

alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or

in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with

our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to

which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and

regulations related to breaches of laws and regulations, principally those determined by the PRA and the FCA, and we

considered the extent to which non-compliance might have a material effect on the financial statements. We also considered

those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006, UK tax

legislation and the Listing Rules of the FCA.

Independent auditors’ report to the members of Close Brothers Group plc continued

Close Brothers Group plc Annual Report 2026

162

We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the

risk of override of controls), and determined that the principal risks were related to posting inappropriate manual journal entries

to manipulate financial performance, management bias in the application of judgements and assumptions in significant

accounting estimates and significant one-off or unusual transactions. Audit procedures performed by the engagement team

included:

• Enquiries with management, compliance, internal audit and those charged with governance including consideration of

known or suspected instances of non-compliance with laws and regulations and fraud;

• Evaluation of the completeness of matters which may impact financial reporting identified by management through the

Group's whistleblowing helpline and management's investigation of such matters;

• Evaluating assumptions and judgements made by management in their significant accounting estimates, in particular in

relation to the allowance for ECL, certain impairment assessments for non-financial assets and considering the provision in

relation to the FCA’s review of historical motor finance commission arrangements and other redress provisions;

• Identifying and testing higher risk journal entries;

• Incorporating unpredictability into the nature, timing and/or extent of our testing; and

• Reviewing key correspondence with the FCA and PRA in relation to compliance with regulatory requirements.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-

compliance with laws and regulations that are not closely related to events and transactions reflected in the financial

statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one

resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or

through collusion.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing

techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete

populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,

we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with

Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or

assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may

come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received

from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• the company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement

with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

We were first appointed by the company for the financial year ended 31 July 2018. Our uninterrupted engagement covers 9

financial years.

Other matter

The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these

financial statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R -

4.1.18R and filed on the National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no

assurance over whether the structured digital format annual financial report has been prepared in accordance with those

requirements.

Luke Hanson (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

29 September 2026

Strategic report

Governance report

Financial statements

163

Consolidated income statement

For the year ended 31 July 2026

Interest income

4 1,002.7 1,111.7

Interest expense

(464.2)

(542.9)

Net interest income

538.5

568.8

Fee and commission income

94.4

103.5

Fee and commission expense

(17.1)

(16.7)

Other income

101.3

118.5

Depreciation of operating lease assets and other direct costs

(66.1)

(84.6)

Impairment of operating lease assets

—

(30.0)

Non-interest income

112.5

90.7

Operating income

651.0

659.5

Provision in relation to motor finance commissions

(164.7)

(165.0)

Other motor finance commissions related costs, net of insurance recoveries

3.0

(18.7)

Provision in relation to early settlements in Motor Finance

—

(33.0)

Restructuring costs

(14.3)

(2.3)

Other administrative expenses

(443.5)

(470.1)

Total administrative expenses

(619.5)

(689.1)

Impairment losses on financial assets

(91.8)

(92.8)

Total operating expenses

(711.3)

(781.9)

Operating loss before tax

(60.3)

(122.4)

Tax

(5.1)

(4.7)

Loss after tax from continuing operations

(65.4)

(127.1)

Profit from discontinued operations, net of tax

2.0

49.2

Loss after tax

(63.4)

(77.9)

Attributable to

Shareholders

(85.7)

(100.2)

Other equity owners

22.3

(63.4)

(77.9)

From continuing operations

Basic earnings per share

(58.5) p

(99.8)p

Diluted earnings per share

(58.5) p

(99.8)p

From continuing and discontinued operations

Basic earnings per share

(57.1) p

(66.9)p

Diluted earnings per share

(57.1) p

(66.9)p

Interim dividend per share

—

Final dividend per share

—

Note

2026

£ million

2025

£ million

Close Brothers Group plc Annual Report 2026

164

Consolidated statement of comprehensive income

For the year ended 31 July 2026

Loss after tax

(63.4)

(77.9)

Items that may be reclassified to income statement

Currency translation (losses)/gains

(0.3)

0.5

Losses on cash flow hedging

(4.5)

(12.7)

Gains/(losses) on financial instruments classified at fair value through other comprehensive

income

2.3

(4.2)

Tax relating to items that may be reclassified

0.8

4.3

(1.7)

(12.1)

Items that will not be reclassified to income statement

Defined benefit pension scheme losses

—

(0.1)

Tax relating to items that will not be reclassified

—

(0.1)

Other comprehensive expense, net of tax

(1.7)

(12.2)

Total comprehensive loss

(65.1)

(90.1)

Attributable to

Shareholders

(87.4)

(112.4)

Other equity owners

22.3

(65.1)

(90.1)

Note

2026

£ million

2025

£ million

Strategic report

Governance report

Financial statements

165

Consolidated balance sheet

At 31 July 2026

Assets

Cash and balances at central banks

1,190.7 1,917.0

Loans and advances to banks

224.6

161.7

Loans and advances to customers

9,463.2 9,459.4

Debt securities

571.1

859.2

Derivative financial instruments

93.3

103.1

Intangible assets

155.0

166.3

Property, plant and equipment

165.4

209.4

Current tax assets

55.6

44.2

Deferred tax assets

27.9

31.0

Prepayments, accrued income and other assets

111.6

186.6

Assets classified as held for sale

—

934.0

Total assets

12,058.4 14,071.9

Liabilities

Deposits by banks

20.3

88.1

Deposits by customers

7,876.2 8,799.3

Loans and overdrafts from banks

0.9

1.5

Debt securities in issue

1,636.0 1,991.3

Derivative financial instruments

90.0

104.7

Provisions for liabilities and charges

364.4

210.3

Accruals, deferred income and other liabilities

169.2

172.3

Subordinated loan capital

249.8

195.5

Liabilities directly associated with assets classified as held for sale

—

773.4

Total liabilities

10,406.8 12,336.4

Equity

Called up share capital

38.0

Retained earnings

1,445.1 1,532.3

Other equity instrument

197.6

Other reserves

(29.1)

(32.4)

Total shareholders' and other equity owners' equity

1,651.6 1,735.5

Total equity

1,651.6 1,735.5

Total equity and liabilities

12,058.4 14,071.9

Note

31 July 2026

£ million

31 July 2025

£ million

The consolidated financial statements on pages 164 to 213 were approved and authorised for issue by the Board of Directors

on 29 September 2026 and signed on its behalf by:

Michael B. Morgan

Fiona McCarthy

Chief Executive

Group Chief Finance Officer

Registered number: 520241

Close Brothers Group plc Annual Report 2026

166

Consolidated statement of changes in equity

For the year ended 31 July 2026

At 1 August 2024

38.0 1,634.4

197.6

(5.3)

(33.8)

(1.4)

13.0

1,842.5 1,842.5

Loss for the year

—

(77.9)

—

(77.9)

Other comprehensive

(expense)/income

—

(0.1)

—

(3.0)

—

0.1

(9.2)

(12.2)

Total comprehensive

(expense)/income for the

year

—

(78.0)

—

(3.0)

—

0.1

(9.2)

(90.1)

Shares purchased

—

(1.6)

—

(1.6)

Shares released

—

9.2

—

9.2

Coupon paid on other

equity instrument (Note 18)

—

(22.3)

—

(22.3)

Other movements

—

(1.8)

—

(0.4)

—

(2.2)

At 31 July 2025

38.0 1,532.3

197.6

(8.3)

(26.6)

(1.3)

3.8

1,735.5 1,735.5

Loss for the year

—

(63.4)

—

(63.4)

Other comprehensive

income/(expense)

—

1.6

—

(0.1)

(3.2)

(1.7)

Total comprehensive

(expense)/income for the

year

—

(63.4)

—

1.6

—

(0.1)

(3.2)

(65.1)

Shares purchased

—

Shares released

—

4.2

—

4.2

Coupon paid on other

equity instrument (Note 18)

—

(22.3)

—

(22.3)

Other movements

—

(1.7)

—

0.8

—

(0.9)

Income tax

—

0.2

—

0.2

At 31 July 2026

38.0 1,445.1

197.6

(6.7)

(21.6)

(1.4)

0.6

1,651.6 1,651.6

Other reserves

Total

attributable to

shareholders

and other

equity owners

£ million

Total equity

£ million

Called up

capital

£ million

Retained

earnings

£ million

Other equity

instrument

£ million

FVOCI

reserve

£ million

Share-

based

payments

reserve

£ million

Exchange

movements

reserve

£ million

Cash flow

hedging

reserve

£ million

Strategic report

Governance report

Financial statements

167

Consolidated cash flow statement

For the year ended 31 July 2026

Net cash (outflow)/inflow from operating activities

23(a)

(804.7)

241.2

Net cash inflow/(outflow) from investing activities

Purchase of:

Property, plant and equipment

(2.9)

(5.3)

Intangible assets – software

(25.7)

(24.5)

Subsidiaries, net of cash acquired

23(b)

—

(0.5)

Sale of:

Equity shares held for investment

—

1.8

Subsidiaries, net of cash disposed

23(c)

122.5

104.0

93.9

75.5

Net cash (outflow)/inflow before financing activities

(710.8)

316.7

Financing activities

Purchase of own shares for employee share award schemes

—

(1.6)

Interest paid on subordinated loan capital and debt financing

(23.1)

(23.4)

Issuance of subordinated loan capital

248.9

—

Redemption of subordinated loan capital

(198.4)

—

Payment of lease liabilities

(7.2)

(12.1)

AT1 coupon payment

(22.3)

Net (decrease)/increase in cash

(712.9)

257.3

Cash and cash equivalents at beginning of year

2,101.8 1,844.5

Cash and cash equivalents at end of year

23(d) 1,388.9 2,101.8

Cash and cash equivalents per the balance sheet

1,388.9 2,046.8

Cash and cash equivalents within the assets of the disposal group classified as held for sale

—

55.0

1,388.9 2,101.8

Note

2026

£ million

2025

£ million

Close Brothers Group plc Annual Report 2026

168

Company balance sheet

At 31 July 2026

Fixed assets

Property, plant and equipment

5.3

6.5

Investment in subsidiaries

487.0

492.3

493.5

Current assets

Amounts owed by subsidiaries due within one year

407.5

420.8

Amounts owed by subsidiaries due after more than one year

249.0

199.7

Corporation tax receivable

0.1

5.9

Deferred tax asset

0.8

0.4

Other debtors

2.2

3.0

Cash at bank

0.1

4.8

659.7

634.6

Creditors: Amounts falling due within one year

Debt securities in issue

2.1

Subordinated loan capital

7.5

1.5

Provisions for liabilities and charges

0.2

Other creditors

0.6

1.5

Accruals

7.3

6.7

17.7

12.0

Net current assets

642.0

622.6

Total assets less current liabilities

1,134.3 1,116.1

Creditors: Amounts falling due after more than one year

Debt securities in issue

249.6

249.2

Subordinated loan capital

249.0

199.7

Provisions

0.7

0.8

Net assets

635.0

666.4

Capital and reserves

Called up share capital

38.0

Other equity instrument

200.0

Other reserves

(21.6)

(26.6)

Profit and loss account

418.6

455.0

Shareholders' and other equity owners' funds

635.0

666.4

Note

31 July 2026

£ million

31 July 2025

£ million

The company reported a loss for the financial year ended 31 July 2026 of £12.2 million (2025: £20.7 million loss).

The company financial statements were approved and authorised for issue by the Board of Directors on 29 September 2026

and signed on its behalf by:

Michael B. Morgan

Chief Executive

Fiona McCarthy

Group Chief Finance Officer

Strategic report

Governance report

Financial statements

169

Company statement of changes in equity

For the year ended 31 July 2026

At 1 August 2024

38.0

200.0

502.0

(33.8)

706.2

Loss for the year

—

(20.7)

—

(20.7)

Other comprehensive expense

—

(0.1)

—

(0.1)

Total comprehensive loss for the year

—

(20.8)

—

(20.8)

Dividends paid (Note 8)

—

Shares purchased

—

(1.6)

Shares released

—

9.2

Other equity instrument issued (Note 18)

—

Coupon paid on other equity instrument (Note 18)

—

(22.3)

—

(22.3)

Other movements

—

(3.9)

(0.4)

(4.3)

At 31 July 2025

38.0

200.0

455.0

(26.6)

666.4

Loss for the year

—

(12.2)

—

(12.2)

Other comprehensive income

—

Total comprehensive loss for the year

—

(12.2)

—

(12.2)

Dividends paid (Note 8)

—

Shares purchased

—

Shares released

—

4.2

Other equity instrument issued (Note 18)

—

Coupon paid on other equity instrument (Note 18)

—

(22.3)

—

(22.3)

Other movements

—

(1.9)

0.8

(1.1)

At 31 July 2026

38.0

200.0

418.6

(21.6)

635.0

Other reserves

Total

attributable to

shareholders

and other

equity owners

£ million

Share capital

£ million

Other equity

instrument

£ million

Profit and loss

account

£ million

Share-based

payments

reserve

£ million

Close Brothers Group plc Annual Report 2026

170

1. Material accounting policies

(a) Reporting entity

Close Brothers Group plc (“the company”), a public limited

company by shares incorporated and domiciled in the UK

(England), together with its subsidiaries (collectively, “the

group”), operates through three (2025: three) operating

segments: Commercial, Retail and Property, and is primarily

located within the UK.

(b) Basis of preparation

The consolidated financial statements have been prepared in

accordance with UK-adopted International Accounting

Standards (“IAS”) and with the requirements of the

Companies Act 2006 as applicable to companies reporting

under those standards.

The company financial statements have been prepared in

compliance with United Kingdom Accounting Standards,

including Financial Reporting Standard 102 “The Financial

Reporting Standard applicable in the United Kingdom and

the Republic of Ireland” (“FRS 102”) and the Companies Act

2006, under the provision of the Large and Medium-sized

Companies and Groups (Accounts and Financial

Instruments: Recognition and Measurement Reports)

Regulations 2008 (SI 2008/410).

As permitted by FRS 102, the company has chosen to adopt

IFRS 9 Financial Instruments where applicable and taken

advantage of the disclosure exemptions available under FRS

102 in relation to the presentation of a cash flow statement,

share-based payments and related party transactions. Where

required, equivalent disclosures are given in the consolidated

financial statements of the group. The company has also

taken advantage of the exemption in section 408 of the

Companies Act 2006 not to present its company income

statement and related notes.

Where relevant, the accounting policies of the company are

the same as those of the group set out in this note except for

(j) Leases. For the company, rental costs under operating

leases are charged to the income statement in equal

instalments over the period of the lease. Amounts owed by

subsidiaries due within one year on the company balance

sheet include cash held with Close Brothers Limited.

The consolidated and company financial statements have been

prepared on a going concern basis and under the historical cost

convention, except for financial assets and liabilities held at fair

value through profit or loss and financial assets held at fair value

through other comprehensive income. Further information on

going concern can be found within the Strategic Report.

Items relevant to understanding financial performance are

presented on the consolidated income statement under IAS

Standards adopted during the year

The accounting standards applied this financial year are

consistent with those of the previous financial year.

Future accounting developments

Amendments to the Classification and Measurement of

Financial Instruments, which amend IFRS 9 "Financial

Instruments" and IFRS 7 "Financial Instruments: Disclosures",

are effective for the group from 1 August 2026. These

amendments clarify certain classification and measurement

and related disclosure requirements and are expected to

have an immaterial impact on the group.

IFRS 18 "Presentation and Disclosure in Financial

Statements" is effective for the group from 1 August 2027

and the impact is currently under assessment.

(d) Consolidation and investment in subsidiaries

Subsidiaries

Subsidiaries are all entities over which the group has control.

The group controls an entity when it is exposed to, or has

rights to, variable returns from its involvement with the entity

and has the ability to affect those returns through its power

over the entity. Such power generally accompanies a

shareholding of more than one half of the voting rights.

Subsidiaries are fully consolidated from the date on which

the group effectively obtains control. They are de-

consolidated from the date that control ceases.

The acquisition method of accounting is used to account for

the acquisition of subsidiaries. Under the acquisition method

of accounting, with some limited exceptions, the assets,

liabilities and contingent liabilities of a subsidiary are

measured at their fair values at the date of acquisition. Any

non-controlling interest is measured either at fair value or at

the non-controlling interest’s proportion of the net assets

acquired. Acquisition-related costs are accounted for as

expenses when incurred, unless directly related to the issue of

debt or equity securities. Any excess of the cost of acquisition

over net assets is capitalised as goodwill. All intra-group

balances, transactions, income and expenses are eliminated.

The company’s investment in its subsidiary is valued at cost

less any accumulated impairment losses.

(e) Foreign currency translation

For the company and those subsidiaries whose balance

sheets are denominated in sterling, which is the company’s

functional and presentation currency, monetary assets and

liabilities denominated in foreign currencies are translated

into sterling at the closing rates of exchange at the balance

sheet date. Foreign currency transactions are translated into

sterling at the average rates of exchange at the date of the

transaction and exchange differences arising are taken to the

consolidated income statement.

The balance sheets of subsidiaries denominated in foreign

currencies are translated into sterling at the closing rates.

The income statements for these subsidiaries are translated

at the average rates and exchange differences arising are

taken to equity. Such exchange differences are reclassified

to the consolidated income statement in the period in which

the subsidiary is disposed of.

(f) Revenue recognition

Interest income

Interest on loans and advances made by the group, and fee

income and expense and other direct costs relating to loan

origination, restructuring or commitments, are recognised in

the consolidated income statement using the effective

interest rate method.

The effective interest rate method applies a rate that

discounts estimated future cash payments or receipts over

the expected life of a financial instrument to the gross

carrying amount of a financial asset or to the amortised cost

of a financial liability. The cash flows take into account all

contractual terms of the financial instrument including

transaction costs and all other premiums or discounts but

not future credit losses. Interest income is recognised on a

contractual basis where it is not possible to reliably estimate

the cash flows or expected life of a financial instrument.

Strategic report

Governance report

Financial statements

171

The Notes

Fees and commissions

Where fees that have not been included within the effective

interest rate method are earned on the execution of a

significant act at a point in time, such as fees arising from

invoice discounting and factoring services, or negotiating or

arranging a transaction for a third party, they are recognised

as revenue when that act has been completed and the

performance obligation has been met. Fees and

corresponding expenses in respect of other services are

recognised in the consolidated income statement as the right

to consideration or payment accrues over time when

services are performed and obligations are met. To the

extent that fees and commissions are recognised in advance

of billing they are included as accrued income or expense.

Dividends

Dividend income is recognised when the right to receive

payment is established.

(g) Adjusted measures

Adjusted measures are management measures presented on

a basis consistent with prior periods and exclude adjusting

items which do not reflect underlying trading performance

and which may be recurring. Adjusted measures also

exclude exceptional items.

Adjusting items this year comprise:

• provision in relation to motor finance commissions;

• other motor finance commissions related costs, net of

insurance recoveries;

• discount unwind in relation to the provisions for motor

finance commissions and early settlements in Motor

Finance;

• provision in relation to early settlements in Motor Finance;

• gain on disposal of Close Brewery Rentals Limited;

• restructuring costs;

• amortisation of intangible assets on acquisition;

• operating profit/(loss) of Close Brewery Rentals Limited;

and

• operating profit/(loss) of Close Brothers Vehicle Hire.

Amortisation of intangible assets on acquisition is excluded

to present the performance of the group’s acquired

businesses consistent with its other businesses. The other

adjusting items do not reflect underlying trading

performance.

Exceptional items are income and expense items that are

material by size and/or nature and are non-recurring.

(h) Financial assets and liabilities (excluding

derivatives)

Classification and measurement

Financial assets are classified at initial recognition on the

basis of the business model within which they are managed

and their contractual cash flow characteristics. The

classification categories are amortised cost, fair value

through other comprehensive income (“FVOCI”) and fair

value through profit or loss (“FVTPL”).

Financial assets that are held to collect contractual cash

flows where those cash flows represent solely payments of

principal and interest are measured at amortised cost. Initial

recognition is at fair value plus directly attributable

transaction costs. Interest income is accounted for using the

effective interest rate method.

Financial assets that are held to collect contractual cash

flows and for subsequent sale, where the assets’ cash flows

represent solely payments of principal and interest, are

classified at FVOCI. Directly attributable transaction costs

are added to the initial fair value. Gains and losses are

recognised in other comprehensive income, except for

impairment gains and losses, until the financial asset is either

sold or matures, at which time the cumulative gain or loss is

recognised in the income statement. Impairment gains and

losses are recognised in the income statement.

Financial assets are classified at FVTPL where they do not

meet the criteria to be measured at amortised cost or FVOCI

or where they are designated at FVTPL to reduce an

accounting mismatch. Financial assets at FVTPL are

recognised at fair value. Transaction costs are immediately

recognised in profit or loss on initial recognition. Gains and

losses that subsequently arise on changes in fair value are

recognised in the income statement.

Financial liabilities are classified at initial recognition at

amortised cost except for the following instruments which

are classified at FVTPL: derivatives; financial liabilities held

for trading; and financial liabilities designated as FVTPL to

eliminate an accounting mismatch.

Financial liabilities at amortised cost are measured at fair

value less directly attributable transaction costs on initial

recognition. Interest expense is accounted for using the

effective interest rate method. Financial liabilities at FVTPL

are measured at fair value on initial recognition. Transaction

costs are immediately recognised in profit or loss on initial

recognition. Subsequent changes in fair value are recognised

in the income statement except for financial liabilities

designated at FVTPL; changes in fair value attributable to

changes in credit risk are recognised in other comprehensive

income.

The fair values of quoted financial assets or financial

liabilities in active markets are based on bid or offer prices. If

the market for a financial asset or financial liability is not

active, or they relate to unlisted securities, the group

establishes fair value by using valuation techniques. These

include the use of recent arm’s length transactions,

discounted cash flow analysis and other valuation

techniques commonly used by market participants.

Derecognition

Financial assets are derecognised when the contractual

rights to receive cash flows from the financial assets have

expired or where the group has transferred the contractual

rights to receive cash flows and transferred substantially all

risks and rewards of ownership. If substantially all the risks

and rewards have been neither retained nor transferred the

assets continue to be recognised to the extent of the group’s

continuing involvement. Financial liabilities are derecognised

when they are extinguished.

Modifications

The terms or cash flows of a financial asset or liability may

be modified due to renegotiation or otherwise. If the terms or

cash flows are substantially different to the original, then the

financial asset or liability is derecognised and a new financial

asset or liability is recognised at fair value. If the terms or

cash flows are not substantially different to the original, then

the financial asset or liability carrying value is adjusted to

reflect the present value of modified cash flows discounted

at the original EIR. The adjustment is recognised within

income on the income statement.

The Notes continued

Close Brothers Group plc Annual Report 2026

172

1. Material accounting policies (continued)

(i) Impairment of financial assets

Expected credit losses

In accordance with IFRS 9, expected credit losses (“ECL”)

are recognised for loans and advances to customers and

banks, other financial assets held at amortised cost, financial

assets measured at FVOCI, loan commitments and financial

guarantee contracts. The impairment charge in the income

statement includes the change in expected credit losses.

At initial recognition, financial assets are considered to be in

Stage 1 and a provision is recognised for 12 months of

expected credit losses. If a significant increase in credit risk

since initial recognition occurs, these financial assets are

considered to be in Stage 2 and a provision is made for the

lifetime expected credit losses. As a backstop, all financial

assets 30 days past due are considered to have experienced

a significant increase in credit risk and are transferred to

Stage 2.

A financial asset will remain classified as Stage 2 until the

credit risk has improved and it can be returned to Stage 1 or

until it deteriorates such that it meets the criteria to move to

Stage 3.

Where a financial asset no longer represents a significant

increase in credit risk since origination it can move from

Stage 2 back to Stage 1. As a minimum this means that all

payments must be up to date, the quantitative probability of

default assessment trigger is no longer met, and the account

is not evidencing qualitative assessment triggers.

When objective evidence exists that a financial asset is credit

impaired, such as the occurrence of a credit default event or

identification of an unlikeliness to pay indicator, the financial

asset is considered to be in Stage 3. As a backstop, all

financial assets 90 days or more past due are considered to

be credit impaired and transferred to Stage 3.

Cure definitions are in operation where certain financial

assets in Stage 3 can move back to Stage 2, subject to

Stage 3 indicators no longer being in effect, and meeting the

appropriate cure period.

In all circumstances, loans and advances to customers are

written off against the related provisions when there are no

reasonable expectations of further recovery. This is typically

following realisation of all associated collateral and available

recovery actions against the customer. Subsequent

recoveries of amounts previously written off decrease the

amount of impairment losses recorded in the income

statement.

The calculation of expected credit losses for loans and

advances to customers, either on a 12-month or lifetime

basis, is based on the probability of default (“PD”), the

exposure at default (“EAD”) and the loss given default

(“LGD”), and includes forward-looking macroeconomic

information where appropriate. Further information on this

calculation methodology can be found on page 82 in the

“Use of estimates” section of the Risk Report.

The calculation of expected credit losses for some loan

portfolios and receivables relating to operating lease assets

is based on a simplified lifetime only expected credit loss

approach. Under the simplified approach, stage

classification represents management’s internal assessment

of credit risk.

Expected credit losses are assessed against actual loss

experience via a series of provision adequacy reviews. These

reviews also incorporate management judgement to ensure

that our ECL coverage ratios remain appropriate.

(j) Leases

Lessor

A finance lease is a lease or hire purchase contract that

transfers substantially all the risks and rewards incidental to

ownership of an asset to the lessee. Finance leases are

recognised as loans at an amount equal to the gross

investment in the lease, which comprises the lease payments

receivable and any unguaranteed residual value, discounted

at its implicit interest rate. Finance charges on finance leases

are taken to income in proportion to the net funds invested.

An operating lease is a lease that does not transfer

substantially all the risks and rewards incidental to ownership

of an asset to the lessee. Rental income from operating

leases is recognised in equal instalments over the period of

the leases and included in other income in the consolidated

income statement.

Lessee

A lease liability and right of use asset are recognised on the

balance sheet at the lease commencement date. The lease

liability is measured at the present value of future lease

payments. The discount rate is the rate implicit in the lease,

or if that cannot be determined, the group’s incremental

borrowing rate appropriate for the right of use asset. The

right of use asset is measured at cost, comprising the initial

lease liability, payments made at or before the

commencement date less lease incentives received, initial

direct costs, and estimated costs of restoring the underlying

asset to the condition required by the lease.

Lease payments are allocated between the liability and

finance cost. The finance cost relating to the lease liability is

charged to the consolidated income statement over the lease

term. The right of use asset is depreciated over the shorter of

the asset’s useful life and the lease term on a straight-line

basis.

As set out in Note 1(b), the company has a different

accounting policy for leases under FRS 102. Rental costs

under operating leases are charged to the income statement

in equal instalments over the period of the lease.

(k) Sale and repurchase agreements and other

secured lending and borrowings

Securities may be sold subject to a commitment to

repurchase them. Such securities are retained on the

consolidated balance sheet when substantially all the risks

and rewards of ownership remain with the group. The

transactions are treated as collateralised borrowing and the

counterparty liability is included within loans and overdrafts

from banks. Similar secured borrowing transactions,

including securities lending transactions and collateralised

short-term notes, are treated and presented in the same

way. These secured financing transactions are initially

recognised at fair value, and subsequently valued at

amortised cost, using the effective interest rate method.

(l) Securitisation transactions

The group securitises its own financial assets via the sale of

these assets to special purpose entities, which in turn issue

securities to investors. All financial assets continue to be

held on the group’s consolidated balance sheet together

with debt securities in issue recognised for the funding.

The group has a forward flow arrangement with a third party.

In this arrangement, financial assets were originated and

recognised on the balance sheet and simultaneously

derecognised on sale of the assets.

See Note 1(h) for the derecognition accounting policy.

Strategic report

Governance report

Financial statements

173

(m) Offsetting financial instruments

Financial assets and financial liabilities are offset and the net

amount presented on the consolidated balance sheet if there

is a legally enforceable right to set off the recognised

amounts and there is an intention to settle on a net basis, or

to realise an asset and settle the liability simultaneously.

(n) Derivatives and hedge accounting

On adoption of IFRS 9 Financial Instruments in 2018, the

group elected to continue applying hedge accounting under

IAS 39: Financial Instruments: Recognition and

Measurement.

In general, derivatives are used to minimise the impact of

interest rate and currency exchange rate movements on the

group’s financial instruments. They are carried on the

consolidated balance sheet at fair value which is obtained

from quoted market prices in active markets, including

recent market transactions and discounted cash flow

models.

On acquisition, certain derivatives are designated as a hedge

and the group formally documents the relationship between

these derivatives and the hedged item. The group also

documents its assessment, both at hedge inception and on

an ongoing basis, of whether the derivative is highly effective

in offsetting changes in fair values or cash flows of hedged

items. If a hedge was deemed partially ineffective but

continues to qualify for hedge accounting, the amount of the

ineffectiveness, taking into account the timing of the

expected cash flows where relevant, would be recorded in

the consolidated income statement. If the hedge is not, or

has ceased to be highly effective, the group discontinues

hedge accounting.

For fair value hedges, changes in the fair value are

recognised in the consolidated income statement, together

with changes in the fair value of the hedged item. For cash

flow hedges, the fair value gain or loss associated with the

effective proportion of the cash flow hedge is recognised

initially directly in equity and recycled to the consolidated

income statement in the period when the hedged item

affects income.

(o) Intangible assets

Computer software (acquired and costs associated with

development) and intangible assets on acquisition (excluding

goodwill) are stated at cost less accumulated amortisation

and provisions for impairment which are reviewed at least

annually. Amortisation is calculated to write off their cost on

a straight-line basis over the estimated useful lives as

follows:

Computer software

3 to 10 years

Intangible assets on acquisition

17 years

Goodwill on acquisitions of subsidiaries is included in

intangible assets. Goodwill is assessed annually for

impairment and carried at cost less any accumulated

impairment.

(p) Property, plant and equipment

Property, plant and equipment is stated at cost less

accumulated depreciation and provisions for impairment

which are reviewed at least annually. Depreciation is

calculated to write off their cost on a straight-line basis over

their estimated useful lives as follows:

Short leasehold property

Over the length of the lease

Fixtures, fittings and

equipment

3 to 5 years

Assets held under operating

leases

1 to 20 years

Motor vehicles

1 to 5 years

(q) Share capital and other equity

Share issue costs

Incremental costs directly attributable to the issue of new

shares or options, including those issued on the acquisition

of a business, are shown in equity as a deduction, net of tax,

from the proceeds.

Dividends on ordinary shares

Dividends on ordinary shares are recognised in equity in the

period in which they are paid or, if earlier, approved by

shareholders.

Treasury shares

Where the company or any member of the group purchases

the company’s share capital, the consideration paid is

deducted from shareholders’ equity as Treasury shares until

they are cancelled. Where such shares are subsequently sold

or reissued, any consideration received is included in

shareholders’ equity.

Other equity

Financial instruments are classified as equity when there is

no contractual obligation to deliver cash, another financial

asset, or a variable number of the group’s own equity

instruments to another entity. The instrument is measured at

cost less transaction costs and distributions are recognised

as a deduction from retained earnings when they become

irrevocable.

(r) Employee benefits

The group operates a defined contribution pension scheme

for eligible employees as well as a defined benefit pension

scheme which is closed to new members and further

accrual.

Under the defined contribution scheme the group pays fixed

contributions into a fund separate from the group’s assets.

Contributions are charged in the consolidated income

statement when they become payable.

The expected cost of providing pensions within the funded

defined benefit scheme, determined on the basis of annual

valuations using the projected unit method, is charged to the

consolidated income statement. Actuarial gains and losses

are recognised in full in the period in which they occur and

recognised in other comprehensive income.

The retirement benefit obligation recognised in the balance

sheet represents the present value of the defined benefit

obligation, as adjusted for unrecognised past service cost,

and as reduced by the fair value of scheme assets at the

balance sheet date. Both the return on investment expected

in the period and the expected financing cost of the liability,

as estimated at the beginning of the period, are recognised

in the results for the period. Any variances against these

estimates in the year form part of the actuarial gain or loss.

The assets of the scheme are held separately from those of

the group in an independently managed fund.

The Notes continued

Close Brothers Group plc Annual Report 2026

174

1. Material accounting policies (continued)

The scheme entered into a buy-in transaction with an

insurance company covering all members of the scheme. A

buy-in is a bulk annuity policy that matches the scheme’s

assets and liabilities. The pension surplus on the group’s

balance sheet relates to the cash held by the scheme with

the fair value of the insurance policy matched to the fair

value of the scheme’s liabilities, which remains subject to

changes in actuarial valuations.

(s) Share-based payments to employees

The group operates three (2025: three) share-based award

schemes: the Deferred Share Awards (“DSA”) scheme, the

Long Term Incentive Plan (“LTIP”), and the HMRC approved

Save As You Earn (“SAYE”) scheme.

The value of the DSA at the grant date is charged to the

group’s consolidated income statement in the year to which

the award relates.

The costs of LTIP and SAYE are based on the fair value of

awards on the date of grant. Fair values of share-based

awards are determined using the Black-Scholes pricing

model, with the exception of fair values for market-based

performance conditions, which are determined using Monte

Carlo simulation. Both models take into account the exercise

price of the option, the current share price, the risk-free

interest rate, the expected volatility of the company’s

historical share price over the life of the option award and

other relevant factors. For non-market-based performance

conditions, vesting conditions are not taken into account

when measuring fair value, but are reflected by adjusting the

number of shares in each award such that the amount

recognised reflects the number that are expected to, and

then actually do, vest. The fair value is expensed in the

consolidated income statement on a straight-line basis over

the vesting period, with a corresponding credit to the share-

based payments reserve. At the end of the vesting period, or

upon exercise, lapse or forfeit if earlier, this credit is

transferred to retained earnings. Further information on the

group’s schemes is provided in Note 22 and in the Directors’

Remuneration Report.

(t) Provisions and contingent liabilities

Provisions are recognised in respect of present obligations

arising from past events where it is probable that outflows of

resources will be required to settle the obligations and they

can be reliably estimated. Provisions include costs directly

attributable to the settlement of obligations.

Contingent liabilities are possible obligations whose

existence depends on the outcome of uncertain future

events or those present obligations where the outflows of

resources are uncertain or cannot be measured reliably.

Contingent liabilities are not recognised in the financial

statements but are disclosed unless they are deemed

remote.

(u) Taxes, including deferred taxes

Current tax is the expected tax payable on the taxable profit

for the year. Taxable profit differs from net profit as reported

in the consolidated income statement because it excludes

items of income and expense that are taxable or deductible

in other years and items that are never taxable or deductible.

The group’s liability for current tax is calculated using tax

rates that have been enacted or substantively enacted by the

balance sheet date.

To enable the tax charge to be based on the profit for the

year, deferred tax is provided in full on temporary timing

differences, at the rates of tax expected to apply when these

differences crystallise. Deferred tax assets are recognised

only to the extent that it is probable that sufficient taxable

profits will be available against which temporary differences

can be set. Deferred tax liabilities are offset against deferred

tax assets when there is both a legal right to set off and an

intention to settle on a net basis.

(v) Cash and cash equivalents

For the purposes of the cash ﬂow statement, cash and cash

equivalents comprises cash and demand deposits with

banks, together with short-term highly liquid investments that

are readily convertible to known amounts of cash.

(w) Segmental reporting

Operating segments are reported in a manner consistent

with the internal reporting provided to the Executive

Committee, which is considered the group’s chief operating

decision-maker. All transactions between business segments

are conducted on an arm’s length basis, with intra-segment

revenue and costs being eliminated on consolidation.

Income and expenses directly associated with each segment

are included in determining business segment performance.

(x) Discontinued operations

The results of discontinued operations are shown as:

• a single amount on the face of the consolidated income

statement comprising the post-tax profit or loss of

discontinued operations; and

• post-tax gain or loss recognised either on measurement to

fair value less costs to sell or on the disposal of the

discontinued operation.

A discontinued operation is a cash generating unit (“CGU”)

or a group of CGUs that either has been disposed of, or is

classified as held for sale, and represents a separate major

line of business or geographical area of operations, is part of

a single coordinated plan to dispose of a separate major line

of business or geographical area of operations or is a

subsidiary acquired exclusively with a view to resale.

Intercompany transactions between continuing and

discontinued operations have been eliminated on

consolidation in the consolidated income statement.

The following accounting policies relate only to discontinued

operations:

Gains less losses arising from dealing in securities

Non-interest income includes net realised and unrealised

gains arising from the buying and selling of securities and

from positions held in securities, including related interest

income and dividends.

(y) Held for sale disposal groups

Disposal groups are classified as held for sale when their

carrying amounts will be recovered principally through a sale

rather than continuing use, and the sale is highly probable

within 12 months. They are measured at the lower of carrying

amount and fair value less costs to sell, with impairment

losses, as needed, recognised in the income statement on

initial classification and subsequent remeasurement.

Financial assets and liabilities within a disposal group

continue to be measured under IFRS 9.

The following accounting policies relate only to held for sale

disposal groups:

Settlement accounts

Settlement balance debtors and creditors are the amounts

due to and from counterparties in respect of the group’s

market-making activities and are measured at fair value on

initial recognition and carried at amortised cost. The

balances are short term in nature, do not earn interest and

are recorded at the amount receivable or payable.

Strategic report

Governance report

Financial statements

175

Loans to and from money brokers against stock

advanced

Loans to money brokers against stock advanced is the cash

collateral provided to these institutions for stock borrowing

by the group’s market-making activities and is measured at

fair value on initial recognition and carried at amortised cost.

Interest is paid on the stock borrowed and earned on the

cash deposits advanced. The stock borrowing to which the

cash deposits relate is short term in nature and is recorded

at the amount receivable. Loans from money brokers against

stock collateral provided are recorded at the amount

payable. Interest is paid on the loans.

2. Critical accounting judgements and

estimates

The reported results of the group are sensitive to the

judgements, estimates and assumptions that underlie the

application of its accounting policies and preparation of its

financial statements. UK company law and IFRS require the

Directors, in preparing the group’s financial statements, to

select suitable accounting policies, apply them consistently

and make judgements, estimates and assumptions that are

reasonable.

The group’s estimates and assumptions are based on

historical experience and reasonable expectations of future

events and are reviewed on an ongoing basis. Actual results

in the future may differ from the amounts estimated due to

the inherent uncertainty.

The group’s critical accounting judgements, made in

applying its accounting policies as described in Note 1, and

the key sources of estimation uncertainty that may have a

significant risk of causing a material adjustment within the

next financial year, are set out below. There are no critical

accounting judgements or key sources of estimation

uncertainty relating to the company.

The impact of climate change on the group’s judgements,

estimates and assumptions has been considered in

preparing these financial statements. While no material

impact has been identified, climate risk continues to be

monitored on an ongoing basis as set out in the Risk Report.

Critical accounting judgements

The critical accounting judgements of the group, which relate

to expected credit loss provisions under IFRS 9 and motor

finance commissions, are as follows. These were also critical

accounting judgements in the prior year albeit the judgement

relating to motor finance commissions has been updated in

line with the latest developments:

• establishing the criteria for a significant increase in credit

risk;

• determining the appropriate definition of default; and

• determining the affected customers in the motor finance

commissions provisioning assessment and applying a

single, best estimate scenario rather than a probability

weighted multi-scenario approach.

Further information on the first two judgements can be found

in the “Use of judgements” section in the Risk Report, while

further information on the third judgement can be found in

Note 15.

Key sources of estimation uncertainty

The key sources of estimation uncertainty of the group,

which relate to expected credit loss provisions, value in use

calculations, and motor finance commissions, are as follows.

These were also sources of estimation uncertainty in the

prior year except the estimates relating to individually

assessed expected credit loss provisions. In addition, the

estimates relating to motor finance commissions have been

updated in line with the latest developments:

• forward-looking macroeconomic information incorporated

into expected credit loss models;

• adjustments by management to model calculated

expected credit losses due to limitations in the group's

expected credit loss models or input data, which may be

identified through ongoing model monitoring and validation

of models;

• expected credit loss provisions assessed on an individual,

rather than collective, basis, with assumptions made in

relation to the timing and value of future cash flows under

multiple probability-weighted scenarios;

• estimate of future cash flow forecasts in the calculation of

value in use for the testing of goodwill and other non-

financial assets for impairment in relation to the group's

cash generating units, in particular Motor Finance and

Asset Finance and Leasing;

• estimates of the expected rental incomes and disposal

values in the calculation of value in use for the operating

lease assets of Close Brothers Vehicle Hire; and

• estimates and assumptions applied in the calculation of

the provision relating to motor finance commissions. These

assumptions are customer claim rates and the costs to

administer the scheme. Claim rate is defined as the

estimated cost of customer remediation (based on

customer engagement with redress invitation) as a

percentage of the estimated cost of the eligible in-scope

population.

Additional disclosures on the estimation uncertainty relating

to forward-looking macroeconomic information, model

adjustments, individually assessed expected credit loss

provisions, operating lease assets, goodwill and motor

finance commissions can be found in the Risk Report (“Use

of estimates” and “Use of Adjustments” sections), Note 13,

Note 14 and Note 15 respectively.

The Notes continued

Close Brothers Group plc Annual Report 2026

176

3. Segmental analysis

The Directors manage the group by class of business and present the segmental analysis on that basis. The group’s activities

are presented in three (2025: three) operating segments: Commercial, Retail and Property.

In the segmental reporting information that follows, Group consists of central functions as well as various non-trading head

office companies and consolidation adjustments and is set out in order that the information presented reconciles to the

consolidated income statement. The Group balance sheet primarily includes treasury assets and liabilities comprising cash and

balances at central banks, debt securities, customer deposits and other borrowings.

Businesses continue to charge market prices for the limited services rendered to other parts of the group. Funding charges

allocated to the segments take into account commercial demands. More than 90% of the group’s activities, revenue and

assets are located in the UK.

Summary income statement for the

year ended 31 July 2026

Net interest income/(expense)

233.4

197.2

116.6

(8.7)

538.5

—

538.5

Other non-interest income

93.7

17.2

1.1

0.5

112.5

—

112.5

Operating income/(expense)

327.1

214.4

117.7

(8.2)

651.0

—

651.0

Provision in relation to motor finance

commissions

—

(164.7)

—

(164.7)

—

(164.7)

Other motor finance commissions related

costs, net of insurance recoveries

—

3.0

—

3.0

—

3.0

Restructuring costs

(7.2)

(5.6)

(1.4)

(0.1)

(14.3)

—

(14.3)

Other administrative expenses

(177.8)

(161.2)

(29.7)

(25.9)

(394.6)

—

(394.6)

Depreciation and amortisation

(23.8)

(18.8)

(3.4)

(2.9)

(48.9)

—

(48.9)

Impairment losses on financial assets

(27.0)

(29.2)

(35.6)

—

(91.8)

—

(91.8)

Total operating expenses

(235.8)

(376.5)

(70.1)

(28.9)

(711.3)

—

(711.3)

Operating profit/(loss) before tax from

continuing operations

91.3

(162.1)

47.6

(37.1)

(60.3)

—

(60.3)

Operating profit before tax from

discontinued operations

—

2.6

External operating income/(expense)

327.9

228.2

122.4

(27.5)

651.0

—

651.0

Inter segment operating (expense)/

income

(0.8)

(13.8)

(4.7)

19.3

—

Segment operating income/(expense)

327.1

214.4

117.7

(8.2)

651.0

—

651.0

Commercial

£ million

Retail

£ million

Property

£ million

Group

£ million

Continuing

operations

£ million

Discontinued

operations1

£ million

Total

£ million

Discontinued operations comprise Winterflood Securities sold on 1 December 2025 and Close Brothers Asset Management sold on 28 February

2025. See Note 26.

Other non-interest income of £112.5 million (2025: £120.7 million) includes other income of £101.3 million (2025: £118.5

million), which predominantly relates to the operating lease assets rental income of Close Brothers Vehicle Hire (which is in

wind-down) and Close Brewery Rentals Limited (which was sold in August 2025). In the current period, other income also

includes a gain on disposal of Close Brewery Rentals Limited of £6.4 million – please refer to Note 26 for more information.

As set out in Note 26 "Discontinued operations and assets and liabilities classified as held for sale", on 25 July 2025, the group

announced the sale of Winterflood Securities, an execution services and securities business, to Marex Group plc. The sale

completed on 1 December 2025 and its financial results are presented within this note as discontinued operations.

Strategic report

Governance report

Financial statements

177

Commercial

£ million

Retail

£ million

Property

£ million

Group2

£ million

Continuing

operations

£ million

Discontinued

operations

£ million

Total

£ million

Summary balance sheet information at

31 July 2026

Total assets¹

5,016.2

2,820.8

1,757.3

2,464.1 12,058.4

— 12,058.4

Total liabilities

—

— 10,406.8 10,406.8

— 10,406.8

Total assets for the operating segments comprise the loan book and operating lease assets only in line with the reporting to the Chief Operating

Decision Maker and the requirements of IFRS 8 “Operating Segments”.

Balance sheet includes £2,428.7 million assets and £10,139.4 million liabilities (excluding intercompany balances) primarily relating to the treasury

balances described in the second paragraph of this note.

Equity is allocated across the group as set out below. The equity of Commercial, Retail and Property, which is managed as a

whole rather than on a segmental basis, reflects loan book and operating lease assets of £9,594.3 million, in addition to assets

and liabilities of £2,430.3 million and £10,494.3 million respectively, primarily comprising treasury balances which are included

within the Group column above. The remaining difference relates to assets and liabilities of the Group central functions.

Equity

1,530.3

121.3

1,651.6

—

1,651.6

Equity at 31 July 2026

Operating

segments

£ million

Group

£ million

Continuing

operations

£ million

Discontinued

operations

£ million

Total

£ million

Commercial

Retail

Property

Group

Continuing

operations

Discontinued

operations

Total

Other segment information for the

year ended 31 July 2026

Employees (average number)¹

1,350

1,092

166

2,698

2,793

Commercial, Retail and Property segments include a central function headcount allocation. The company’s average number of employees is

equivalent to the Group number.

Summary income statement for the year

ended 31 July 2025

Net interest income/(expense)

228.1

224.5

128.3

(12.1)

568.8

—

568.8

Impairment of operating lease assets

(30.0)

—

(30.0)

—

(30.0)

Other non-interest income

95.8

22.2

2.3

0.4

120.7

—

120.7

Operating income/(expense)

293.9

246.7

130.6

(11.7)

659.5

—

659.5

Provision in relation to motor finance

commissions

—

(165.0)

—

(165.0)

—

(165.0)

Other motor finance commissions related

costs, net of insurance recoveries

—

(18.7)

—

(18.7)

—

(18.7)

Provision in relation to early settlements

in Motor Finance

—

(33.0)

—

(33.0)

—

(33.0)

Restructuring costs

(1.4)

(0.6)

(0.3)

—

(2.3)

—

(2.3)

Other administrative expenses

(183.6)

(163.5)

(29.4)

(39.5)

(416.0)

—

(416.0)

Depreciation and amortisation

(26.8)

(20.0)

(4.5)

(2.8)

(54.1)

—

(54.1)

Impairment losses on financial assets

(18.8)

(44.5)

(29.5)

—

(92.8)

—

(92.8)

Total operating expenses

(230.6)

(445.3)

(63.7)

(42.3)

(781.9)

—

(781.9)

Operating profit/(loss) before tax from

continuing operations

63.3

(198.6)

66.9

(54.0)

(122.4)

—

(122.4)

Operating profit before tax from

discontinued operations

—

46.3

4.9

51.2

External operating income/(expense)

491.4

364.3

215.1

(411.3)

659.5

—

659.5

Inter segment operating (expense)/

income

(197.5)

(117.6)

(84.5)

399.6

—

Segment operating income/(expense)

293.9

246.7

130.6

(11.7)

659.5

—

659.5

Commercial

£ million

Retail

£ million

Property

£ million

Group

£ million

Continuing

operations

£ million

Discontinued

operations1

£ million

Total

£ million

Discontinued operations comprise Winterflood Securities sold on 1 December 2025 and Close Brothers Asset Management sold on 28 February

2025. See Note 26.

The Notes continued

Close Brothers Group plc Annual Report 2026

178

3. Segmental analysis (continued)

Commercial

£ million

Retail

£ million

Property

£ million

Group²

£ million

Continuing

operations

£ million

Discontinued

operations3

£ million

Total

£ million

Summary balance sheet information at

31 July 2025

Total assets¹

4,894.3

2,878.9

1,852.5

3,567.3 13,193.0

878.9 14,071.9

Total liabilities

—

— 11,548.1 11,548.1

788.3 12,336.4

Total assets for the operating segments comprise the loan book and operating lease assets only in line with the reporting to the Chief Operating

Decision Maker and the requirements of IFRS 8 “Operating Segments”.

Balance sheet includes £3,521.9 million assets and £11,556.2 million liabilities primarily relating to the treasury balances described in the second

paragraph of this note. The remaining difference relates to the assets and liabilities of the Group central functions.

Discontinued operations on the balance sheet comprise Winterflood Securities. See Note 26. The assets and liabilities of Winterflood Securities

presented in this table include intercompany balances for the purposes of segmental reporting.

Equity is allocated across the group as set out below. The equity of Commercial, Retail and Property, which is managed as a

whole rather than on a segmental basis, reflects loan book and operating lease assets of £9,625.7 million, in addition to assets

and liabilities of £3,521.9 million and £11,556.2 million respectively primarily comprising treasury balances which are included

within the Group column above. The remaining difference relates to the assets and liabilities of the group central functions.

Equity at 31 July 2025

Operating

segments

£ million

Group

£ million

Continuing

operations

£ million

Discontinued

operations

£ million

Total

£ million

Equity

1,591.4

53.5

1,644.9

90.6

1,735.5

Commercial

Retail

Property

Group

Continuing

operations

Discontinued

operations

Total

Other segment information for the year

ended 31 July 2025

Employees (average number)¹

1,417

1,154

172

2,831

765

3,596

Commercial, Retail and Property segments include a central function headcount allocation. The company’s average number of employees is

equivalent to the Group number.

4. Operating loss before tax

Interest income1

Cash and balances at central banks

63.4

86.7

Loans and advances to banks

2.6

3.4

Loans and advances to customers

904.5

991.2

Other interest income

32.2

30.4

1,002.7

1,111.7

Interest expense

Deposits from banks

(0.7)

(4.3)

Deposits by customers

(345.0)

(405.9)

Borrowings

(69.1)

(80.8)

Other interest expense2

(49.4)

(51.9)

(464.2)

(542.9)

Net interest income

538.5

568.8

2026

£ million

2025

£ million

Interest income calculated using the effective interest method predominantly relating to financial assets held at amortised cost.

Other interest expense includes £28.8 million (2025: £24.7 million) relating to the subordinated loan capital and debt securities issued by the

company, £12.0 million (2025: £nil) relating to the discount unwind on provisions for motor finance commissions and early settlements in Motor

Finance and £8.1 million (2025: £26.9 million) relating to derivative assets and liabilities.

Strategic report

Governance report

Financial statements

179

4. Operating loss before tax (continued)

Fee and commission income1

94.4

103.5

Fee and commission expense1

(17.1)

(16.7)

Net fee and commission income

77.3

86.8

2026

£ million

2025

£ million

Fee income and expense relates to financial instruments which are not at fair value through profit or loss. There is no fee income or expense arising

from trust and other fiduciary activities (2025: £nil). Fee income includes fees arising from invoice discounting and factoring services.

Other income

Operating lease assets rental income

77.7

91.6

Other1

23.6

26.9

101.3

118.5

2026

£ million

2025

£ million

Includes £10.5 million income from services provided in relation to operating lease assets (2025: £12.6 million), £6.4 million gain on disposal of Close

Brewery Rentals Limited (2025: £nil) and £2.0 million amortisation of de-designated cash flow and fair value hedges (2025: £11.4 million).

Administrative expenses

Staff costs:

Wages and salaries

186.2

194.0

Social security costs

28.0

26.7

Share-based awards

2.5

3.8

Other pension costs

13.9

230.6

238.4

Depreciation and amortisation

48.9

54.1

Other administrative expenses1

340.0

396.6

Total administrative expenses

619.5

689.1

2026

£ million

2025

£ million

Other administrative expenses of £340.0 million (2025: £396.6 million) include the following items which have been separately disclosed on the

consolidated income statement: provision in relation to motor finance commissions of £164.7 million (2025: £165.0 million), other motor finance

commissions related costs, net of insurance recoveries of £(3.0) million (2025: £18.7 million), provision in relation to early settlements in Motor Finance

of £nil (2025: £33.0 million) and restructuring costs of £14.3 million (2025: £2.3 million).

Staff costs of the company total £15.9 million (2025: £18.6 million), comprising largely of wages and salaries of £12.2 million

(2025: £13.8 million).

5. Information regarding the auditors

Fees payable

Audit of the company's annual financial statements

0.8

1.3

Audit of the company's subsidiaries pursuant to legislation

4.4

4.8

Audit related services

0.3

Other services

0.2

0.6

5.7

7.0

20261

£ million

20251

£ million

During the year, an additional audit fee of £0.8 million (2025: £0.8 million) was paid to the auditors in relation to scope changes in the prior year audit,

which is not included above.

The auditors of the group are PricewaterhouseCoopers LLP (2025: PricewaterhouseCoopers LLP).

The Notes continued

Close Brothers Group plc Annual Report 2026

180

6. Tax

Tax charged/(credited) to the income statement

Current tax:

UK corporation tax

0.5

15.0

Foreign tax

1.6

1.0

Adjustments in respect of previous years

(1.2)

(1.3)

0.9

14.7

Deferred tax:

Deferred tax charge/(credit) for the current year

2.2

(11.6)

Adjustments in respect of previous years

2.0

1.6

5.1

4.7

Tax on items not charged/(credited) to the income statement

Current tax relating to:

Acquisitions and disposals

—

3.7

Defined benefit pension scheme

0.1

—

Deferred tax relating to:

Cash flow hedging

(1.3)

(3.5)

Defined benefit pension scheme

(0.1)

—

Financial instruments classified as fair value through other comprehensive income

0.7

(1.2)

Share-based payments

(0.2)

—

Currency translation (losses)/gains

(0.2)

0.4

Acquisitions and disposals

—

1.7

(1.0)

1.1

Reconciliation to tax expense

UK corporation tax for the period at 25% (2025: 25%) on operating loss

(15.1)

(30.6)

Disallowable items and other permanent differences1

25.0

40.6

Banking surcharge

—

Tax relief on coupon on other equity instruments

(5.6)

Prior period tax provision

0.8

0.3

5.1

4.7

2026

£ million

2025

£ million

Disallowable items and other permanent differences largely relate to the non-deductible provision in relation to motor finance commissions.

The standard UK corporation tax rate for the financial year is 25.0% (2025: 25.0%). An additional 3.0% (2025: 3.0%) surcharge

applies to banking company profits as defined in legislation, but only above a threshold amount which is not exceeded by the

current year banking company profits. The effective tax rate of (8.5)% (2025: (3.8)%), which relates to a £5.1 million charge on

an operating loss before tax of £60.3 million, differs to the UK corporation tax rate primarily due to disallowable expenditure,

which more than offsets the tax relief on coupons on the group's AT1 instrument.

The UK government has implemented the Pillar 2 global minimum tax rate of 15% and a UK domestic minimum top-up tax.

The jurisdictions in relation to which Pillar 2 tax liabilities are expected to potentially arise for the group are the Republic of

Ireland, Jersey and Guernsey. The current tax charge for the period includes £0.2 million (2025: £nil) in respect of Pillar 2

income taxes. The group has adopted the IAS 12 exemption from recognition and disclosure regarding the impact on deferred

tax assets and liabilities arising from this legislation. The company has adopted the same exemption under FRS 102.

Strategic report

Governance report

Financial statements

181

Movements in deferred tax assets and liabilities were as follows:

Group

At 1 August 2024

5.1

(0.2)

7.2

6.0

(5.0)

(2.1)

3.3

14.3

Credit/(charge) to the

income statement

8.3

0.1

(1.0)

(0.6)

—

1.6

8.4

(Charge)/credit to other

comprehensive income

(0.4)

—

3.5

—

1.2

4.3

Disposals

(0.1)

—

(3.2)

—

1.6

—

(1.7)

Reclassification to assets

held for sale

6.2

—

(0.8)

—

0.3

5.7

At 31 July 2025

19.1

(0.1)

2.2

5.4

(1.5)

(0.5)

6.4

31.0

(Charge)/credit to the

income statement

(2.0)

—

0.1

(1.1)

—

(1.2)

(4.2)

Credit/(charge) to other

comprehensive income

0.2

0.1

—

1.3

—

(0.7)

0.9

Credit to equity

—

0.2

—

0.2

At 31 July 2026

17.3

—

2.5

4.3

(0.2)

(0.5)

4.5

27.9

Capital

allowances

£ million

Pension

scheme

£ million

Share-based

payments and

deferred

compensation

£ million

Impairment

losses

£ million

Cash flow

hedging

£ million

Intangible

assets

£ million

Other

£ million

Total

£ million

The group’s deferred tax asset comprises £4.6 million (31 July 2025: £5.7 million) due within one year and £23.3 million (31 July

2025: £25.3 million) due after more than one year.

Company

At 1 August 2024

(0.2)

0.6

0.2

Credit/(charge) to the income statement

0.2

0.1

(0.1)

0.2

Credit to other comprehensive income

—

At 31 July 2025

—

(0.1)

0.5

0.4

Credit to the income statement

0.2

—

0.1

0.3

Credit to other comprehensive income

—

0.1

—

0.1

At 31 July 2026

0.2

—

0.6

0.8

Capital

allowances

£ million

Pension

scheme

£ million

Share-based

payments and

deferred

compensation

£ million

Total

£ million

The company’s deferred tax asset comprises £0.2 million (31 July 2025: £0.1 million) due within one year and £0.6 million

(31 July 2025: £0.3 million) due after more than one year.

As the group has been and is expected to continue to be consistently taxpaying, the full deferred tax assets have been

recognised. However, deferred tax assets of £0.3 million (31 July 2025: £0.5 million) have not been recognised in respect of

certain carried forward tax losses. It is currently uncertain whether the group will be able to utilise these losses.

7. Earnings per share

The calculation of basic earnings per share is based on the profit attributable to shareholders and the number of basic

weighted average shares. When calculating the diluted earnings per share, the weighted average number of shares in issue is

adjusted for the effects of all dilutive share options and awards.

Basic

(58.5)p

(99.8)p

Diluted

(58.5)p

(99.8)p

Adjusted basic1

47.5p

59.3p

Adjusted diluted1

47.5p

59.3p

Continuing operations

2026

2025

Basic

1.4p

32.9p

Diluted

1.4p

32.9p

Discontinued operations2

The Notes continued

Close Brothers Group plc Annual Report 2026

182

7. Earnings per share (continued)

Basic

(57.1) p

(66.9)p

Diluted

(57.1) p

(66.9)p

Continuing and discontinued operations

1. Excludes the adjusting items set out in the table below and the associated tax effect.

2. Discontinued operations comprise Winterflood Securities sold on 1 December 2025 and Close Brothers Asset Management sold on 28 February

2025. See Notes 3 and 26.

Loss attributable to shareholders

(85.7)

(100.2)

Less profit from discontinued operations, net of tax1

(2.0)

(49.2)

Loss attributable to shareholders on continuing operations

(87.7)

(149.4)

Provision in relation to motor finance commissions

164.7

165.0

Other motor finance commissions related costs, net of insurance recoveries

(3.0)

18.7

Discount unwind in relation to the provisions for motor finance commissions and early settlements in

Motor Finance2

12.0

—

Provision in relation to early settlements in Motor Finance

—

33.0

Gain on disposal of Close Brewery Rentals Limited

(6.4)

—

Restructuring costs

14.3

2.3

Amortisation of intangible assets on acquisition

0.2

Operating (profit)/loss before tax of Close Brewery Rentals Limited

(0.4)

4.1

Operating (profit)/loss before tax of Close Brothers Vehicle Hire

(0.8)

43.4

Tax effect of adjustments

(21.6)

(28.6)

Adjusted profit attributable to shareholders on continuing operations

71.3

88.7

2026

£ million

2025

£ million

Discontinued operations comprise Winterflood Securities sold on 1 December 2025 and Close Brothers Asset Management sold on 28 February

2025. See Notes 3 and 26.

Refer to Note 15 for further information.

The tax rate on adjusting items is 12.0% (2025: 10.7%), which differs to the standard UK corporation tax rate for the financial

year of 25.0% (2025: 25.0%). This is primarily due to £100.4 million (2025: £150.0 million) of the provisions in relation to motor

finance commissions and early settlements in Motor Finance comprising disallowable expenditure, partly offset by the gain on

disposal of Close Brewery Rentals Limited being exempt from corporation tax.

Average number of shares

Basic weighted

150.0

149.7

Effect of dilutive share options and awards

1.9

0.2

Diluted weighted

151.9

149.9

2026

million

2025

million

8. Dividends

For each ordinary share

Final dividend for previous financial year paid in November 2025: £nil (November 2024: £nil)

—

Interim dividend for current financial year paid in April 2026: £nil (April 2025: £nil)

—

2026

£ million

2025

£ million

Given the continued uncertainty regarding the outcome of the legal challenges to the FCA’s motor finance consumer redress

scheme and any potential financial impact, the group will not pay a final dividend on its ordinary shares for the 2026 financial

year. We remain committed to the resumption of shareholder distributions at an appropriate time and will reassess our options

as greater certainty emerges regarding motor finance commissions, taking into account the group's future capital needs and

shareholder feedback.

9. Loans and advances to banks

At 31 July 2026

199.0

0.8

3.6

5.3

15.9

224.6

At 31 July 2025

135.2

1.3

3.5

14.2

7.5

161.7

On demand

£ million

Within three

months

£ million

Between

three months

and one year

£ million

Between one

and two

years

£ million

Between two

and five years

£ million

Total

£ million

Strategic report

Governance report

Financial statements

183

10. Loans and advances to customers

(a) Maturity and classification analysis of loans and advances to customers

The following tables set out the maturity and IFRS 9 classification analysis of loans and advances to customers. At 31 July

2026, loans and advances to customers with a maturity of two years or less was £7,255.5 million (31 July 2025: £7,346.3

million) representing 74.6% (31 July 2025: 75.7%) of total gross loans and advances to customers:

At 31 July 2026

87.1 2,889.9 2,360.5 1,918.0 2,330.6

141.5

9,727.6

(264.4)

9,463.2

At 31 July 2025

85.1 2,984.1 2,512.4 1,764.7 2,220.7

142.1

9,709.1

(249.7)

9,459.4

On demand

£ million

Within three

months

£ million

Between

three

months and

one year

£ million

Between

one and two

years

£ million

Between

two and five

years

£ million

After more

than five

years

£ million

Total gross

loans and

advances to

customers

£ million

Impairment

provisions

£ million

Total net loans

and advances

to customers

£ million

Gross loans and advances to customers

Held at amortised cost

9,717.2

9,697.3

Held at fair value through profit or loss

10.4

11.8

9,727.6

9,709.1

31 July 2026

£ million

31 July 2025

£ million

(b) Loans and advances to customers held at amortised cost and impairment provisions by stage

Gross loans and advances to customers held at amortised cost by stage and the corresponding impairment provisions and

provision coverage ratios are set out below:

At 31 July 2026

Gross loans and advances to customers held at

amortised cost

Commercial

3,686.6

1,112.3

27.7

1,140.0

120.5

4,947.1

Retail

2,713.1

106.1

15.8

121.9

72.7

2,907.7

Property

1,515.6

7.4

59.7

67.1

279.7

1,862.4

7,915.3

1,225.8

103.2

1,329.0

472.9

9,717.2

Impairment provisions

Commercial

19.7

16.0

2.5

18.5

34.2

72.4

Retail

29.9

10.4

3.9

14.3

42.7

86.9

Property

5.5

0.1

0.9

1.0

98.6

105.1

55.1

26.5

7.3

33.8

175.5

264.4

Provision coverage ratio

Commercial

0.5%

1.4%

9.0%

1.6%

28.4%

1.5%

Retail

1.1%

9.8%

24.7%

11.7%

58.7%

3.0%

Property

0.4%

1.4%

1.5%

35.3%

5.6%

0.7%

2.2%

7.1%

2.5%

37.1%

2.7%

Stage 2

Stage 1

£ million

Less than

30 days past

due

£ million

Greater

than or

equal to 30

days past

due

£ million

Total

£ million

Stage 3

£ million

Total

£ million

The Notes continued

Close Brothers Group plc Annual Report 2026

184

10. Loans and advances to customers (continued)

At 31 July 2025

Gross loans and advances to customers held at

amortised cost

Commercial

3,717.5

925.1

39.0

964.1

108.1

4,789.7

Retail

2,611.1

252.6

15.1

267.7

95.2

2,974.0

Property

1,585.6

15.7

43.5

59.2

288.8

1,933.6

7,914.2

1,193.4

97.6

1,291.0

492.1

9,697.3

Impairment provisions

Commercial

21.7

10.8

5.2

16.0

35.8

73.5

Retail

25.3

13.9

2.7

16.6

53.2

95.1

Property

3.6

1.0

—

1.0

76.5

81.1

50.6

25.7

7.9

33.6

165.5

249.7

Provision coverage ratio

Commercial

0.6%

1.2%

13.3%

1.7%

33.1%

1.5%

Retail

1.0%

5.5%

17.9%

6.2%

55.9%

3.2%

Property

0.2%

6.4%

—%

1.7%

26.5%

4.2%

0.6%

2.2%

8.1%

2.6%

33.6%

2.6%

Stage 2

Stage 1

£ million

Less than 30

days past

due

£ million

Greater than

or equal to 30

days past

due

£ million

Total

£ million

Stage 3

£ million

Total

£ million

Stage allocation of loans and advances to customers has been applied in line with the definitions set out in Note 1(i).

Additional disclosures on the stage allocation and movements of loans and advances to customers can be found in the Risk

Report.

By their nature, limitations in the group’s expected credit loss models or input data may be identified through ongoing model

monitoring and validation of models. In certain circumstances, management make appropriate adjustments to model-

calculated expected credit losses. Adjustments have been identified as a key source of estimation uncertainty as set out in

Note 2 “Critical accounting judgements and estimates”.

(d) Reconciliation of loans and advances to customers held at amortised cost and impairment provisions

Reconciliation of gross loans and advances to customers and associated impairment provisions are set out below.

New financial assets originate in Stage 1 only, and the amount presented represents the value at origination.

Subsequently, a loan may transfer between stages, and the presentation of such transfers is based on a comparison of the

loan at the beginning of the year (or at origination if this occurred during the year) and the end of the year (or just prior to final

repayment or write off).

Repayments relating to loans which transferred between stages during the year are presented within the transfers between

stages lines. Such transfers do not represent overnight reclassification from one stage to another. All other repayments are

presented in a separate line.

ECL model methodologies may be updated or enhanced from time to time and the impacts of such changes are presented on

a separate line.

Enhancements to our model suite are a contributory factor to ECL movements and such factors have been taken into

consideration when assessing any required adjustments to modelled output and ensuring appropriate provision coverage

levels.

A loan is written off when there is no reasonable expectation of further recovery following realisation of all associated collateral

and available recovery actions against the customer.

Strategic report

Governance report

Financial statements

185

Gross loans and advances to customers held at amortised cost

At 1 August 2025

7,914.2

1,291.0

492.1

9,697.3

New financial assets originated

5,699.3

—

5,699.3

Transfers to Stage 1

309.0

(399.5)

(9.7)

(100.2)

Transfers to Stage 2

(1,219.2)

1,035.8

(13.0)

(196.4)

Transfers to Stage 3

(210.1)

(166.9)

285.6

(91.4)

Net transfer between stages and repayments¹

(1,120.3)

469.4

262.9

(388.0)

Repayments while stage remained unchanged and final repayments

(4,596.5)

(432.8)

(185.3) (5,214.6)

Changes to model methodologies2

22.7

4.2

(26.9)

—

Write offs

(4.1)

(2.8)

(69.9)

(76.8)

At 31 July 2026

7,915.3

1,329.0

472.9

9,717.2

Stage 1

£ million

Stage 2

£ million

Stage 3

£ million

Total

£ million

1. Repayments (net of further advances) relate only to financial assets which transferred between stages during the year. Other repayments (net of

further advances) are shown in the line below.

Changes relate to the updated model deployed for the Motor Finance business – see the Credit risk section within the Risk report for more

information.

Gross loans and advances to customers held at amortised cost

At 1 August 2024

8,410.5

1,128.8

725.5 10,264.8

New financial assets originated

5,766.1

—

5,766.1

Transfers to Stage 1

200.4

(289.4)

(5.2)

(94.2)

Transfers to Stage 2

(1,381.4)

1,112.6

(4.5)

(273.3)

Transfers to Stage 3

(274.4)

(146.1)

321.9

(98.6)

Net transfer between stages and repayments1

(1,455.4)

677.1

312.2

(466.1)

Repayments while stage remained unchanged and final repayments

(4,852.2)

(464.3)

(223.7)

(5,540.2)

Changes to model methodologies

48.3

(48.3)

—

Write offs

(3.1)

(2.3)

(321.9)

(327.3)

At 31 July 2025

7,914.2

1,291.0

492.1

9,697.3

Stage 1

£ million

Stage 2

£ million

Stage 3

£ million

Total

£ million

1. Repayments (net of further advances) relate only to financial assets which transferred between stages during the year. Other repayments (net of

further advances) are shown in the line below.

The gross carrying amount before modification of loans and advances to customers which were modified during the year while

in Stage 2 or 3 was £218.8 million (2025: £259.5 million). £nil (2025: £0.1 million loss) was recognised as a result of these

modifications. The gross carrying amount at 31 July 2026 of modified loans and advances to customers which transferred from

Stage 2 or 3 to Stage 1 during the year was £13.0 million (31 July 2025: £20.9 million). The accounting policy for modifications

is set out in Note 1(i).

Impairment provisions on loans and advances to customers held at

amortised cost

At 1 August 2025

50.6

33.6

165.5

249.7

New financial assets originated

45.4

—

45.4

Transfers to Stage 1

2.2

(8.1)

(3.1)

(9.0)

Transfers to Stage 2

(12.2)

38.5

(4.0)

22.3

Transfers to Stage 3

(3.2)

(17.0)

82.3

62.1

Net remeasurement of expected credit losses arising from transfer of stages

and repayments1

(13.2)

13.4

75.2

75.4

Repayments and ECL movements while stage remained unchanged and final

repayments

(24.3)

(11.7)

8.4

(27.6)

Changes to model methodologies2

0.1

1.1

(15.7)

(14.5)

Charge to the income statement

8.0

2.8

67.9

78.7

Write offs

(3.5)

(2.6)

(57.9)

(64.0)

At 31 July 2026

55.1

33.8

175.5

264.4

Stage 1

£ million

Stage 2

£ million

Stage 3

£ million

Total

£ million

1. Repayments (net of further advances) relate only to financial assets which transferred between stages during the year. Other repayments (net of further

advances) are shown in the line below.

2. Changes relate to the updated model deployed for the Motor Finance business – see the Credit risk section within the Risk report for more information..

The Notes continued

Close Brothers Group plc Annual Report 2026

186

10. Loans and advances to customers (continued)

Impairment provisions on loans and advances to customers held at

amortised cost

At 1 August 2024

52.2

31.3

362.3

445.8

New financial assets originated

46.0

—

46.0

Transfers to Stage 1

1.1

(4.3)

(1.0)

(4.2)

Transfers to Stage 2

(13.4)

30.6

(1.4)

15.8

Transfers to Stage 3

(4.3)

(11.4)

88.0

72.3

Stage 1

£ million

Stage 2

£ million

Stage 3

£ million

Total

£ million

Net remeasurement of expected credit losses arising from transfer of stages

and repayments1

(16.6)

14.9

85.6

83.9

Repayments and ECL movements while stage remained unchanged and final

repayments

(29.5)

(10.9)

27.0

(13.4)

Changes to model methodologies

1.4

0.5

(0.4)

1.5

Charge to the income statement

1.3

4.5

112.2

118.0

Write offs

(2.9)

(2.2)

(309.0)

(314.1)

At 31 July 2025

50.6

33.6

165.5

249.7

1. Repayments (net of further advances) relate only to financial assets which transferred between stages during the year. Other repayments (net of further

advances) are shown in the line below.

Impairment losses relating to loans and advances to customers held at amortised cost:

Charge to income statement arising from movement in impairment provisions

78.7

118.0

Amounts written off and expensed directly to income statement and other costs, net of discount

unwind on Stage 3 loans to interest income, and recoveries

13.8

(29.9)

92.5

88.1

Impairment (credit)/losses relating to other financial assets

(0.7)

4.7

Impairment losses on financial assets recognised in income statement

91.8

92.8

2026

£ million

2025

£ million

Impairment losses on financial assets of £91.8 million (2025: £92.8 million) include an impairment credit of £0.8 million in

relation to Novitas (2025: impairment credit of £6.8 million). Stage 3 gross loans and associated expected credit loss provisions

written off in the year in relation to Novitas were £2.3 million (2025: £247.2 million) and £2.3 million (2025: £247.2 million)

respectively.

The contractual amount outstanding at 31 July 2026 on financial assets that were written off during the period and are still

subject to recovery activity is £26.0 million (31 July 2025: £27.1 million).

(e) Finance lease and hire purchase agreement receivables

Net loans and advances to customers comprise

Hire purchase agreement receivables

3,768.3

3,613.4

Finance lease receivables

1,035.7

945.6

Other loans and advances

4,659.2

4,900.4

9,463.2

9,459.4

31 July 2026

£ million

31 July 2025

£ million

Strategic report

Governance report

Financial statements

187

The following table shows a reconciliation between gross investment in finance lease and hire purchase agreement receivables

included in the net loans and advances to customers table above to present value of minimum lease and hire purchase

payments.

Gross investment in finance leases and hire purchase agreement receivables due:

One year or within one year

2,029.8

1,983.2

>One to two years

1,606.6

1,535.1

>Two to three years

1,198.9

1,155.3

>Three to four years

729.6

647.7

>Four to five years

253.7

225.0

More than five years

43.4

41.2

5,862.0

5,587.5

Unearned finance income

(923.8)

(884.5)

Present value of minimum lease and hire purchase agreement payments

4,938.2

4,703.0

Of which due:

One year or within one year

1,698.9

1,661.0

>One to two years

1,352.5

1,292.2

>Two to three years

1,013.8

974.2

>Three to four years

618.4

547.9

>Four to five years

216.8

191.9

More than five years

37.8

35.8

4,938.2

4,703.0

Impairment provisions

(134.2)

(144.0)

Net hire purchase agreement receivables and finance lease receivables

4,804.0

4,559.0

31 July 2026

£ million

31 July 2025

£ million

The aggregate cost of assets acquired for the purpose of letting under finance leases and hire purchase agreements was

£8,035.0 million (2025: £7,848.3 million). The average effective interest rate on finance leases approximates to 12.2% (2025:

12.4%). The present value of minimum lease and hire purchase agreement payments reflects the fair value of finance lease and

hire purchase agreement receivables before deduction of impairment provisions.

11. Debt securities

Sovereign and central bank debt

—

340.1

—

340.1

Supranational, sub-sovereigns and agency ("SSA") bonds

—

144.0

—

144.0

Covered bonds

—

83.9

—

83.9

Other debt securities

0.6

—

2.5

3.1

At 31 July 2026

0.6

568.0

2.5

571.1

Fair value

through profit

or loss

£ million

Fair value

through other

comprehensive

income

£ million

Amortised

cost

£ million

Total

£ million

Sovereign and central bank debt

—

601.6

—

601.6

Supranational, sub-sovereigns and agency ("SSA") bonds

—

146.2

—

146.2

Covered bonds

—

105.6

—

105.6

Other debt securities

1.1

—

4.7

5.8

At 31 July 2025

1.1

853.4

4.7

859.2

Fair value

through profit

or loss

£ million

Fair value

through other

comprehensive

income

£ million

Amortised

cost

£ million

Total

£ million

£449.0 million (31 July 2025: £486.1 million) of debt securities measured at fair value through other comprehensive income are

due in one year or after one year.

The Notes continued

Close Brothers Group plc Annual Report 2026

188

11. Debt securities (continued)

Movements on the book value of sovereign and central bank debt comprise:

Sovereign and central bank debt at 1 August

601.6

383.7

Additions

412.0

512.4

Redemptions

(675.0)

(299.1)

Currency translation differences

(0.9)

2.2

Movement in value

2.4

Sovereign and central bank debt at 31 July

340.1

601.6

2026

£ million

2025

£ million

Movements on the book value of SSA bonds comprise:

SSA bonds at 1 August

146.2

145.5

Currency translation differences

(0.2)

0.4

Movement in value

(2.0)

0.3

SSA bonds at 31 July

144.0

146.2

2026

£ million

2025

£ million

Movements on the book value of covered bonds comprise:

Covered bonds 1 August

105.6

187.7

Additions

—

15.5

Redemptions/disposals

(21.0)

(97.4)

Currency translation differences

(0.2)

0.5

Movement in value

(0.5)

(0.7)

Covered bonds at 31 July

83.9

105.6

2026

£ million

2025

£ million

12. Derivative financial instruments

The group enters into derivative contracts with a number of financial institutions for risk management purposes to hedge

exposures to interest rate and exchange rate movements. Derivatives are classified as held for trading unless they are

designated as being in a hedge accounting relationship. The group’s total derivative asset and liability position as reported on

the consolidated balance sheet is as follows.

Exchange rate contracts

799.6

17.3

0.1

376.3

0.1

7.3

Interest rate contracts

8,907.7

76.0

89.9

7,012.4

103.0

97.4

9,707.3

93.3

90.0

7,388.7

103.1

104.7

31 July 2026

31 July 2025

Notional

value

£ million

Assets

£ million

Liabilities

£ million

Notional

value

£ million

Assets

£ million

Liabilities

£ million

Interest rate contracts are held for interest rate risk management and interest margin stabilisation purposes.

Strategic report

Governance report

Financial statements

189

Included in the derivatives above are the following cash flow and fair value hedges:

Cash flow hedges

Interest rate contracts

1,053.5

2.2

3.8

658.7

4.9

1.7

Fair value hedges

Interest rate contracts

4,482.7

60.2

76.7

4,775.6

89.5

88.5

31 July 2026

31 July 2025

Notional

value

£ million

Assets

£ million

Liabilities

£ million

Notional

value

£ million

Assets

£ million

Liabilities

£ million

Where derivatives are designated as being in a hedge accounting relationship, the group applies fair value and cash flow

hedging if the relevant transaction meets the required documentation and hedge effectiveness criteria.

Fair value hedge accounting

Fair value hedges seek to hedge the exposure to changes in the fair value of recognised assets and liabilities or firm

commitments. For fair value hedges of interest rate risk, changes in the benchmark interest rate are considered the largest

component of the overall change in fair value. Other risks such as credit risk are managed but excluded from the hedge

accounting relationship. Changes in the fair value of derivatives in a fair value hedge are recorded in the income statement,

along with changes in the fair value of the hedged item (asset or liability) attributable to the hedged risk. If the hedged item is

measured at amortised cost, the fair value changes due to the hedged risk would adjust the carrying amount of the hedged

asset or liability. If the hedge no longer qualifies for hedge accounting, changes in the fair value of the hedged item attributable

to the hedged risk are no longer recognised in the income statement and the cumulative adjustment to the carrying amount of

the hedged item is amortised to the income statement over the period to maturity. For micro and macro fair value hedges, this

is applied using a straight-line method over the period to maturity.

Cash flow hedge accounting

Cash flow hedges seek to hedge the exposure to variability in future cash flows due to movements in the relevant benchmark

interest rate with interest rate swaps. These future cash flows relate to future interest payments or receipts on recognised

financial instruments and on forecast transactions for periods of five (2025: five) years. The effective portion of changes in the

fair value of qualifying cash flow hedges is recognised in other comprehensive income within the cash flow hedging reserve.

The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Amounts accumulated in

equity are reclassified to the income statement in the periods when the hedged item affects profit or loss. When a hedging

instrument expires, is sold, or no longer meets the criteria for hedge accounting, any cumulative gain or loss in equity remains

there until the forecast transaction is recognised in the income statement. If the forecast transaction is no longer expected to

occur, the cumulative gain or loss in equity is immediately transferred to the income statement. The group applies portfolio

cash flow hedging for interest rate risk exposures on a portfolio of actual and forecast variable interest rate cash flows arising

from variable rate borrowings. Cash flow hedge accounting is applied when hedging interest rate risk exposures on floating

rate assets.

To assess hedge effectiveness, the change in fair value or cash flows of the hedging instruments is compared with the change

in fair value or cash flows of the hedged item attributable to the hedged risk. A hedge is considered highly effective if the

results are within a ratio of 80%-125%.

The main sources of hedge ineffectiveness can include, but are not limited to, basis mismatch, maturity mismatch, credit

valuation adjustments and cash flow timing mismatch between the hedged item and the hedging instrument.

The maturity profiles for the notional amounts of the group’s cash flow and fair value hedges are set out as follows.

Cash flow hedges

Interest rate risk

31 July 2026

3.7

31.8

93.9

73.6

850.5

—

1,053.5

31 July 2025

—

5.8

0.5

13.1

619.8

19.5

658.7

Fair value hedges

Interest rate risk

31 July 2026

—

710.6

187.7

1,310.4

1,526.5

747.5

4,482.7

31 July 2025

—

543.7

737.2

1,502.0

1,308.1

684.6

4,775.6

On demand

£ million

Within three

months

£ million

Between

three and six

months

£ million

Between six

months and

one year

£ million

Between one

and five years

£ million

After more

than five

years

£ million

Total

£ million

Cash flow hedges have an average fixed rate of 3.9% (31 July 2025: 4.0%). Fair value hedges have an average fixed rate of

3.3% (31 July 2025: 3.3%).

Details of the hedging instruments for the group’s hedge ineffectiveness assessment are set out as follows.

The Notes continued

Close Brothers Group plc Annual Report 2026

190

12. Derivative financial instruments (continued)

Cash flow hedges

Interest rate risk

(4.7)

—

(1.2)

(0.1)

Fair value hedges

Interest rate risk

4.3

—

33.9

0.1

Changes in fair value

of hedging

instrument used for

calculating hedge

ineffectiveness

Hedge

ineffectiveness

recognised in

income statement

Changes in fair value

of hedging instrument

used for calculating

hedge ineffectiveness

Hedge ineffectiveness

recognised in income

statement

2026

£ million

2026

£ million

2025

£ million

2025

£ million

The carrying amount of hedging interest rate swaps is held within derivative financial instruments and the hedge

ineffectiveness is held within other income. Details of the hedged exposures covered by the group’s hedging strategies are set

out as follows.

At 31 July 2026

Fair value hedges

Assets

Debt securities

423.6

(33.1)

(13.0)

Loans and advances to customers and undrawn commitments

158.4

(7.3)

0.8

582.0

(40.4)

(12.2)

Liabilities

Deposits by customers

2,698.5

(9.0)

(16.3)

Debt securities in issue

875.3

(67.1)

9.3

Subordinated loan capital

249.8

(6.4)

(0.9)

3,823.6

(82.5)

(7.9)

Carrying amount of

hedged item

£ million

Accumulated

amount of fair value

adjustments on the

hedged item

£ million

Changes in fair value

of hedged item used

for calculating hedge

ineffectiveness

£ million

At 31 July 2025

Fair value hedges

Assets

Debt securities

424.0

(20.1)

(4.9)

Loans and advances to customers and undrawn commitments

163.6

(8.1)

1.3

587.6

(28.2)

(3.6)

Liabilities

Deposits by customers

3,342.1

7.3

3.1

Debt securities in issue

615.8

(76.4)

19.3

Subordinated loan capital

195.5

(5.6)

7.8

4,153.4

(74.7)

30.2

Carrying amount of

hedged item

£ million

Accumulated amount

of fair value

adjustments on the

hedged item

£ million

Changes in fair value

of hedged item used

for calculating hedge

ineffectiveness

£ million

Details of the impact of hedging relationships on the income statement and other comprehensive income are set out as follows.

Cash flow hedges

Interest rate risk

31 July 2026

4.8

3.1

0.6

(4.7)

2.0

31 July 2025

1.0

2.9

3.8

(1.1)

12.3

Changes in fair value

of hedged item used

for calculating hedge

ineffectiveness

£ million

Balance remaining in

cashflow hedge

reserve for

discontinued hedge

relationships

£ million

Cashflow hedge reserve

balance

£ million

Losses from changes in

value of hedging instrument

recognised in other

comprehensive income

£ million

Amounts reclassified

from reserves to

income statement1

£ million

Following de-designation of hedge relationships, the amounts previously recognised in the cash flow hedge reserve have been reclassified to other

income to the extent that the hedged cash flows occurred during the year. There is no gain or loss (2025: £nil) reclassified from the cash flow hedge

reserve to the income statement relating to hedge accounting that had previously been used but for which the hedged future cash flows are no

longer expected to occur.

Strategic report

Governance report

Financial statements

191

13. Intangible assets

Goodwill

£ million

Software

£ million

Intangible

assets on

acquisition

£ million

Group total

£ million

Company

software

£ million

Cost

At 1 August 2024

150.8

348.7

57.4

556.9

0.3

Additions

—

25.6

—

25.6

—

Disposals

—

(6.1)

—

(6.1)

—

Disposal of subsidiaries1

(46.9)

(16.6)

(51.7)

(115.2)

—

Reclassification to assets held for sale2

(67.7)

(20.4)

—

(88.1)

—

At 31 July 2025

36.2

331.2

5.7

373.1

0.3

Additions

—

25.5

—

25.5

—

Disposals

(1.3)

(13.4)

—

(14.7)

—

At 31 July 2026

34.9

343.3

5.7

383.9

0.3

Accumulated amortisation and impairments

At 1 August 2024

47.9

195.3

47.7

290.9

0.3

Amortisation charge for the year

—

38.3

0.8

39.1

—

Impairment charge for the year

16.6

2.0

—

18.6

—

Disposals

—

(5.3)

—

(5.3)

—

Disposal of subsidiaries1

(3.5)

(9.2)

(46.0)

(58.7)

—

Reclassification to assets held for sale2

(58.9)

(18.9)

—

(77.8)

—

At 31 July 2025

2.1

202.2

2.5

206.8

0.3

Amortisation charge for the year

—

35.3

0.2

35.5

—

Disposals

(1.3)

(12.1)

—

(13.4)

—

At 31 July 2026

0.8

225.4

2.7

228.9

0.3

Net book value at 31 July 2026

34.1

117.9

3.0

155.0

—

Net book value at 31 July 2025

34.1

129.0

3.2

166.3

—

Net book value at 1 August 2024

102.9

153.4

9.7

266.0

—

Close Brothers Asset Management was sold to Oaktree Capital Management, L.P. on 28 February 2025 – see Note 26.

Intangible assets relating to Winterflood Securities and Close Brewery Rentals have been reclassified to assets held for sale – see Note 26.

Software includes assets under development of £26.4 million (31 July 2025: £30.6 million).

Intangible assets on acquisition relate to customer relationships and are amortised over a period of 17 years.

In the 2026 financial year, £35.5 million (2025: £37.4 million) of the amortisation charge, relating to continuing operations, is

included in the consolidated income statement within other administrative expenses. The residual is included within profit from

discontinued operations, net of tax in the consolidated income statement.

Impairment tests for goodwill and other intangible assets

Overview

At 31 July 2026, goodwill has been allocated to seven (31 July 2025: eight) individual cash generating units (“CGUs”). All seven

relate to the Commercial, Retail and Property operating segments, previously collectively known as the Banking division. At 31

July 2025, the eighth CGU related to the Winterflood Securities division ("Winterflood"). However, as disclosed in Note 26, the

group completed the sale of Winterflood on 1 December 2025 and therefore the CGU and associated goodwill have been

derecognised from the balance sheet.

Goodwill is allocated to the CGU in which the historical acquisition occurred and hence the goodwill originated. Goodwill

impairment reviews are carried out at least annually by assessing the recoverable amount of the group’s CGUs, which is the

higher of fair value less costs to sell and value in use.

Methodology

The recoverable amounts for all CGUs are measured based on value in use. A value in use calculation uses discounted cash

flow forecasts based on three-year strategic plans. The value in use calculations are sensitive primarily to changes in the

assumptions for future cash flows, which include consideration for future capital requirements and appropriate allocation of

overhead costs, as well as discount rates.

The Notes continued

Close Brothers Group plc Annual Report 2026

192

13. Intangible assets (continued)

The most relevant assumptions underlying management’s strategic plans for the CGUs, which are based on past experience

and forecast market conditions, are expected loan book growth rates, net return on loan book, future costs and future capital

requirements. While these assumptions are relevant to management's plans, they may not all be key assumptions in the

goodwill impairment test. In addition, while the CGUs are not individually regulated, for the purposes of an impairment

assessment, theoretical capital requirements have been taken into consideration in calculating a CGU's value in use and

carrying value to ensure that capital constraints on free cash flows are appropriately reflected and the carrying value is on a

comparable basis.

Beyond the group’s three-year planning horizon, estimates of future cash flows in the fourth and fifth years, and longer where

appropriate, are made by management with due consideration given to the relevant assumptions set out above. After the final

year, a terminal value is calculated using an annual growth rate of 2%, which is consistent with the UK government’s long-term

inflation target.

The cash flows are discounted using a pre-tax estimated weighted average cost of capital as set out in the following table. The

methodology used to derive the discount rates is fundamentally consistent with the prior year and the discount rates used are

also broadly consistent with the prior year. However, they differ across the CGUs, reflecting the nature of the CGUs’ business

and the current market returns appropriate to the CGU that investors would require for a similar asset.

Assessment overview

The results of the review performed for the year ended 31 July 2026 demonstrate that goodwill is not impaired. This conclusion

is underpinned by a number of assumptions as described above, with the future cash flow forecasts in the value in use

calculations of the Motor Finance and Asset Finance and Leasing ("AF&L") CGUs identified as key sources of estimation

uncertainty.

Assessment of CGUs

The Motor Finance CGU, which includes goodwill of £3.0 million (31 July 2025: £3.0 million) and other intangible assets of £6.8

million (31 July 2025: £10.7 million), relates to the group's UK Motor Finance business. Cash flows for this CGU have been

estimated for seven years to ensure an appropriate terminal value and value in use are calculated given a period of strategic

change in the shorter term. The value in use of Motor Finance excludes the £318.5 million (31 July 2025: £163.9 million)

balance sheet provision in relation to motor finance commissions and £31.3 million (31 July 2025: £33.0 million) provision in

relation to early settlements, both as described in Note 15, in line with the requirements of IAS 36.

The key source of estimation uncertainty within the Motor Finance value in use calculation relates to the expected future cash

flows, which include consideration for the CGU's strategic growth plans, as well as forecast costs and capital charge.

Management's future growth expectations are in part dependent on assumptions relating to funding, capital and customer

demand.

The value in use of Motor Finance is calculated to be 135% (31 July 2025: 133%) of carrying value, which represents a

headroom of £60 million (31 July 2025: £53 million). To demonstrate the sensitivity to lower cash flows or a delay in future

growth, a 36% (31 July 2025: 33%) reduction in the annual cash flows to perpetuity would result in the full reduction of the

available headroom. Separately, the pre-tax discount rate used is 16.0% (31 July 2025: 14.9%) and an absolute increase of

3.4% (31 July 2025: 2.5%) in the pre-tax discount rate would result in the full reduction of the available headroom.

The AF&L CGU includes goodwill of £9.8 million (31 July 2025: £9.8 million), which is significant in comparison to total

goodwill. The value in use of AF&L is calculated to be 152% (31 July 2025: 122%) of carrying value. The value in use

calculation is also dependent on management's assumptions for future cash flows. To demonstrate the sensitivity to cash

flows, a 10% reduction in the annual cash flows to perpetuity would result in a 22% (31 July 2025: 46%) reduction in the

available headroom.

These scenarios for Motor Finance and AF&L are a demonstration of sensitivity only and do not represent management's base

case scenarios where, as stated, value in use remains above carrying value. In addition, the sensitivities do not include all

possible management actions which may affect the cash flow and capital forecasts of the CGUs.

Details of the CGUs by operating segments, together with the pre-tax discount rate used in determining value in use, are

disclosed below. The goodwill of each CGU is not material with the exception of the AF&L CGU as noted above.

Commercial

14.6

15.7

14.6

14.9-15.2

Retail

11.9

15.2-16.0

11.9 14.7-15.1

Property

7.6

14.2

7.6

14.4

34.1

31 July 2026

31 July 20251

Cash generating unit

Goodwill

£ million

Pre-tax

discount rate

Goodwill

£ million

Pre-tax

discount rate

Comparative information re-presented to ensure consistency with this year’s presentation of the CGUs by operating segments.

Strategic report

Governance report

Financial statements

193

14. Property, plant and equipment

Leasehold

property

£ million

Fixtures,

fittings and

equipment

£ million

Assets held

under

operating

leases

£ million

Motor

vehicles

£ million

Right of use

assets¹

£ million

Total

£ million

Group

Cost

At 1 August 2024

22.4

65.1

441.9

0.4

92.9

622.7

Additions

3.2

2.7

40.3

—

10.3

56.5

Disposals

(13.3)

(4.2)

(75.9)

—

(26.5)

(119.9)

Disposal of subsidiaries2

(5.1)

(6.8)

—

(7.5)

(19.4)

Reclassification to assets held for sale3

(0.7)

(21.9)

(80.1)

(0.1)

(19.1)

(121.9)

At 31 July 2025

6.5

34.9

326.2

0.3

50.1

418.0

Additions

0.1

4.5

21.4

—

3.4

29.4

Disposals

(2.8)

(3.5)

(78.3)

(0.1)

(8.1)

(92.8)

At 31 July 2026

3.8

35.9

269.3

0.2

45.4

354.6

Accumulated depreciation and impairments

At 1 August 2024

17.0

36.6

174.0

0.3

45.2

273.1

Depreciation and impairment charges for the year

1.3

8.2

78.3

—

13.3

101.1

Disposals

(13.0)

(4.1)

(53.3)

—

(25.1)

(95.5)

Disposal of subsidiaries2

(3.2)

(4.7)

—

(3.4)

(11.3)

Reclassification to assets held for sale3

(0.6)

(13.8)

(39.1)

(0.1)

(5.2)

(58.8)

At 31 July 2025

1.5

22.2

159.9

0.2

24.8

208.6

Depreciation and impairment charges for the year

0.3

4.8

37.4

—

8.3

50.8

Disposals

(0.1)

(3.4)

(59.1)

(0.1)

(7.5)

(70.2)

At 31 July 2026

1.7

23.6

138.2

0.1

25.6

189.2

Net book value at 31 July 2026

2.1

12.3

131.1

0.1

19.8

165.4

Net book value at 31 July 2025

5.0

12.7

166.3

0.1

25.3

209.4

Net book value at 1 August 2024

5.4

28.5

267.9

0.1

47.7

349.6

Right of use assets primarily relate to the group’s leasehold properties.

Close Brothers Asset Management was sold to Oaktree Capital Management, L.P. on 28 February 2025 – see Note 26.

Property, plant and equipment relating to Winterflood Securities and Close Brewery Rentals were reclassified to assets held for sale – see Note 26.

There was a gain of £1.3 million from the sale of assets held under operating leases for the year ended 31 July 2026 (2025: loss

of £2.0 million).

Assets held under operating leases primarily relate to vehicles owned by the group's Vehicle Hire business, which is part of the

Commercial operating segment. At 31 July 2026, the carrying value of the operating lease assets in relation to this business

was £130.0 million (31 July 2025: £165.0 million). As disclosed in the prior year, the group has decided to exit this business

over time.

The operating lease assets have been assessed for impairment with the value in use ("VIU") calculated based on

management's exit plan. The VIU of the assets represents the recoverable amount and it approximates their carrying value,

therefore, no impairment or reversal of impairment has been identified (2025: £30.0 million impairment charge).

The key sources of estimation uncertainty in the VIU calculation relate to the expected rental incomes and disposal values of

the vehicles. At 31 July 2026, a 7.5% absolute increase or decrease in expected rental incomes would increase or decrease

the recoverable amount by £8.4 million or £1.6 million respectively (31 July 2025: decrease or increase the impairment charge

by £10.2 million or £10.3 million respectively).

Separately, a 10% absolute increase or decrease in the disposal values would increase or decrease the recoverable amount by

£6.7 million or £0.5 million respectively (31 July 2025: 15% absolute increase or decrease in the disposal values would

decrease or increase the impairment charge by £12.7 million or £13.2 million respectively).

For sensitivity decreases in the recoverable amount in the current year, where the fair value is higher than the reduced value in

use, the decrease in recoverable amount is capped at the fair value.

The Notes continued

Close Brothers Group plc Annual Report 2026

194

14. Property, plant and equipment (continued)

31 July 2026

£ million

31 July 2025

£ million

Future minimum lease rentals receivable under non-cancellable operating leases

One year or within one year

49.0

50.5

>One to two years

34.9

39.1

>Two to three years

20.3

30.3

>Three to four years

8.7

15.4

>Four to five years

3.2

5.9

More than five years

1.2

2.9

117.3

144.1

Company

Cost

At 1 August 2024

0.3

11.8

12.1

Additions

—

At 31 July 2025

0.3

11.8

12.1

Additions

—

At 31 July 2026

0.3

11.8

12.1

Depreciation

At 1 August 2024

0.1

4.3

4.4

Charge for the year

—

1.2

At 31 July 2025

0.1

5.5

5.6

Charge for the year

—

1.2

At 31 July 2026

0.1

6.7

6.8

Net book value at 31 July 2026

0.2

5.1

5.3

Net book value at 31 July 2025

0.2

6.3

6.5

Net book value at 1 August 2024

0.2

7.5

7.7

Leasehold

property

£ million

Fixtures,

fittings and

equipment

£ million

Total

£ million

The net book value of leasehold property comprises:

Long leasehold property

—

0.2

—

0.2

Short leasehold property

2.1

4.8

0.2

—

2.1

5.0

0.2

Group

Company

31 July 2026

£ million

31 July 2025

£ million

31 July 2026

£ million

31 July 2025

£ million

Strategic report

Governance report

Financial statements

195

15. Other assets and liabilities

Prepayments, accrued income and other assets

Prepayments

62.8

92.0

Accrued income

3.6

3.1

Trade and other receivables1

45.2

91.5

111.6

186.6

Accruals, deferred income, other liabilities and provisions

Accruals

93.0

87.1

Deferred income

5.0

Trade and other payables

71.2

80.2

Provisions

364.4

210.3

533.6

382.6

31 July 2026

£ million

31 July 2025

£ million

Trade and other receivables includes £22.1 million (31 July 2025: £21.1 million) of contingent deferred consideration relating to the disposal of Close

Brothers Asset Management (see Note 26). The prior year included an insurance settlement receivable (see Credit risk section of the Risk Report).

Group provisions

At 1 August 2024

19.6

7.9

4.8

32.3

Additions

204.0

0.8

1.0

205.8

Utilisation

(20.5)

(0.1)

(0.9)

(21.5)

Released

—

(0.3)

—

(0.3)

Reclassification to liabilities held for sale

—

(3.0)

(6.0)

At 31 July 2025

203.1

5.3

1.9

210.3

Additions

182.0

0.5

8.2

190.7

Utilisation and transfers

(24.7)

(0.1)

(8.8)

(33.6)

Released

(0.7)

(2.0)

(0.3)

(3.0)

At 31 July 2026

359.7

3.7

1.0

364.4

Legal and

regulatory

£ million

Property

£ million

Other

£ million

Total

£ million

Company provisions

At 1 August 2024

0.4

1.2

1.6

Additions

—

0.1

Utilisation

—

(0.5)

Released

(0.2)

—

(0.2)

At 31 July 2025

0.2

0.8

1.0

Additions

0.1

—

0.1

Utilisation

—

(0.2)

Released

—

At 31 July 2026

0.3

0.6

0.9

Property

£ million

Other

£ million

Total

£ million

Provisions are made for claims and other items which arise in the normal course of business. Claims may arise in respect of

legal and regulatory matters, while other items largely relate to property dilapidations and employee benefits. A provision is

recognised where it is determined that there is a legal or constructive present obligation arising from a past event, payment is

probable, and the amount can be estimated reliably. The timing and/or outcome of these claims and other items are uncertain.

Provision in relation to motor commissions

In the previous financial year, a detailed assessment against IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”

determined that the criteria for a provision had been met and a provision of £165.0 million was recognised at 31 January 2025

based on a range of probability-weighted redress scenarios. At 31 July 2025, the provision held on the balance sheet

decreased slightly to £163.9 million, reflecting some utilisation in relation to costs, partly offset by an unwinding of the discount

relating to the time value of money.

The Notes continued

Close Brothers Group plc Annual Report 2026

196

15. Other assets and liabilities (continued)

Following the publication of the Financial Conduct Authority’s (“FCA”) consultation paper on 7 October 2025, which proposed

an industry-wide redress scheme in respect of motor finance commissions, the group carried out a review of the potential

financial impact of the proposed scheme, resulting in an additional income statement charge of £135.0 million in October 2025,

increasing the total charge to £300.0 million based on a probability weighted multi-scenario approach.

Following the publication of FCA Policy Statement PS26/3: Motor finance consumer redress scheme (“the scheme”) on 30

March 2026, the group increased its provision to £320.0 million, which resulted in an additional income statement charge of

£29.7 million. The previously published provision of £300.0 million had reduced due to cost utilisation, partly offset by an

unwinding of the discount relating to the time value of money. The £320.0 million provision reflected the group’s best estimate

of the cost of the scheme as published, including an assumption of delayed implementation due to legal challenges to the

scheme brought by a number of parties. While there are aspects of the scheme that the group disagrees with, in order to

provide an orderly resolution for all parties, Close Brothers decided not to challenge the scheme.

At 31 July 2026, the provision decreased slightly to £318.5 million, reflecting further cost utilisation, partly offset by an

unwinding of the discount relating to the time value of money, and remains the group's best estimate under IAS 37. As set out

in Note 2 “Critical accounting judgements and estimates”, the provision requires critical accounting judgements to be made,

namely determining the affected customers and applying a single scenario based on the scheme as published to calculate the

group’s best estimate of the provision, in contrast to the probability weighted multi-scenario approach taken in the prior year. A

key assumption underpinning the use of a single scenario is that all cases would go through the scheme, as opposed to

alternate means.

In addition, other assumptions have been applied in the calculation of the provision, with certain assumptions representing key

sources of estimation uncertainty. These relate to customer claim rates and costs to administer the scheme. Changes in these

and other assumptions may result in material changes to the estimated provision. The key data points and assumptions are as

follows:

• c.720k UK regulated motor finance loans written between 6 April 2007 and 1 November 2024 qualifying for redress under the

scheme. This includes c.640k loans written under Discretionary Commission Arrangements ("DCAs") and a further c.80k

non-DCA loans which are likely to meet the "tied" arrangements and/or "high commission" criteria as defined by the FCA;

• an average redress payment of c.£500 per customer, including compensatory interest;

• an estimated claim rate under the scheme of 75%, in line with the FCA's assumption. A 5% absolute increase or decrease in

the assumed claim rate would result in a £17 million increase or decrease in the estimated provision;

• an estimated delivery cost of £63 million. This excludes £26 million of costs already incurred against the existing provision at

31 July 2026. A 10% absolute increase or decrease in the assumed delivery costs would result in a £6 million increase or

decrease in the estimated provision; and

• customer remediation is expected to commence during the 2027 calendar year and complete in the 2028 calendar year,

resulting in a time value discount of £17 million.

The estimated provision is the outcome of a thorough assessment, representing the group’s current evaluation based on

available information, although is subject to the outcome of the legal challenges to the scheme and any further legal, regulatory

or industry developments including court claims and complaints from consumers. Therefore, the ultimate cost to the group

could be materially higher or lower than the provision taken. The group continues to gather additional data, progress

complaints and prepare operationally as we await the outcome of the legal challenges.

During the year, the group incurred an expense of £7.7 million (2025: £18.7 million) in relation to motor finance commissions.

This includes the unwinding of the time value discount in relation to the provision (recognised within interest expense) and legal

costs and fees that do not directly relate to the potential redress exercise for which the provision was created, partly offset by

associated insurance recoveries. In the prior period, these expenses also included complaints handling costs incurred before

the provision was established. These costs, as well as the provision described above, do not reflect underlying trading

performance and therefore have been presented as separate adjusting items and excluded from adjusted operating profit by

management.

Provision in relation to early settlements in Motor Finance

As disclosed in the prior year, following the identification of historical deficiencies in certain operational processes related to

early settlement of loans in the Motor Finance business, the group recognised a provision of £33.0 million at 31 July 2025 in

relation to a proactive customer remediation programme to be implemented by the group.

At 31 July 2026, the provision held was £31.3 million, reflecting some utilisation in relation to costs, partly offset by an

unwinding of the discount relating to the time value of money, and it continues to reflect management's best estimate of the

cost of remediation in relation to impacted customers. The provision includes compensatory interest and associated

administrative costs based on the information currently available. The data and provision will be refined as the scope and

design of the remediation programme are finalised. Remediation is expected to commence towards the end of the 2026

calendar year.

Strategic report

Governance report

Financial statements

197

16. Financial liabilities

Deposits by banks

20.3

—

20.3

Deposits by customers

838.9 2,634.1

2,982.7

931.2

489.3

—

7,876.2

Loans and overdrafts from banks

0.9

—

0.9

Debt securities in issue

—

332.6

36.2

269.8

749.0

248.4

1,636.0

At 31 July 2026

860.1 2,966.7

3,018.9

1,201.0

1,238.3

248.4

9,533.4

On demand

£ million

Within

three

months

£ million

Between

three

months and

one year

£ million

Between

one and two

years

£ million

Between

two and five

years

£ million

After more

than five

years

£ million

Total

£ million

Deposits by banks

9.3

78.8

—

88.1

Deposits by customers

1,161.4 2,640.3

3,533.7

852.9

611.0

—

8,799.3

Loans and overdrafts from banks

1.5

—

1.5

Debt securities in issue

—

56.5

124.1

974.2

503.2

333.3

1,991.3

At 31 July 2025

1,172.2 2,775.6

3,657.8

1,827.1

1,114.2

333.3 10,880.2

On demand

£ million

Within three

months

£ million

Between

three months

and one year

£ million

Between one

and two

years

£ million

Between two

and five years

£ million

After more

than five

years

£ million

Total

£ million

At 31 July 2026, the parent company had £251.7 million (31 July 2025: £251.3 million) of non-instalment debt securities in

issue with an interest rate of 7.75% and a final maturity date of 2028.

17. Subordinated loan capital

Final maturity date

2031

2026

2.000%

—

195.5

2036

2031

6.125%

249.8

—

249.8

195.5

Prepayment

date

Initial

interest

rate

31 July 2026

£ million

31 July 2025

£ million

At 31 July 2026, the parent company had £256.5 million (31 July 2025: £201.2 million) of subordinated loan capital with an

interest rate of 6.125% and a final maturity date of 2036.

In February 2026, the group issued £250.0 million of 6.125% Subordinated Tier 2 Notes due 2036. These notes are classified

as financial liabilities at amortised cost and were measured at fair value less directly attributable transaction costs on initial

recognition. The new issuance was accompanied by a related tender offer of our outstanding £200.0 million 2.00%

Subordinated Tier 2 Notes due 2031, of which £191.4 million was tendered and accepted for purchase by the group.

18. Called up share capital, distributable reserves and other equity instrument

Group and company

Ordinary shares of 25p each (allotted, issued and fully paid)

152.1

38.0

152.1

38.0

31 July 2026

31 July 2025

million

£ million

million

£ million

At 31 July 2026, the company’s reserves available for distribution under sections 830(2) and 831(2) of the Companies Act 2006

were £228.4 million (2025: £259.8 million). The Directors have applied the guidance provided by ICAEW TECH 02/17 in

determining this.

Other equity instrument comprises the group’s £200.0 million Fixed Rate Reset Perpetual Subordinated Contingent Convertible

Securities, or Additional Tier 1 capital (“AT1”), issued on 29 November 2023. These AT1 securities are classified as an equity

instrument under IAS 32 “Financial Instruments: Presentation” with the proceeds recognised in equity net of transaction costs

of £2.4 million.

These securities carry a coupon of 11.125%, payable semi-annually on 29 May and 29 November of each year, and have a first

reset date on 29 May 2029. Two coupon payments totalling £22.3 million were made in the year. The securities include, among

other things, a conversion trigger of 7.0% Common Equity Tier 1 capital ratio and are callable any time in the six-month period

prior to and including the first reset date or on each reset date occurring every five years thereafter.

Additional disclosures on the group’s capital position and capital risk can be found in the "Capital risk" section of the Risk

Report.

The Notes continued

Close Brothers Group plc Annual Report 2026

198

19. Guarantees, commitments and contingent liabilities

Guarantees

Earliest period in which guarantee could be called

Within one year1

5.8

96.4

—

87.3

More than one year

2.6

2.1

—

8.4

98.5

—

87.3

Group

Company

31 July 2026

£ million

31 July 2025

£ million

31 July 2026

£ million

31 July 2025

£ million

The year-on-year decrease for both the group and the company is driven by the termination of a guarantee relating to Winterflood Securities, which

was sold on 1 December 2025 (refer to Note 26 for further information on the disposal).

Guarantees arise in the normal course of business and include performance guarantees issued by certain businesses. Where

the group undertakes to make a payment on behalf of its subsidiaries for guarantees issued, such as bank facilities or property

leases, or as irrevocable letters of credit for which an obligation to make a payment to a third party has not arisen at the

reporting date, they are included in these consolidated financial statements.

Commitments

Undrawn facilities, credit lines and other commitments to lend – revocable and irrevocable

Within one year

764.8

823.0

After more than one year

33.5

—

798.3

823.0

31 July 2026

£ million

31 July 2025

£ million

Other commitments

Subsidiaries had contracted capital and other financial commitments of £2.1 million (2025: £31.2 million).

Operating lease commitments

During the year, the company recognised lease payments as an expense of £2.1 million (2025: £2.1 million). At 31 July 2026,

the company had future minimum lease payments under non-cancellable operating leases relating to property of £2.7 million

within one year, £7.7 million between one and five years, and £nil after more than five years, totalling £10.4 million (31 July

2025: £0.8 million, £12.2 million, and £nil respectively, totalling £13.0 million).

Contingent liabilities

In the normal course of the group’s business, there may be other contingent liabilities relating to complaints, legal proceedings

or regulatory reviews. These cases are not currently expected to have a material impact on the group.

20. Related party transactions

Transactions with key management

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the

activities of an entity. The group’s key management are the members of the group’s Board and Executive Committee, which

include all Executive Directors and Non-executive Directors. The related parties of the group include its key management and

their close family members. Details of Directors’ remuneration and interests in shares are disclosed in the Directors’

Remuneration Report. The table below details, on an aggregated basis, the group's key management emoluments:

Emoluments:

Salaries and fees

5.3

Benefits and allowances

2.0

2.1

7.3

7.4

Termination benefits

0.7

0.9

Post-employment benefits

0.1

Share-based awards

1.2

1.1

9.3

9.5

2026

£ million

2025

£ million

Gains upon exercise of options by the group's key management, expensed to the income statement in previous years, totalled

£0.1 million (2025: £0.4 million).

Amounts included in deposits by customers at 31 July 2026 attributable, in aggregate, to the group's key management were

£0.3 million (31 July 2025: £0.3 million). These relationships are undertaken on standard commercial terms.

Strategic report

Governance report

Financial statements

199

21. Pensions

The group operates defined contribution pension schemes for eligible employees as well as a defined benefit pension scheme

which is closed to new members and further accrual. Assets of all schemes are held separately from those of the group.

Defined contribution schemes

During the year the charge to the consolidated income statement for the group’s defined contribution pension schemes was

£13.5 million (2025: £13.4 million), representing contributions payable by the group, and is included in administrative expenses.

Defined benefit pension scheme

The group’s only defined benefit pension scheme (the "scheme”) is a final salary scheme which operates under trust law. The

scheme is managed and administered in accordance with the scheme’s Trust Deed and Rules and all relevant legislation by a

sole independent professional trustee.

The scheme entered into a buy-in transaction with an insurance company covering all members of the scheme. A buy-in is a

bulk annuity policy that matches the scheme’s assets and liabilities. As such, the pension surplus or deficit on the group’s

balance sheet is £nil (31 July 2025: £0.2 million surplus relating to the cash held by the scheme). The scheme’s liabilities

remain subject to changes in actuarial valuations as presented in this note.

The scheme was closed to new entrants in August 1996 and closed to further accrual during 2012. At 31 July 2026, this

scheme had 13 (31 July 2025: 15) deferred members, 64 (31 July 2025: 63) pensioners and dependents and eight (31 July

2025: eight) insured annuitants.

Funding position

The scheme’s most recent triennial actuarial valuation at 31 July 2024 showed that the scheme was fully funded. As such, no

further contributions are scheduled.

IAS 19 valuation

The following disclosures are reported in accordance with IAS 19. Significant actuarial assumptions are as follows:

Inflation rate (Retail Price Index)

3.3

3.2

Inflation rate (CPI)

3.0

2.8

Discount rate for scheme liabilities¹

6.2

5.6

Mortality assumptions²:

Existing pensioners from age 65, life expectancy (years):

Men

23.4

23.2

Women

25.2

25.0

Non-retired members currently aged 50, life expectancy from age 65 (years):

Men

24.2

24.0

Women

26.4

26.3

2026

2025

Based on market yields at 31 July 2026 and 2025 on high quality sterling-denominated corporate bonds, adjusted to be consistent with the

estimated term of the post-employment benefit obligation, using the Willis Towers Watson model “Global RATE:Link”.

Based on standard tables SAPS S2 Light (2025: SAPS S2 Light) produced by the CMI Bureau of the Institute and Faculty of Actuaries with adjusted

mortality multipliers for pensioners and non-pensioners, together with projected future improvements in line with the CMI 2025 (2025: CMI 2024)

core projection model with a long-term trend of 1.5% per annum.

The scheme has been accounted for in the company and the surplus in the prior year was recognised as an asset on the

company and group’s balance sheet within “Trade and other receivables”.

The group has the unconditional right to any surpluses that arise within the scheme once all benefits have been secured in full.

As such, no asset ceiling has been applied, and accordingly the scheme surplus is recognised on the consolidated balance sheet.

Fair value of scheme assets¹

Equities

—

Bonds

—

30.3

Cash

—

0.2

0.9

1.4

3.5

Insured annuities

20.3

21.5

23.2

22.4

1.0

Total assets

20.3

21.7

24.1

23.8

34.8

Fair value of liabilities

(20.3)

(21.5)

(23.3)

(22.5)

(27.6)

Surplus

—

0.2

0.8

1.3

7.2

2026

£ million

2025

£ million

2024

£ million

2023

£ million

2022

£ million

There are no amounts included within the fair value of scheme assets relating to the financial instruments of Close Brothers Group plc.

The Notes continued

Close Brothers Group plc Annual Report 2026

200

Movement in the present value of scheme liabilities during the year:

Carrying amount at 1 August

(21.5)

(23.3)

Interest expense

(1.2)

(1.1)

Benefits paid

1.4

Actuarial gain

1.0

1.5

Carrying amount at 31 July

(20.3)

(21.5)

2026

£ million

2025

£ million

Movement in the fair value of scheme assets during the year:

Carrying amount at 1 August

21.7

24.1

Interest income

1.2

1.1

Benefits paid

(1.4)

Administrative costs paid

(0.2)

(0.5)

Losses on scheme assets, excluding interest income

(1.0)

(1.6)

Carrying amount at 31 July

20.3

21.7

2026

£ million

2025

£ million

Historical experience of actuarial gains/(losses) are shown below:

(Losses)/returns on scheme assets

(1.0)

(1.6)

0.9

(10.6)

(8.7)

Experience (losses)/gains on scheme liabilities

—

(0.4)

(0.9)

0.4

Impact of changes in assumptions

1.0

1.5

(0.5)

5.8

8.2

Total actuarial changes in liabilities

1.0

1.5

(0.9)

4.9

8.6

Total actuarial losses

—

(0.1)

—

(5.7)

(0.1)

2026

£ million

2025

£ million

2024

£ million

2023

£ million

2022

£ million

Actuarial movements would be recognised in other comprehensive income. The group’s policy is not to allocate the net

defined benefit cost between group entities participating in the scheme.

Following the buy-in transaction with an insurance company which matches the scheme's assets and liabilities, the key risk the

company is exposed to relates to the insurance company's solvency and ability to make pension payments. This risk is

monitored by the trustee and the company.

Nevertheless, the valuation of the scheme’s liabilities is sensitive to the key assumptions used in the valuation. The effect of a

change in those assumptions in 2026 and 2025 is set out below. The analysis reflects the variation of the individual

assumptions. The variation in price inflation includes all inflation-linked pension increases in deferment and in payment.

Discount rate

0.25% decrease

2.3

0.5

2.5

0.5

Price inflation (RPI)

0.25% increase

1.2

0.3

1.4

0.3

Mortality

Increase in life expectancy at age 65 by one year

2.9

0.6

2.8

0.6

Impact on defined benefit obligation increase/(decrease)

2026

2025

Key assumption

Sensitivity

£ million

The weighted average duration of the benefit payments reflected in the scheme liabilities is 10 years (2025: 10 years).

The Virgin Media Ltd v NTL Pension Trustees II judgment, handed down by the High Court on 16 June 2023 (upheld by the

Court of Appeal in July 2024), considered the implications of section 37 of the Pension Schemes Act 1993, with the potential to

cause a significant impact on the pensions industry. The Pension Schemes Act 2026 came into force in April 2026 and

contains provisions allowing schemes to address any potential impact of the judgment where the requirements of the Act are

met. The trustee is considering how this applies to the scheme and what further steps may be required, but it is not possible at

present to estimate the potential impact, if any, on the scheme.

22. Share-based awards

The Save As You Earn (“SAYE”), Long Term Incentive Plan (“LTIP”) and Deferred Share Awards (“DSA”) share-based awards

have been granted under the group’s equity-settled share schemes. The general terms and conditions for these share-based

awards are described in the Directors’ Remuneration Report.

In order to satisfy a number of the awards below, the company has purchased company shares into Treasury and the Close

Brothers Group Employee Share Trust has purchased company shares. At 31 July 2026, £1.3 million (31 July 2025: £1.6

million) and £1.2 million (31 July 2025: £1.3 million) of these shares were held respectively and in total £27.1 million (2025:

£31.3 million) was recognised within the share-based payments reserve. During the year £4.2 million (2025: £9.2 million) of

Strategic report

Governance report

Financial statements

201

these shares were released to satisfy share-based awards to employees. The share-based payments reserve as shown in the

consolidated statement of changes in equity also includes the cumulative position in relation to unvested share-based awards

charged to the consolidated income statement of £5.5 million (2025: £4.7 million). The share-based awards charge of £3.4

million (2025: £5.0 million) is included in administrative expenses shown in the consolidated income statement.

Movements in the number of share-based awards outstanding and their weighted average share prices are as follows:

At 1 August 2024

3,911,767

—

1,321,734

—

532,202

—

Granted

3,297,025

243.0p

390,601

—

459,578

—

Exercised

(2,981)

371.0p

(57,429)

—

(765,039)

—

Forfeited

(2,431,561)

393.7p

(300,733)

—

(13,102)

—

Lapsed

(61,075)

964.4p

—

(65)

—

At 31 July 2025

4,713,175

—

1,354,173

—

213,574

—

Granted

389,075

379.0p

407,419

—

12,678

—

Exercised

(224,472)

282.5p

(21,050)

—

(145,916)

—

Forfeited

(1,316,494)

312.9p

(396,278)

—

11,381

—

Lapsed

(72,392)

780.5p

—

At 31 July 2026

3,488,892

—

1,344,264

—

91,717

—

Exercisable at:

31 July 2026

34,188

732.8p

42,854

—

19,964

—

31 July 2025

18,933

957.2p

63,904

—

121,541

—

SAYE

LTIP

DSA

Number

Weighted

average

exercise price

Number

Weighted

average

exercise price

Number

Weighted

average

exercise price

The table below shows the weighted average market price at the date of exercise:

SAYE

496.1p

410.0p

LTIP

492.6p

342.8p

DSA

416.9p

336.0p

2026

2025

The range of exercise prices and weighted average remaining contractual life of awards and options outstanding are as

follows:

SAYE

Between £2 and £3

2,368,382

2.4

3,226,727

3.4

Between £3 and £4

1,079,201

2.1

1,345,831

1.6

Between £7 and £8

37,848

0.6

111,847

1.0

Between £8 and £9

—

2,565

0.3

Between £9 and £10

2,978

0.3

20,573

0.4

Between £12 and £13

483

0.8

5,087

1.2

Between £13 and £14

—

545

—

LTIP

Nil

1,344,264

3.4

1,337,923

3.5

DSA

Nil

91,717

1.4

229,824

1.4

Total

4,924,873

2.3

6,280,922

2.9

2026

Options outstanding

2025

Options outstanding

Number

outstanding

Weighted

average

remaining

contractual

life

Years

Number

outstanding

Weighted

average

remaining

contractual life

Years

The Notes continued

Close Brothers Group plc Annual Report 2026

202

For the share-based awards granted during the year, the weighted average fair value of those options at 31 July 2026 was

322.0p (31 July 2025: 167.1p). The main assumptions for the valuation of these share-based awards comprised:

SAYE

1 Jul 2029 to 30 Dec 2029

460.0p

379.0p

59.0%

5.0%

4.4%

LTIP

9 Oct 2028 to 10 Oct 2029

457.0p

—

57.0%

5.0%

4.0%

9 Oct 2028 to 10 Oct 2031

457.0p

—

57.0%

5.0%

4.0%

DSA

9 Oct 2028 to 10 Oct 2029

457.0p

—

At 31 July 2026

Exercise period

Share price

at issue

Exercise

price

Expected

volatility

Expected

option life in

years

Dividend

yield

Risk free

interest rate

At 31 July 2025

Exercise period

Share price

at issue

Exercise

price

Expected

volatility

Expected

option life in

years

Dividend

yield

Risk free

interest rate

SAYE

1 Jul 2028 to 30 Dec 2028

303.8p

243.0p

55.0%

7.3%

4.0%

LTIP

26 Sep 2027 to 26 Sep 2028

431.8p

—

50.0%

4.6%

4.0%

26 Sep 2027 to 26 Sep 2030

431.8p

—

53.0%

3.9%

4.2%

26 Sep 2027 to 26 Sep 2030

431.8p

—

50.0%

4.6%

4.3%

DSA

26 Sep 2026 to 26 Sep 2027

431.8p

—

26 Sep 2027 to 26 Sep 2028

431.8p

—

Expected volatility was determined mainly by reviewing historical share price volatility for the expected life of each option up to

the date of grant.

Strategic report

Governance report

Financial statements

203

23. Consolidated cash flow statement reconciliation

(a) Reconciliation of operating loss before tax to net cash inflow from operating activities

Operating loss before tax from continuing operations

(60.3)

(122.4)

Operating profit before tax from discontinued operations

2.6

51.2

Tax paid

(12.2)

(28.1)

Depreciation, amortisation and impairment

87.6

159.4

Impairment losses on financial assets

91.8

92.7

Provision in relation to motor finance commissions excluding cash paid

145.1

161.4

Other motor finance commissions related costs, net of insurance recoveries and excluding cash paid

in relation to motor finance commissions

0.7

5.6

Provision in relation to early settlements in Motor Finance excluding cash paid

(2.6)

33.0

Restructuring costs excluding cash paid

6.2

—

Gain on disposal of CBAM excluding cash paid in relation to transaction costs

(1.0)

(67.6)

Gain on disposal of Winterflood Securities excluding cash paid in relation to transaction costs

(4.5)

—

Gain on disposal of Brewery excluding cash paid in relation to transaction costs

(6.6)

—

Amortisation of de-designated cash flow hedges

(2.0)

(11.4)

Cash inflow/(outflow) arising from changes in:

Interest receivable and prepaid expenses

29.8

4.8

Net settlement balances and trading positions

(25.8)

3.8

Net money broker loans against stock advanced

26.8

(7.7)

Interest payable and accrued expenses

4.1

(0.8)

Net cash inflow from trading activities

279.7

273.9

Cash inflow/(outflow) arising from changes in:

Loans and advances to banks not repayable on demand

5.5

1.4

Loans and advances to customers

(104.1)

196.8

Assets let under operating leases

(5.7)

(20.3)

Sovereign and central bank debt

263.0

(213.3)

Covered bonds

21.5

81.9

Deposits by banks

(68.0)

(52.1)

Deposits by customers

(923.2)

100.1

Loans and overdrafts from banks

(3.9)

(148.8)

Debt securities in issue (net)

(366.6)

(18.4)

Derivative financial instruments (net)

—

1.0

Other assets less other liabilities1

97.1

39.0

Net cash (outflow)/inflow from operating activities

(804.7)

241.2

(b) Analysis of net cash outflow in respect of the purchase of subsidiaries

Purchase of subsidiaries, net of cash acquired

—

(0.5)

Cash consideration received from the disposal of Winterflood Securities

103.7

—

Cash consideration received from the disposal of Close Brewery Rentals Limited

8.1

—

Cash consideration received from the disposal of Close Brothers Asset Management

—

146.4

Total cash consideration received

111.8

146.4

Cash received in respect of amounts owed by disposed entities, net of cash and cash equivalents

disposed of

10.7

(42.4)

122.5

104.0

(d) Analysis of cash and cash equivalents2

Cash and balances at central banks

1,190.8

1,917.2

Loans and advances to banks

198.1

184.6

1,388.9

2,101.8

2026

£ million

2025

£ million

Net cash inflow includes £55.6 million received for an insurance settlement relating to the loans and advances to customers of Novitas (2025: £27.2

million), £29.6 million interest expense on Group subordinated loan capital and debt financing reclassified to financing activities (2025: £24.5 million)

and £12.0 million discount unwind in relation to the provisions for motor finance commissions and early settlements in Motor Finance (2025: £nil).

Excludes £26.4 million (2025: £31.9 million) of cash reserve accounts and cash held in trust.

During the year ended 31 July 2026, the non-cash changes on debt financing amounted to £27.2 million (31 July 2025: £32.2

million) arising largely from interest accretion and fair value hedging movements.

The Notes continued

Close Brothers Group plc Annual Report 2026

204

24. Financial risk management

The group faces a number of risks in the normal course of its business. To manage these effectively, a consistent approach is

adopted based on a set of overarching principles, namely:

• adhering to our established and proven business model;

• implementing an integrated risk management approach based on the concept of three lines of defence; and

• setting and operating within clearly defined risk appetites, monitored with defined metrics and limits.

The group’s Enterprise Risk Management Framework details the core risk management components and structures, and

defines a consistent and measurable approach to identifying, assessing, controlling and mitigating, reviewing and monitoring,

and reporting risk.

The Board retains overall responsibility for overseeing the maintenance of a system of internal control, which ensures that an

effective risk management framework and oversight process operate across the group, while risk management across the

group is overseen by the Risk Committee.

The Risk Report provides more information on the group’s approach to risk management. As a financial services group,

financial instruments are central to the group’s activities. The risk associated with financial instruments represents a significant

component of those faced by the group and is analysed in more detail below.

Details of the material accounting policies and methods adopted, including the criteria for recognition, the basis of

measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,

financial liability and equity instrument are disclosed in Note 1.

(a) Classification

The following tables analyse the group’s assets and liabilities in accordance with the categories of financial instruments in IFRS

9. There are no financial instruments designated as fair value through profit or loss on initial recognition.

At 31 July 2026

Assets

Cash and balances at central banks

—

1,190.7

Loans and advances to banks

—

224.6

Loans and advances to customers

—

10.4

—

9,452.8

9,463.2

Debt securities

—

0.6

568.0

2.5

571.1

Derivative financial instruments

62.5

30.8

—

93.3

Other financial assets

—

22.1

—

9.5

31.6

62.5

63.9

568.0

10,880.1

11,574.5

Liabilities

Deposits by banks

—

20.3

Deposits by customers

—

7,876.2

Loans and overdrafts from banks

—

0.9

Debt securities in issue

—

1,636.0

Subordinated loan capital

—

249.8

Derivative financial instruments

80.6

9.4

—

90.0

Other financial liabilities

—

104.7

80.6

9.4

—

9,887.9

9,977.9

Derivatives

designated as

qualifying

hedging

instruments

£ million

Fair value

through profit

or loss

£ million

Fair value

through other

comprehensive

income

£ million

Amortised

cost

£ million

Total

£ million

Strategic report

Governance report

Financial statements

205

24. Financial risk management (continued)

At 31 July 2025

Assets

Cash and balances at central banks

—

1,917.0

Loans and advances to banks

—

161.7

Loans and advances to customers

—

11.8

—

9,447.6

9,459.4

Debt securities

—

1.1

853.4

4.7

859.2

Derivative financial instruments

94.4

8.7

—

103.1

Other financial assets

—

21.1

—

63.6

84.7

94.4

42.7

853.4

11,594.6

12,585.1

Liabilities

Deposits by banks

—

88.1

Deposits by customers

—

8,799.3

Loans and overdrafts from banks

—

1.5

Debt securities in issue

—

1,991.3

Subordinated loan capital

—

195.5

Derivative financial instruments

90.2

14.5

—

104.7

Other financial liabilities

—

103.5

90.2

14.5

—

11,179.2

11,283.9

Derivatives

designated as

qualifying

hedging

instruments

£ million

Fair value

through profit

or loss

£ million

Fair value

through other

comprehensive

income

£ million

Amortised cost

£ million

Total

£ million

(b) Valuation

The fair values of the group’s subordinated loan capital and debt securities in issue are set out below.

Subordinated loan capital

251.1

249.8

193.5

195.5

Debt securities in issue

1,651.1

1,636.0

2,013.2

1,991.3

31 July 2026

31 July 2025

Fair value

£ million

Carrying value

£ million

Fair value

£ million

Carrying value

£ million

The fair value of gross loans and advances to customers at 31 July 2026 is estimated to be £9,525.5 million (31 July 2025:

£9,543.4 million), with a carrying value of £9,463.2 million (31 July 2025: £9,459.4 million). The fair value of deposits by

customers is estimated to be £7,856.7 million (31 July 2025: £8,798.2 million), with a carrying value of £7,876.2 million (31 July

2025: £8,799.3 million). These estimates are based on highly simplified assumptions and inputs including estimated future cash

flows and discount rates and may differ to actual amounts received or paid. The differences between fair value and carrying

value are not considered to be significant, and are consistent with management’s expectations given the nature of the

business and the short average tenor of the instruments.

Valuation hierarchy

The group holds financial instruments that are measured at fair value subsequent to initial recognition. Each instrument has

been categorised within one of three levels using a fair value hierarchy that reflects the significance of the inputs used in

making the measurements. These levels are based on the degree to which the fair value is observable and are defined as

follows:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or

liabilities where prices are readily available and represent actual and regularly occurring market transactions on an arm’s

length basis. An active market is one in which transactions occur with sufficient frequency to provide ongoing pricing

information;

• Level 2 fair value measurements are those derived from quoted prices in less active markets for identical assets or liabilities

or those derived from inputs other than quoted prices that are observable for the asset or liability, either directly as prices or

indirectly derived from prices; and

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that

are not based on observable market data (“unobservable inputs”).

Instruments classified as Level 1 predominantly comprise sovereign and central bank debt, SSA bonds, covered bonds and

liquid listed debt securities. The fair value of these instruments is derived from quoted prices in active markets.

The Notes continued

Close Brothers Group plc Annual Report 2026

206

Instruments classified as Level 2 predominantly comprise investment grade corporate bonds and over-the-counter derivatives.

The fair value of bonds are derived from quoted prices in less active markets in comparison to Level 1. Over-the-counter

derivatives largely relate to interest rate and exchange rate contracts (see Note 12 for further information). The valuation of

such derivatives includes the use of discounted future cash flow models, with the most significant input into these models

being interest rate yield curves developed from quoted rates.

Instruments classified as Level 3 predominantly comprise loans and advances to customers, over-the-counter derivatives and

contingent consideration payable and receivable in relation to the acquisition and disposal of subsidiaries.

The valuation of Level 3 derivatives is similar to Level 2 derivatives and includes the use of discounted future cash flow models,

with the most significant input into these models being interest rate yield curves developed from quoted rates. However, Level

3 derivatives also include inputs which are unobservable.

The valuation of Level 3 loans and advances to customers is determined on a discounted expected cash flow basis net of

expected credit losses. The discount rate used in the valuation is the interest rate charged on the loan, which reflects an arm's

length rate chargeable on similar transactions.

The valuation of Level 3 contingent consideration is determined on a discounted expected cash flow basis.

The group believes that there is no reasonably possible change to the inputs used in the valuation of these positions which

would have a material effect on the group’s consolidated income statement.

During the year, there were no transfers from Level 1 and 2 to 3 (2025: no transfers).

The tables below show the classification of financial instruments held at fair value into the valuation hierarchy.

At 31 July 2026

Assets

Loans and advances to customers held at FVTPL

—

10.4

Debt securities:

Sovereign and central bank debt

340.1

—

340.1

SSA bonds

144.0

—

144.0

Covered bonds

83.9

—

83.9

Derivative financial instruments

—

88.5

4.8

93.3

Contingent consideration1

—

22.1

Other assets

—

0.6

568.0

88.5

37.9

694.4

Liabilities

Derivative financial instruments

—

84.7

5.3

90.0

—

84.7

5.3

90.0

Level 1

£ million

Level 2

£ million

Level 3

£ million

Total

£ million

Contingent consideration relates to the disposal of Close Brothers Asset Management on 28 February 2025. See Note 26.

At 31 July 2025

Assets

Loans and advances to customers held at FVTPL

—

11.8

Debt securities:

Sovereign and central bank debt

601.6

—

601.6

SSA bonds

146.2

—

146.2

Covered bonds

105.6

—

105.6

Derivative financial instruments

—

99.1

4.0

103.1

Contingent consideration1

—

21.1

Other assets

—

1.1

853.4

99.1

38.0

990.5

Liabilities

Derivative financial instruments

—

100.5

4.2

104.7

—

100.5

4.2

104.7

Level 1

£ million

Level 2

£ million

Level 3

£ million

Total

£ million

Contingent consideration relates to the disposal of Close Brothers Asset Management on 28 February 2025. See Note 26.

Strategic report

Governance report

Financial statements

207

24. Financial risk management (continued)

Movements in financial instruments categorised as Level 3 were:

At 1 August 2024

11.8

6.1

(6.4)

0.1

(1.8)

0.8

10.6

Total gains/(losses) recognised in the

consolidated income statement

1.5

(2.1)

2.2

—

1.6

Purchases, issues, originations and

transfers in

3.6

—

0.3

3.9

Sales, settlements and transfers out

(5.1)

—

(0.1)

22.9

—

17.7

At 31 July 2025

11.8

4.0

(4.2)

—

21.1

1.1

33.8

Total gains/(losses) recognised in the

consolidated income statement

1.2

2.0

(2.3)

—

1.0

—

1.9

Purchases, issues, originations and

transfers in

2.1

(1.2)

1.2

—

2.1

Sales, settlements and transfers out

(4.7)

—

(0.5)

(5.2)

At 31 July 2026

10.4

4.8

(5.3)

—

22.1

0.6

32.6

Loans and

advances to

customers

held at

FVTPL

£ million

Derivative

financial

assets

£ million

Derivative

financial

liabilities

£ million

Equity shares

£ million

Contingent

consideration

£ million

Other assets

£ million

Total

£ million

The gains recognised in the consolidated income statement relating to Level 3 instruments held at 31 July 2026 amounted to

£1.9 million (2025: £1.6 million).

Credit risk is the risk of a reduction in earnings and/or value, as a result of the failure of a counterparty or associated party, with

whom the group has contracted, to meet its obligations as they fall due. Credit risk across the group mainly arises through

lending and treasury activities.

Maximum exposure to credit risk

The table below presents the group’s maximum exposure to credit risk, before taking account of any collateral and credit risk

mitigation, arising from its on-balance sheet and off-balance sheet financial instruments. For off-balance sheet instruments, the

maximum exposure to credit risk represents the contractual nominal amounts.

On-balance sheet

Cash and balances at central banks

1,190.7

1,917.0

Loans and advances to banks

224.6

161.7

Loans and advances to customers

9,463.2

9,459.4

Debt securities

571.1

859.2

Derivative financial instruments

93.3

103.1

Other financial assets

31.6

84.7

11,574.5 12,585.1

Off-balance sheet

Irrevocable undrawn commitments

170.1

211.6

Total maximum exposure to credit risk

11,744.6 12,796.7

31 July 2026

£ million

31 July 2025

£ million

Assets pledged and received as collateral

The group pledges assets for repurchase agreements and securities borrowing agreements which are generally conducted

under terms that are customary to standard borrowing contracts.

The group maintains access to the Bank of England’s Sterling Monetary Framework, including a reserves account.

The group has securitised without recourse and restrictions £1,570.4 million (31 July 2025: £1,544.8 million) of its insurance

premium and motor loan receivables in return for cash and asset-backed securities in issue of £1,443.1 million (31 July 2025:

£1,323.4 million), of which £964.1 million (31 July 2025: £245.9 million) is retained by the group.

As the group has retained exposure to substantially all the risks and rewards of the above receivables, including credit, interest

rate, prepayment and other risks, it continues to recognise these assets in loans and advances to customers on its

consolidated balance sheet.

The majority of loans and advances to customers are secured against specific assets. Consistent and prudent lending criteria

are applied across the whole loan book with emphasis on the quality of the security provided.

The Notes continued

Close Brothers Group plc Annual Report 2026

208

Financial assets: Loans and advances to customers

The group’s approach to managing credit risk relating to loans and advances to customers is set out in the “Credit risk”

section of the Risk Report.

Information on the group’s internal credit risk reporting can be found in the “Credit risk” section of the Risk report, including an

analysis of gross loans and advances to customers, trade receivables and undrawn facilities by the group’s internal credit risk grading.

Information on the collateral held in relation to loans and advances to customers can also be found in the “Credit risk” section

of the Risk report, including analyses of gross loans and advances to customers by LTV ratio.

Financial assets: Treasury assets

The credit risk presented by the group’s treasury assets is low. Immaterial impairment provisions are recognised for cash and

balances at central banks, sovereign and central bank debt, SSA bonds and covered bonds. These financial assets are

investment grade and in Stage 1.

Company financial assets: Amounts owed by subsidiaries

Amounts owed by subsidiaries on the company balance sheet largely relate to Close Brothers Limited and Close Brothers

Holdings Limited, and the credit risk presented by these financial assets is immaterial.

(d) Market risk

Interest rate risk

Additional disclosures on the group’s interest rate risk can be found in the “Non-traded market risk” section of the Risk Report.

Foreign exchange risk

Additional disclosures on the group’s foreign exchange risk can be found in the “Non-traded market risk” section of the Risk

Report.

Non-trading financial instruments

Net gains and losses on non-trading financial instruments are disclosed in Note 11.

(e) Liquidity risk

Liquidity risk is the risk that liabilities cannot be met when they fall due or can only be met at an uneconomic price. The

following table analyses the contractual maturities of the group’s on-balance sheet financial liabilities on an undiscounted cash

flow basis. Additional disclosures on the group’s liquidity risk can be found in the "Funding and liquidity risk" section of the

Risk Report.

At 31 July 2026

Deposits by banks

20.3

—

20.3

Deposits by customers

838.7

2,602.6

1,056.2

2,035.8

1,529.4

—

8,062.7

Loans and overdrafts from banks

0.9

—

0.9

Debt securities in issue

—

343.2

42.5

41.6

1,217.3

257.2

1,901.8

Subordinated loan capital

—

7.7

—

7.7

61.3

334.2

410.9

Derivative financial instruments

0.4

41.6

36.3

52.2

294.7

57.6

482.8

Lease liabilities1

0.1

2.3

2.2

4.0

17.1

1.3

27.0

Other financial liabilities

7.9

63.1

2.5

1.7

4.9

0.2

80.3

Total

868.3

3,060.5

1,139.7

2,143.0

3,124.7

650.5 10,986.7

On demand

£ million

In less than

three months

£ million

In more than

three months

but not more

than six

months

£ million

In more than

six months

but not more

than one year

£ million

In more than

one year but

not more

than five

years

£ million

In more than

five years

£ million

Total

£ million

Lease liabilities are included within "Accruals, deferred income and other liabilities" on the balance sheet and primarily relate to the group's leasehold

properties.

Strategic report

Governance report

Financial statements

209

24. Financial risk management (continued)

At 31 July 2025

Deposits by banks

9.3

78.9

—

88.2

Deposits by customers

1,161.7

2,625.6

1,570.5

2,070.3

1,614.3

—

9,042.4

Loans and overdrafts from banks

1.5

—

1.5

Debt securities in issue

—

71.2

84.3

114.5

1,577.6

403.3

2,250.9

Subordinated loan capital

—

2.0

—

3.0

15.0

205.0

225.0

Derivative financial instruments

0.2

47.2

33.9

45.3

182.2

68.2

377.0

Lease liabilities1

0.2

1.4

1.5

3.3

24.1

1.9

32.4

Other financial liabilities

24.3

47.0

0.3

1.2

2.6

0.3

75.7

Total

1,197.2

2,873.3

1,690.5

2,237.6

3,415.8

678.7

12,093.1

On demand

£ million

In less than

three months

£ million

In more than

three months

but not more

than six

months

£ million

In more than

six months

but not more

than one year

£ million

In more than

one year but

not more than

five years

£ million

In more than

five years

£ million

Total

£ million

Lease liabilities are included within "Accruals, deferred income and other liabilities" on the balance sheet and primarily relate to the group's leasehold

properties.

Derivative financial instruments in the table above include net currency swaps. The following table shows the currency swaps

on a gross basis:

At 31 July 2026

0.4

297.9

223.1

390.0

294.7

57.6

1,263.7

At 31 July 2025

5.0

183.5

105.2

206.5

180.8

68.2

749.2

On demand

£ million

In less than

three months

£ million

In more than

three months

but not more

than six

months

£ million

In more than

six months

but not more

than one year

£ million

In more than

one year but

not more than

five years

£ million

In more than

five years

£ million

Total

£ million

(f) Offsetting

The following table shows the impact on derivative financial assets and liabilities which have not been offset but for which the

group has enforceable master netting arrangements in place with counterparties. The net amounts show the exposure to

counterparty credit risk after offsetting benefits and collateral, and are not intended to represent the group’s actual exposure to

credit risk.

Master netting arrangements allow outstanding transactions with the same counterparty to be offset and settled net, either

unconditionally or following a default or other predetermined event. Financial collateral on derivative financial instruments

consists of cash settled, typically daily, to mitigate the mark to market exposures.

At 31 July 2026

Derivative financial assets

93.3

(76.0)

47.2

64.5

Derivative financial liabilities

90.0

(76.0)

(13.2)

0.8

At 31 July 2025

Derivative financial assets

103.1

(95.5)

27.9

35.5

Derivative financial liabilities

104.7

(95.5)

(5.1)

4.1

Gross

amounts

recognised

£ million

Master netting

arrangements

£ million

Financial

collateral1

£ million

Net amounts

after

offsetting1

£ million

Financial collateral and net amounts after offsetting include initial margin of £59.5 million (31 July 2025: £35.2 million).

25. Investments in subsidiaries

In accordance with section 409 of the Companies Act 2006, the following is a list of the group’s subsidiaries at 31 July 2026,

which are all wholly owned and incorporated in the UK unless otherwise stated.

The investment in subsidiary of £487.0 million (31 July 2025: £487.0 million) in the company balance sheet relates to a 100%

shareholding in Close Brothers Holdings Limited of £287.0 million (31 July 2025: £287.0 million) and an investment in the AT1

securities of Close Brothers Limited of £200.0 million (31 July 2025: £200.0 million). The company issued AT1 securities of

£200.0 million on 29 November 2023 as described in Note 18 and simultaneously entered into a back-to-back transaction with

its subsidiary Close Brothers Limited.

There was no impairment of these investments in this and the prior year, albeit indicators of impairment exist in light of the

FCA's motor commissions review. The impairment assessment of the investment in Close Brothers Holdings Limited, based on

a discounted cash flow analysis of expected future dividends, which includes consideration for the potential impact of the

FCA's motor commissions review, demonstrated that its value in use remains above its carrying value.

The Notes continued

Close Brothers Group plc Annual Report 2026

210

Group

Close Brothers Holdings Limited1

The Bank

Air and General Finance Limited1

Arrow Audit Services Limited1

Close Asset Finance Limited1

Close Brothers DAC2 (Ireland)

Close Brothers Factoring GmbH3 (Germany)

Close Brothers Finance DAC4,12 (Ireland)

Close Brothers Finance plc1

Close Brothers Limited1

Close Brothers Motor Finance Payments Limited4,12 (Ireland)

Close Brothers Premium DAC2 (Ireland)

Close Brothers Retention Holdings DAC4,12 (Ireland)

Close Brothers Technology Services Limited1

Close Brothers Vehicle Hire Limited5

Close Business Finance Limited1

Close Credit Management (Holdings) Limited1

Close Finance (CI) Limited6 (Jersey)

Close Invoice Finance Limited1

Close Leasing Limited7

Close PF Funding I Limited8,10

Commercial Acceptances Limited1

Commercial Finance Credit Limited1

Finance for Industry Limited1,13

Finance for Industry Services Limited1,13

Kingston Asset Finance Limited1,11

Kingston Asset Leasing Limited1,11

Novitas Loans Limited1

Orbita Funding 2023-1 plc8,10

Orbita Funding 2026-1 plc8,10

Surrey Asset Finance Limited1

Topaz Asset Finance 2019-1 DAC9,10 (Ireland)

Topaz Asset Finance 2020-1 DAC9,10 (Ireland)

Registered office addresses:

1. 10 Crown Place, London EC2A 4FT, United Kingdom.

2. Swift Square, Building 1, Santry Demesne, Northwood, Dublin D09 A0E4, Ireland.

3. Rheinstraße 4i, 55116 Mainz, Germany.

4. Unit 18, Northwood House, Northwood Business Campus, Dublin D09 CR44, Ireland.

5. Lows Lane, Stanton-By-Dale, Ilkeston, Derbyshire DE7 4QU, United Kingdom.

6. Conway House, Conway Street, St Helier JE4 5SR, Jersey.

7. Jackson House, Sibson Road, Sale M33 7RR, United Kingdom.

8. 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom.

9. The Sidings, 4th Floor, Grand Canal Quay, Dublin 2, D02 E7K8, Ireland.

Subsidiaries by virtue of control:

10. The related undertakings are included in the consolidated financial statements as they are controlled by the group.

Subsidiaries owned by other holding companies in the group:

11. Kingston Asset Leasing Limited is owned by Kingston Asset Finance Limited.

12. Close Brothers Motor Finance Payments Limited and Close Brothers Retention Holdings DAC (Ireland) are owned by Close Brothers Finance DAC.

13. Finance for Industry Services Limited is owned by Finance for Industry Limited.

26. Discontinued operations and assets and liabilities classified as held for sale

At 31 July 2026, the group's discontinued operations comprised Winterflood Securities and Close Brothers Asset

Management.

Summary results of discontinued operations

Operating profit/(loss) before tax

Winterflood Securities

1.5

(14.2)

Close Brothers Asset Management

1.1

65.4

Operating profit before tax

2.6

51.2

Year ended

31 July 2026

£ million

Year ended

31 July 2025

£ million

Profit/(loss) after tax

Winterflood Securities

0.9

(14.7)

Close Brothers Asset Management

1.1

63.9

Profit after tax

2.0

49.2

Year ended

31 July 2026

£ million

Year ended

31 July 2025

£ million

Winterflood Securities

On 25 July 2025, the group announced that it had entered into an agreement to sell Winterflood Securities, an execution

services and securities business and one of the group's operating segments, to Marex Group plc. The sale was completed on

1 December 2025.

In the group's 2025 Annual Report, the business fulfilled the requirements of IFRS 5 to be classified as discontinued operations

in the consolidated income statement with comparative information restated. In addition, the assets and liabilities of the

business were presented as held for sale in the consolidated balance sheet.

Strategic report

Governance report

Financial statements

211

26. Discontinued operations and assets and liabilities classified as held for sale (continued)

Assets and liabilities held for sale

The major classes of assets and liabilities classified as held for sale, which exclude intercompany balances eliminated on

consolidation, are as follows:

Balance sheet

Intangible assets

—

10.3

Property, plant and equipment

—

20.2

Loans and advances to banks

—

54.8

Settlement balances

—

726.4

Equity shares

—

28.3

Debt securities and loans

—

32.8

Other assets

—

14.2

Total assets classified as held for sale

—

887.0

Bank loans and overdrafts

—

15.3

Settlement balances

—

698.2

Equity shares

—

10.4

Debt securities and loans

—

14.8

Accruals and deferred income

—

8.5

Other liabilities

—

20.2

Total liabilities classified as held for sale

—

767.4

31 July 2026

£ million

31 July 2025

£ million

Results of discontinued operations

Operating income

28.9

77.3

Operating expenses

(28.4)

(77.1)

Impairment credit on financial assets

—

0.1

Goodwill impairment recognised on remeasurement of disposal group as held for sale

—

(14.5)

Trading profit

0.5

(14.2)

Gain on disposal

1.0

—

Operating profit/(loss) before tax

1.5

(14.2)

Tax1

(0.6)

(0.5)

Profit/(loss) after tax

0.9

(14.7)

Four months ended

30 November 2025

£ million

Year ended

31 July 2025

£ million

The tax charge of £0.6 million relates to the trading profit of the business prior to disposal. The gain on disposal is exempt following the application

of the Substantial Shareholding Exemption.

Cash flow from discontinued operations

Net cash flow from operating activities

(2.3)

(8.3)

Net cash flow from investing activities

(0.4)

0.1

Net cash flow from financing activities

(0.2)

(0.5)

Four months ended

30 November 2025

£ million

Year ended

31 July 2025

£ million

Consolidated gain on disposal

Cash consideration received

103.7

Disposal transaction costs

(3.4)

100.3

Net assets on completion date

(99.3)

Gain on disposal

1.0

31 July 2026

£ million

Close Brothers Asset Management

On 19 September 2024, the group announced that it had entered into an agreement to sell its wealth management business,

Close Brothers Asset Management ("CBAM"), one of the group's operating segments, to funds managed by Oaktree Capital

Management, L.P. ("Oaktree"). The sale completed on 28 February 2025.

The Notes continued

Close Brothers Group plc Annual Report 2026

212

CBAM related to the group's 100% shareholding in Close Asset Management Holdings Limited ("CAMHL") and its subsidiaries.

The business was a well-regarded UK wealth management franchise and the transaction strengthened the group's capital base

and enhanced its position to navigate the current uncertain environment.

In the group's Half Year 2025 Results, the business fulfilled the requirements of IFRS 5 to be classified as discontinued

operations in the consolidated income statement. In addition, the assets and liabilities of the business were presented as held

for sale in the consolidated balance sheet. On completion, the assets and liabilities were derecognised and a gain on disposal

was recognised as follows.

Results of discontinued operations

Operating income

—

95.4

Operating expenses

—

(90.8)

Trading profit

—

4.6

Gain on disposal

0.1

60.8

Movement in fair value of deferred consideration

1.0

—

Operating profit before tax

1.1

65.4

Tax1

—

(1.5)

Profit after tax

1.1

63.9

Year ended

31 July 2026

£ million

Seven months ended

28 February 2025

£ million

Tax charge relates to the trading profit of the business prior to disposal. The gain on disposal is exempt following the application of the Substantial

Shareholding Exemption.

Cash flow from discontinued operations

Net cash flow from operating activities

—

(1.5)

Net cash flow from investing activities

—

(3.5)

Net cash flow from financing activities

—

(1.7)

Year ended

31 July 2026

£ million

Seven months ended

28 February 2025

£ million

Cash consideration of £146.4 million was received on completion. The contingent deferred consideration is in the form of

preference shares, redeemable no later than Oaktree’s exit, for an amount of up to £28.0 million plus interest at a rate of 8%

per annum, stepping up to 12% after five years.

The contingent deferred consideration is subject to potential deductions, including in relation to retention of key individuals and

certain potential regulatory costs and separation cost overruns. The preference shares are measured at fair value through profit

or loss under IFRS 9. The fair value is calculated to be £22.1 million (31 July 2025: £21.1 million) based on a discounted

expected cash flow method, with the main assumptions relating to the expected time until redemption, aforementioned

potential deductions and discount rate.

Close Brewery Rentals Limited

As announced on 15 July 2025, the group agreed the sale of its brewery container rentals business, Close Brewery Rentals

Limited ("CBRL"), to MML Keystone, a fund managed by MML Capital. The sale completed on 31 August 2025 and a gain on

disposal of £6.4 million has been recognised within “other income” in the consolidated income statement. The cash

consideration received was £8.1 million.

In the group's Annual Report 2025, the assets and liabilities of the business were classified as held for sale but did not meet

the criteria to be classified as discontinued operations under IFRS 5. The results of CBRL were therefore included within

continuing operations.

Assets and liabilities held for sale

The major classes of assets and liabilities classified as held for sale, which exclude intercompany balances eliminated on

consolidation, are as follows:

Balance sheet

Property, plant and equipment

—

42.8

Loans and advances to banks

—

0.2

Other assets

—

4.0

Total assets classified as held for sale

—

47.0

Accruals and deferred income

—

0.7

Other liabilities

—

5.3

Total liabilities classified as held for sale

—

6.0

31 July 2026

£ million

31 July 2025

£ million

Strategic report

Governance report

Financial statements

213

Glossary and definition of key terms

Additional Tier 1 (“AT1”) capital

Additional regulatory capital that along with CET1 capital makes up a bank’s or banking

group’s Tier 1 regulatory capital. Includes the group’s perpetual subordinated contingent

convertible securities classified as other equity instruments under IAS 32

Adjusted

Adjusted measures are presented on a basis consistent with prior periods and exclude

any exceptional and adjusting items which do not reflect underlying trading performance

Adjusted Earnings per Share

(“AEPS”)

Adjusted operating profit less tax and AT1 coupons divided by basic weighted average

number of ordinary shares in issue

Applicable requirements

Applicable capital ratio requirements consist of the Pillar 1 requirement as defined by the

CRR, the Pillar 2a requirement set by the PRA, and the capital conservation buffer and

countercyclical buffer as defined by the PRA Rulebook. Any applicable PRA buffer is

excluded

Artificial Intelligence ("AI")

The capability of computer systems to perform tasks that normally require human

intelligence, including learning, analysis, decision-making, and content generation

Average loan size

The average balance outstanding calculated as the gross loans and advances to

customers divided by number of the loans in issue

Average maturity of funding

allocated to the loan book

Simple weighted average of the applicable funding allocated to the loan book. The

applicable funding excludes equity (except AT1 instruments) and deducts funding held

for liquidity purposes

Bad debt ratio

(Adjusted) impairment losses in the year as a percentage of average net loans and

advances to customers and operating lease assets excluding Vehicle Hire, which is in

wind-down, and Brewery Rentals, classified as held for sale on the group's 31 July 2025

balance sheet, now sold

Basic earnings per share

(“EPS”)

Total profit attributable to ordinary shareholders divided by basic weighted average

number of ordinary shares in issue

Basic earnings per share

(“EPS”) continuing operations

Operating profit from continuing operations less tax and AT1 coupons, divided by basic

weighted average number of ordinary shares in issue

Buy As You Earn (“BAYE”)

The HM Revenue & Customs-approved Share Incentive Plan that gives all employees the

opportunity to become shareholders in the group

Capital Requirements Directive

(“CRD”)

European Union regulation implementing the Basel III requirements in Europe, alongside

CRR II

Capital Requirements

Regulation (“CRR”)

Regulation 575/2013/EU, as it forms part of the assimilated law of the United Kingdom

CDP

Formerly the “Carbon Disclosure Project”, a leading, internationally recognised

independent rating agency and assessor of corporate carbon emissions disclosures and

actions

CET1 capital ratio

Measure of the group’s CET1 capital as a percentage of risk weighted assets, as

required by CRR

Common Equity Tier 1 (“CET1”)

capital

Measure of capital as defined by the CRR. CET1 capital consists of the highest quality

capital including ordinary shares, related share premium account, retained earnings and

other reserves, less goodwill and certain intangible assets and other regulatory

adjustments

Compensation ratio

Total staff costs as a percentage of adjusted operating income

Consolidated gain on disposal

The profit or loss recognised on the sale of a subsidiary or business, calculated as

proceeds received less related costs and the carrying amount of net assets and goodwill

disposed

Contingent deferred

consideration

A portion of the purchase price on an acquisition that is payable at a future date and is

dependent on the occurrence of specified future events or conditions

Cost of funds

Interest expense incurred to support lending activities excluding Vehicle Hire and

Brewery Rentals divided by the average net loans and advances to customers and

operating lease assets excluding Vehicle Hire and Brewery Rentals

Credit-impaired

Where one or more events that have a detrimental impact on the estimated future cash

flows of a loan have occurred. Credit-impaired events are more severe than significant

increase in credit risk triggers. Accounts which are credit-impaired will be allocated to

Stage 3

Customer sentiment score

Measures of a customers' perception of and satisfaction with a company. Includes

customer satisfaction score ("CSAT"): a measure of customer satisfaction expressed as

a percentage of positive responses from the total of those surveyed) and net promoter

score ("NPS"): a measure of how likely a customer is to recommend a company.

Close Brothers Group plc Annual Report 2026

214

Discounting

The process of determining the present value of future payments

Dividend per share (“DPS”)

Comprises the final dividend proposed for the respective year, together with the interim

dividend declared and paid in the year

Effective interest rate (“EIR”)

The interest rate at which revenue is recognised on loans and discounted to their

carrying value over the life of the financial asset

Effective tax rate (“ETR”)

Tax on operating profit/(loss) as a percentage of operating profit/(loss) on ordinary

activities before tax

Employee engagement

The average of scores from our annual engagement survey relating to overall colleague

satisfaction, likelihood of recommending the firm and its products and services, and

intention to stay working for Close Brothers

Expected credit loss (“ECL”)

The unbiased probability-weighted average credit loss determined by evaluating a range

of possible outcomes and future economic conditions

Expense/income ratio

(Adjusted) operating expenses divided by (adjusted) operating income

Exposure at default (“EAD”)

The capital outstanding at the point of default

Financial Conduct Authority

(“FCA”)

A financial regulatory body in the UK, regulating financial firms and maintaining integrity

of the UK’s financial market

Financial Ombudsman Service

(“FOS”)

The Financial Ombudsman Service settles complaints between consumers and

businesses that provide financial services

Financial Reporting Council

(“FRC”)

An independent regulatory body responsible for promoting high quality corporate

governance and reporting amongst UK companies

Forbearance

Forbearance occurs when a customer is experiencing financial difficulty in meeting their

financial commitments and a concession is granted, by changing the terms of the

financial arrangement, which would not otherwise be considered

Gross carrying amount

Loan book before expected credit loss provision

Growth Guarantee Scheme

(“GGS”)

The successor scheme to the Recovery Loan Scheme, the Growth Guarantee Scheme

launched in July 2024 and is designed to support access to finance for UK small

businesses as they look to invest and grow

High quality liquid assets

(“HQLAs”)

Assets which qualify for regulatory liquidity purposes, including Bank of England

deposits and sovereign and central bank debt

HM Revenue & Customs

(“HMRC”)

The UK’s tax, payments and customs authority

Internal Capital Adequacy

Assessment Process (“ICAAP”)

An annual self-assessment of a bank’s material risks and the associated level of capital

needed to be held, and undertaking appropriate stress testing of capital adequacy

Internal Liquidity Adequacy

Assessment Process (“ILAAP”)

The processes for the identification, measurement, management and monitoring of

liquidity

Internal ratings based (“IRB”)

approach

A supervisor-approved method using internal models, rather than standardised risk

weightings, to calculate regulatory capital requirements for credit risk

International Accounting

Standards (“IAS”)

Older set of standards issued by the International Accounting Standards Council, setting

up accounting principles and rules for preparation of financial statements. IAS are being

superseded by IFRS

International Financial

Reporting Standards (“IFRS”)

Globally accepted accounting standards issued by the IFRS Foundation and the

International Accounting Standards Board

Leverage ratio

Tier 1 capital as a percentage of non-risk-weighted total exposures, adjusted for certain

capital deductions, including intangible assets, and off-balance sheet exposures

Lifetime expected credit loss

provision (“Lifetime ECL”)

Losses that result from default events occurring within the lifetime of the loan

Liquidity coverage ratio

(“LCR”)

Measure of the group’s HQLAs as a percentage of expected net cash outflows over the

next 30 days in a stressed scenario

Loan to value (“LTV”) ratio

For a secured or structurally protected loan, the loan balance as a percentage of the

total value of the asset

Long-term bad debt ratio

Long-term bad debt ratio is calculated using IAS 39 until the change to IFRS 9 in FY19.

Long-term average bad debt ratio of 1.2% based on the average bad debt ratio for

FY08-FY26, excluding Novitas from FY21 onwards and Rentals businesses from FY24

Loss given default (“LGD”)

The amount lost on a loan if a customer defaults

Net interest margin (“NIM”)

(Adjusted) operating income for the lending divisions, divided by average net loans and

advances to customers and operating lease assets excluding Vehicle Hire and Brewery

Rentals

Net stable funding ratio

(“NSFR”)

Regulatory measure of the group’s weighted funding as a percentage of weighted assets

Net zero

Target of completely negating the amount of greenhouse gases produced by reducing

emissions or implementing methods for their removal

Probability of default (“PD”)

Probability that a customer will default on their loan

Prudential Regulation Authority

(“PRA”)

A financial regulatory body, responsible for regulating and supervising banks and other

financial institutions in the UK

Strategic report

Governance report

Financial statements

215

Return on assets

Adjusted operating profit less tax and AT1 coupons divided by average total assets for

continuing operations at the balance sheet date and prior year

Return on average tangible

equity (“RoTE”)

Adjusted operating profit, less tax and AT1 coupons, divided by average total

shareholders’ equity, excluding intangible assets and AT1, for continuing operations

Return on opening equity

(“RoE”)

Adjusted operating profit less tax and AT1 coupons divided by opening equity for

continuing operations, excluding AT1

Risk weighted assets (“RWAs”)

A measure of the amount of a bank’s exposures, adjusted for risk in line with the CRR. It

is used in determining the capital requirement for a financial institution

Scope 1, 2 and 3 emissions

Categorisation of greenhouse gas emissions, as defined by the Greenhouse Gas (GHG)

Protocol, into direct emissions from owned or controlled sources (Scope 1), indirect

emissions from the generation of purchased electricity, heating and cooling consumed

by the reporting company (Scope 2), and all other indirect emissions that occur in a

company’s value chain (Scope 3)

Significant increase in credit

risk (“SICR”)

An assessment of whether credit risk has increased significantly since initial recognition

of a loan using a range of triggers. Accounts which have experienced a significant

increase in credit risk will be allocated to Stage 2

Standardised approach

Generic term for regulator-defined approaches for calculating credit, operational and

market risk capital requirements as set out in the CRR

Subordinated debt

Represents debt that ranks below, and is repaid after claims of, other secured or senior

debt owed by the issuer

Task Force on Climate‑related

Financial Disclosures (“TCFD”)

Regulatory framework to improve and increase reporting of climate-related financial

information, including more effective and consistent disclosure of climate-related risks

and opportunities

Term funding

Funding with a remaining maturity greater than 12 months

Tier 2 capital

Additional regulatory capital that along with Tier 1 capital makes up a bank’s total

regulatory capital. Includes qualifying subordinated debt

Total funding as percentage of

loan book

Total funding divided by net loans and advances to customers and operating lease

assets

Total shareholder return

(“TSR”)

Measure of shareholder return including share price appreciation and dividends, which

are assumed to be re-invested in the company’s shares

Typical loan maturity

Term of loan measured per contract with customer at loan's inception

Watch list

Internal risk management process for heightened monitoring of exposures that are

showing increased credit risk

Glossary and definition of key terms continued

Close Brothers Group plc Annual Report 2026

216

Registered office

Close Brothers Group plc

10 Crown Place

London EC2A 4FT

Telephone:

0333 321 6100

Email:

enquiries@closebrothers.com

Website:

www.closebrothers.com

Company No. 00520241

Shareholder enquiries

Registrar

MUFG Corporate Markets

FREEPOST SAS

MUFG Corporate Markets

Central Square

29 Wellington Street

Leeds

LS1 4DL

Customer support centre:

0371 664 0300 (calls are charged at the standard

geographic rate and will vary by provider)

From overseas:

+44 (0)371 664 0300 (calls will be charged at the

applicable international rate)

Lines are open from 9.00 am to 5.30 pm Monday to

Friday, excluding public holidays in England and Wales

Email:

shareholderenquiries@cm.mpms.mufg.com

Website:

www.mpms.mufg/en/mufg-corporate-markets/

Online proxy voting:

https://uk.investorcentre.mpms.mufg.com/

Shareholder information

Financial calendar

First quarter trading update

19 November 2026

Annual General Meeting

19 November 2026

Half year end

31 January 2027

Interim results

March 2027

Third quarter trading update

May 2027

Financial year end

31 July 2027

Preliminary results

September 2027

The financial calendar is updated on a regular basis throughout the year. Please refer to our website

www.closebrothers.com for up-to-date details.

Safeguarding against fraud

Fraudsters use persuasive and high-pressure tactics to lure

investors into scams. They may offer to sell shares that prove

to be worthless or non-existent, or to buy shares at an

inflated price in return for an upfront payment. While high

profits are promised, if you buy or sell shares in this way you

will probably lose your money.

How to avoid share fraud

• Keep in mind that firms authorised by the FCA are unlikely

to contact you out of the blue with an offer to buy or sell

shares.

• Do not get into a conversation, but note the name of the

person and firm contacting you and then end the call.

• Check the Financial Services Register at https://

contacting you are authorised by the FCA.

• Beware of fraudsters claiming to be from an authorised

firm, copying its website, or giving you false contact

details.

• If you want to phone the caller back, use the firm’s contact

details listed on the Financial Services Register at

https://register.fca.org.uk/s/

• If the firm does not have contact details on the Register or

they tell you the details are out of date, call the FCA on

0800 111 6768.

• Search the list of unauthorised firms to avoid at https://

www.fca.org.uk/consumers/unauthorised-firms-individuals

• Remember that if you buy or sell shares from an

unauthorised firm, you cannot access the Financial

Ombudsman Service or Financial Services Compensation

Scheme.

• Get independent financial and professional advice before

handing over any money.

• If it sounds too good to be true, it probably is.

Report a scam

If you think that you have been approached by fraudsters or

have any concerns about a potential scam, contact the

FCA's Consumer Helpline on 0800 111 6768 or use the

online "Share Fraud Reporting Form" available from their

website at https://www.fca.org.uk/consumers/report-scam.

We would also recommend contacting the police through

Report Fraud on 0300 123 2040 or visiting

www.reportfraud.police.uk/ for further information.

Strategic report

Governance report

Financial statements

217

Cautionary statement

Certain statements included or incorporated by reference

within this report may constitute “forward-looking

statements” in respect of the group’s operations,

performance, prospects, financial condition and/or

environmental, social and governance ambitions, targets and

commitments. All statements other than statements of

historical fact are, or may be deemed to be, forward-looking

statements. Forward-looking statements are sometimes, but

not always, identified by their use of a date in the future or

such words as “anticipates”, “aims”, “due”, “could”, “may”,

“will”, “should”, “expects”, “believes”, “intends”, “plans”,

“potential”, “targets”, “goal” or “estimates” and other words

and expressions of similar meaning. By their nature, forward-

looking statements involve a number of risks, uncertainties

and assumptions and actual results or events may differ

materially from those expressed or implied by those

statements, including where statements are based on

evolving methodologies, data and/or regulatory frameworks.

There are also a number of factors, including factors outside

of the group's control, that could cause actual future

operations, performance, financial conditions, results or

developments to differ materially from the plans, goals and

expectations expressed or implied by these forward-looking

statements and forecasts. These factors include, but are not

limited to, those contained in this report including its

sections on principal and emerging risks. Accordingly, no

assurance can be given that any particular expectation will

be met and reliance should not be placed on any forward-

looking statement. Additionally, forward-looking statements

regarding past trends or activities should not be taken as a

representation that such trends or activities will continue in

the future.

Except as may be required by law or regulation, no

responsibility or obligation is accepted to update or revise

any forward-looking statement resulting from new

information, future events or otherwise. Nothing in this

document should be construed as a profit forecast. Past

performance cannot be relied upon as a guide to future

performance and persons needing advice should consult an

independent financial adviser.

This report does not constitute or form part of any offer or

invitation to sell, or any solicitation of any offer to subscribe

for or purchase any shares or other securities in the

company or any of its group members, nor shall it or any part

of it or the fact of its distribution form the basis of, or be

relied on in connection with, any contract or commitment or

investment decisions relating thereto, nor does it constitute a

recommendation regarding the shares or other securities of

the company or any of its group members. Statements in this

report reflect the knowledge and information available at the

time of its preparation. Liability arising from anything in this

report shall be governed by English law. Nothing in this

report shall exclude any liability under applicable laws that

cannot be excluded in accordance with such laws.

Close Brothers Group plc Annual Report 2026

218

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on the emissions volume and the carbon offset project being supported.

Design by Black Sun Global.

Board of Directors and Executive Committee photography by Richard Davies.

Close Brothers Group plc

10 Crown Place

London EC2A 4FT

Tel: 0333 321 6100

www.closebrothers.com

Source: the issuer's announcement on the London Stock Exchange's Regulatory News Service, reproduced for reference. Announcement text is the issuer's; this site adds no commentary to it.