Close Brothers Group plc (CBG) Earnings Call Transcript & Summary

Good morning, and welcome to the Close Brothers Investor Event. I'm Adrian Sainsbury, and I'm here this morning with members of my leadership team, and we're looking forward to sharing with you our perspectives on the Close Brothers Group and our strategy. Let's start with the agenda. First up will be my presentation on the group's strategy. Following this, Mike will give a brief overview of how our strong financial resources support the delivery of our strategy. We'll then move on to a presentation from our Group Treasurer, Andy Townsend, who'll be talking through our approach to funding and how the treasury function supports the growth of our businesses. You'll then hear from each of our business chief executives, who will give their views on their business, its prospects and strategy. First up, you'll hear from each of our banking Chief Executives, with Neil Davies talking through the commercial business; Rebecca McNeil speaking on retail and Frank Pennal on property. We'll then move on to Asset Management with Martin Andrew, and finally, Phillip Yarrow will talk through Winterflood. There will be opportunities to ask questions after the banking presentations and also following presentation on Winterflood. Your questions can be asked either via the telephone conference line during the Q&A sessions or you can submit them over the webcast at any point during this morning. Current circumstances have dictated that this has to be a virtual event. However, engagement with our analysts and investors is important to me, and I look forward to seeing you in person in the near future. To begin with, I'd like to remind you of the breadth and specialism of the businesses that make up the Close Brothers Group. We have 3 separate divisions in Banking, Asset Management and Winterflood, each serving distinct customer bases with a range of specialist products and services. Within banking, we have 3 primary business lines: commercial, retail and property, each in turn made up of multiple specialist lending businesses in distinct markets. Commercial provides asset, invoice and speciality finance solutions against a wide range of asset classes, principally to small and medium-sized businesses. Retail provides intermediated lending, principally to consumers, providing secondhand car finance through motor dealers and premium finance through insurance brokers. And property provides short-term residential development and bridging finance for professional property developers. Close Brothers' Asset Management provides financial advice and investment management services to private clients in the U.K. and has GBP 16 billion of total client assets. Our Winterflood is a leading U.K. market maker, delivering high-quality execution services to stockbrokers, wealth managers and institutional investors as well as a full-service investment trust team and Winterflood Business Services. At our full and half year results, I talked about how important it is that we continue to protect and take our business model forward. Let's take a look at what differentiates this model and puts us in a very strong place to continue to deliver on our long-term track record of growth. In banking, our success is supported by our disciplined pricing and underwriting criteria. We consistently apply these criteria at all stages of the economic cycle. Our lending is predominantly secured or structurally protected with conservative loan-to-value ratios, small loan sizes and short maturities. We don't operate in the undifferentiated volume-driven markets, which are dominated by the larger banks, and we prioritize pricing and margins over volume. Ensuring we have strong capital, funding and liquidity position, which allows us to protect and grow the business model while meeting all regulatory requirements is also key. Our focus on service and personal approach gives us a deep understanding of the needs of our customers, clients and partners, allowing us to offer high service levels and flexible solutions across all our businesses as we deliver a human-fronted tech-enabled approach. We're experts in the industry sectors we serve. In banking, this leads to fast lending decisions and access to funds when customers need them most. Close Brothers Asset Management and Winterflood are strong examples of the expertise of our people in their specialist fields, which underpins their success in wealth management and trading. We have a unique culture at Close Brothers, a relentless customer focus, our long-term approach to everything we do are embedded throughout our organization. And I truly believe that this is one of the most important foundations of our success with our culture key in driving our strong financial performance. Finally, we lend in a variety of sectors, locations and asset classes, which supports our performance, particularly during challenging times. CBAM and Winterflood also provide additional income streams. So each of these strengths has contributed to our long-term track record, enabling us to deliver loan book growth, profitability and dividend progression over the years with each of our businesses supporting our overall performance as a group. Looking further at how each of our businesses combines our key strengths and unique culture to drive this strong track record, in Banking, our consistent pricing discipline supports our high returns and net interest margin. This is combined with our prudent underwriting, leading to a low bad debt ratio as we maintain this discipline throughout the cycle with loan book growth remaining an output. In CBAM, we've seen strong growth with assets under management more than doubling since 2014 and strong net inflows within the historical range of 6% to 10%, capitalizing on our vertically integrated and multichannel distribution and Winterflood, which has generated good levels of income throughout all market conditions, growing income over time and has really excelled with the volatility and surge in retail trading we've seen since COVID-19. Our diversified portfolio of businesses is an important part of our success and resilience over the years. Close Brothers Asset Management and Winterflood contribute to the diversification of the group which has supported the stability of earnings and in turn, the dividend, particularly in challenging times as evidenced by this chart. It also allows us to continue investing to grow the business through the cycle. Each of these businesses are valuable components of the group with a solid contribution to the group's profit, strong ROEs and attractive growth potential. I've outlined our long track record of growth, profitability and dividend progression over the years. It's our strategy, our culture and our responsibility that form the foundations for this success, enabling us to deliver on our purpose, to help the people and businesses of Britain thrive over the long term. I introduced our responsibility as a core component of our model when I took on the Chief Executive role last September. And as we've navigated through this challenging external environment, our responsibility has been more important than ever. Our strategy places exceptional service at the heart of everything we do. Each of our diverse specialist businesses have deep industry knowledge, so they can understand the challenges and opportunities that our customers and clients face. Our culture brings out the very best of our people and embeds our long-term approach. And our responsibility reflects our duty to help address the social, economic and environmental challenges facing our businesses, employees, customers and clients. Our purpose guides everything we do as a business, and conveys the important role we have to play in supporting small businesses and individuals. It means helping people and businesses unlock their potential and plan for the future with confidence, building relationships that stand the test of time. And it means that we continue to be there for the long term, making decisions that are right for today and for generations to come. I genuinely believe that our purpose is at the heart of our business, guiding every decision we make and our people believe it, too, as reflected by our recent employee survey results. Earlier, I highlighted our unique culture as one of the key foundations of our success. It combines our values of service, expertise and relationships with our ways of working, teamwork, integrity and prudence. Taking each in turn, we pride ourselves on our excellent levels of service, evidenced by strong Net Promoter Scores and high levels of repeat business across our businesses. We're committed to attracting and retaining talent, growing and building the expertise of our people. And I'm really pleased that our most recent employee opinion survey showed that 97% of our colleagues feel they have the skills and knowledge to do their job well. We take the time to understand and build strong long-term relationships with our customers and clients. Teamwork and promoting a fair and open environment are really important to us, with almost all our colleagues believing that their teamwork -- their team works well together to get the job done. We're committed to acting with integrity and doing the right thing, reflected by 97% of our colleagues agreeing that our culture encourages them to treat customers and clients fairly. And finally, we always take a prudent, robust and transparent approach to risk management. These values ensure we continue to provide excellent service for our customers and clients over the long term, bringing out the best in our people and supporting our strong reputation. As discussed at the half year results, we've evolved from our previous strategic objectives: protect, improve, extend to protect, grow, sustain. Today, together with my leadership team, I'll give you further details of how we think about these to ensure we can maintain and take forward our strong long-term track record of success. Our first strategic objective is to keep our business safe by maintaining and enhancing our model's key strengths. To protect our business, it's essential that we continue to invest in it. Our high levels of personal service and specialism are real points of differentiation. We don't compete on price. Our model is fundamentally different from the high-volume, low service model pursued by many other institutions. Through our direct sales forces, we've deep knowledge of the industry sectors and asset classes we cover. This in turn leads to lending decisions informed by experts and faster access to funds when our customers need them most. Our investments and cost base support the generation of our strong margins, resilience and future growth opportunities. Whilst we continue to focus on disciplined management of our BAU cost base, it's also essential that we continue to invest in our model, as we've successfully done in the past to ensure its core differentiating strengths are not compromised. On this slide, you can see several examples of how we're investing for the future as we look to build on our track record of successful investments. Some of these programs are focused on protecting our business, strengthening systems and operational resilience and adapting to regulatory change. Others help us to grow and sustain our business. For example, by strengthening our customer proposition or driving operational efficiency. And although we continue to invest in our technology, we see this as a way of supporting our human fronted approach, making our experts even more valuable. Our businesses will talk through some of these investments in more detail later on. Disciplined growth is important, and that's why we've included it as a new strategic objective. As I previously emphasized, this doesn't mean we'll achieve growth at any cost. We don't manage our business through a growth target, but instead prioritize consistency of our lending criteria and maintaining our strong returns across the businesses. Loan book growth in the lending businesses will absolutely continue to be an output of our business model. Although none of us could have predicted the disruption caused by COVID-19, we've navigated its challenges well so far, benefiting from the playbooks and simulations we'd run in prior years to prepare for a downturn. This has allowed us both to support our customers with over 130,000 COVID-19-related concessions offered, totaling GBP 2 billion whilst at the same time, writing record volumes of new business and delivering over GBP 700 million of loan book growth. We've lent over GBP 1 billion of loans across the U.K. government schemes with the majority in CBILS loans. We made a strategic decision to focus on this scheme over the Bounce Back Loan Scheme as it enabled us to apply our normal underwriting discipline and pricing. We've capitalized on the increasing trading volumes in Winterflood and made the most of demand in our core markets, such as motor finance. So we've been able to maximize the opportunities available to us in the current environment. And in the first 9 months of the 2021 financial year, we've delivered 8% loan book growth. While we still can't know how the next phase of the cycle will play out, it's our strategic priority to be ready for it. Historically, this is when we capitalized on the consistent application of our business model. So we're prepared operationally and strategically to continue to support our customers and outperform for our shareholders. Looking ahead, we're confident that we can continue to grow profitably. We'll continue to access new growth opportunities that fit with our successful model across our businesses in existing and in new markets. Our business presentations will touch on some of these opportunities in more detail later on. We have a strong track record of delivering disciplined growth through our existing book but also in new markets. We're constantly looking for new opportunities and tend to target segments in the market where our clients value our personal service and expertise. Over the past 13 years, we've more than tripled our loan book with growth from our existing businesses as well as from new opportunities. But how do we assess these opportunities? As you can see on the right-hand side of this chart, we developed what we call our model fit assessment framework. In addition to looking at the strategic fit of each opportunity with our objectives to protect, grow and sustain the business model, we also look at 8 other criteria to ensure growth opportunities fit with our model and with our culture and our way of doing business. These filters include more tangible attributes such as the extent -- sorry, such as the expert relationship-based and specialist nature of our businesses, the long-term prospects and strong margins but also include cultural fit as it's important that we keep intact our responsible way of doing business. Although these are not mutually exclusive filters, this framework ensures we're growing in line with our model and preserving the attributes that will continue to generate value for our shareholders. Our final strategic objective, Sustain, reflects our long-term approach, which is genuinely embedded in everything we do. That's why it's important that we secure the future of our business, customers and the world we operate in, and we do it responsibly. We recognize that to help the people and businesses of Britain thrive over the long term, we have a responsibility to help address the social, economic and environmental challenges facing our business, employees and customers now and into the future. This collective responsibility is reflected through the sustainable objectives we set ourselves as a business, promoting an inclusive culture and supporting new ways of working in social mobility, 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 and enabling savers and investors to access financial markets and advice and plan for the future and supporting our customers, clients and partners in the transitions towards more sustainable practices. Acting responsibly and sustainably is not a new concept for our business, it's always been our business. Looking at how our responsibility is reflected across our different stakeholders, for our people, this can be seen through our strong scores in our recent employee opinion survey with engagement at 91% and through our commitment to further increase our diversity and nurture our inclusive culture. We continue to partner with organizations such as the business disability forum and now have 33% female senior managers, exceeding the Women in Finance Charter target. We recognize that putting customers' interest at the heart of our business is central to our success. We also engaged with our largest suppliers regularly with our annual survey indicating that the majority of our suppliers feel positive about how we treat them. From an environmental perspective, we're supportive of the ambitions of the Paris Agreement on net zero goals. And we're targeting becoming operationally net zero through our Scope 1 and Scope 2 carbon emissions by 2030 and have already seen a 20% reduction in the 2020 financial year. Over the next 12 months, we're working to gain a deeper understanding of our indirect Scope 3 emissions and help shape our own transition road map towards lower emissions. Our goal is to create long-term value and a lasting positive impact on society. And so engaging with local communities is integral to how we operate and conduct business. We take great pride in helping SMEs achieve their ambitions, and continue with initiatives such as the Close Brothers SME Apprentice Program, now in its fifth cohort. We're proud to be an organization that supports social mobility and creates equal opportunities for all regardless of background. We offer coaching, advice and mentoring to students from disadvantaged backgrounds and provide access through structured work experience opportunities such as through our partnership with upReach. And we've established programs to develop talent with 75 individuals having gone through our graduate program and nearly 40 trainees completing or still participating in our ASPIRE School Leaver Programme. And now I'd like to show you a quick video covering just a couple of the ways that we're putting our responsibility into action. [Presentation]

To summarize, the disciplined application of our business model supports our long track record of growth and profitability. This is supported by our unique culture and long-term approach, which is truly embedded throughout our business, and how we do business with our customers and clients. Our diversified portfolio of businesses further supports our resilience and growth over the long term, with each of our businesses a valuable component in its own right. You'll hear this morning from our business chief executives, how we'll protect, grow and sustain our business model, and we're well positioned to continue delivering for our stakeholders. Acting responsibly and sustainably is fundamental to our purpose, strategy and culture. I'll now hand over to Mike Morgan, who will cover the strength of our financial resources to deliver on our strategy, and I'll come back for each of the Q&A sessions and wrap up. I hope you enjoy the rest of the presentations.

Thank you, Adrian, and good morning. We have a strong balance sheet to support the delivery of our strategy, supported by our disciplined approach on both assets and liabilities. Our disciplined underwriting criteria and the expertise of our people give us confidence in the quality of our loan book, which is diverse and over 90% secured or structurally protected. As Andy will cover in more detail shortly, our funding base is well diversified. We borrow long and lend short. And since the start of the COVID-19 pandemic, we have also increased our funding and liquidity levels which has enabled us to take advantage of market opportunities. Our CET1 capital ratio stood at 15.5% at the end of April with significant headroom against minimum regulatory requirements. We have a strong capital base, which allows us to fund growth and to support a sustainable dividend while meeting our regulatory requirements. In addition, we have a simple capital stack and have flexibility to raise AT1 to supplement the group's capital structure. The consistent capital generation of the group, combined with our disciplined approach to lending and prudent management of resources, places us in a strong position to take the business model forward. Investing through the cycle remains a priority for the group and allows us to protect and grow our business, with ongoing investment critical to ensuring we maintain regulatory compliance and our operational and cyber resilience. Our multiyear investment programs continue to progress, delivering tangible benefits and supporting growth in the business. The investments we have made in recent years has also given us some real benefits in responding and adapting our business to the recent challenges of COVID-19. You will hear more about some of these programs and benefits this morning. While our strong financial resources allow us to continue investing through the cycle, our strict cost discipline and constant focus on becoming more efficient are also key to creating further investment capacity. As illustrated by this chart, banking business as usual costs have remained broadly stable over the past 3 years. Looking ahead in the Banking division, we are progressing well with our key strategic programs. Although cash investment spend is expected to stabilize over the next financial years, depreciation related to these programs will continue to increase. As I said earlier, we'll continue to exercise strict discipline on our operating costs. In Asset Management, as we continue to invest in the business to deliver growth and scale, the cost trajectory will depend on the rate of hiring with investments in technology projects expected to continue. In Winterflood, we have a variable cost base, which is mainly driven by compensation and settlement costs. One of the key investment programs is the transition to the IRB approach to capital management. We have invested significant time and resources on this project and are pleased with the progress to date. The transition to IRB provides us long-term strategic flexibility to fund growth, and the benefits are compelling. It will optimize our capital efficiency resulting in risk weightings that better reflect the risk profile of each of our lending businesses. More importantly, it will enhance our risk management framework which has been evolving to reflect the maturity and size of our organization. In December, we submitted our initial application to the PRA. We are progressing through the first phase of the PRA application process and continue to work with the regulator to support their review. Our property, motor and energy portfolios where the use of models is most mature, have been submitted with our initial application. Other businesses will follow in future years. We are not providing guidance on the quantum of expected benefit or the timing until approval. Although from what we have learned from other banks going through the same process, there is an expectation that it will take at least 18 months until approval and implementation starts. We will provide you with further updates on this important milestone for our organization as we move through the applications process. As well as hearing from our business chief executives, we thought today would provide a good opportunity for you to hear from our Group Treasurer, Andy Townsend. Andy joined Close Brothers in November last year. And prior to this was Group Treasurer at Nationwide and Standard Life Aberdeen. I will now hand over to Andy. Thank you.

Thanks, Mike, and thank you all for joining today. You'll surely hear more from my colleagues about what Adrian described as maximizing the opportunities available to us. And of course, we need to be able to finance that growth and to do so in a way that's sustainable and aligned with our business model. Adrian and Mike both talked about prudent management of financial resources as one of our distinctive strengths. And I'll spend a few minutes explaining how that shapes our approach to all things funding and liquidity. Diversity and specialism has been used to characterize our lending, and this could equally be applied to our borrowing best described with reference to 6 broad themes. You can see from the chart on the right-hand side that our liabilities are spread over a large number of deep and liquid markets, balanced across both wholesale sectors and customer deposits. We've steadily broadened and deepened our access to those markets and are happy with our current funding mix. It reduces concentration risk and ensures we can flex our position through the cycle. On the savings side, investments in our customer deposit platform over the last few years have allowed us to acquire deposit balances across a broader product range with improved servicing capabilities and increased capability. And regarding wholesale markets, despite the relatively modest balance sheet size, we've established and developed an array of liability classes, offering real flexibility and providing insurance against dislocation within individual markets. This funding capability includes the option to make use of high-quality loan assets to access a number of forms of extremely cost-effective collateralized funding. Wholesale market access, in particular, is underpinned by our Moody's credit rating of Aa3, one of the strongest in the United Kingdom. The long-standing approach of borrow long, lend short is central to our funding model. It is and will remain core to our strategy with the average maturity of allocated funding well ahead of the average loan book maturity. We do, though, take a holistic approach also considering factors such as cost, investor preference, secondary liquidity, maturity concentration and incumbents. Liquidity risk is managed in a similarly prudent manner with a liquidity coverage ratio in excess of 1,000%, well ahead of both our internal risk appetite and regulatory requirements. The majority of that liquid asset buffer is held in the form of deposits at the Bank of England. So let me expand briefly how these themes operate across both wholesale and savings areas of the business. Starting with wholesale. While we are well represented across stern bond markets with senior and subordinated public bond issues, private placements, a public securitization program, private secured funding arrangements and money market deposits, in addition, we have access to government funding schemes and are participants in the Sterling Monetary Framework, better known as the Red Book to people of my vintage. This combination of breadth of access together with relatively modest requirements means we're not beholden to any one market and can optimize both cost and mix of funding. Whilst we're not an especially prolific issuer, it is worth highlighting our recent debt issues. We accessed the senior market at the end of 2020 and raised subordinated debt in the form of Tier 2 just a couple of weeks ago. Both transactions were noteworthy for a number of reasons: extending our maturity profile to 2030, setting firsts for both pricing and oversubscription in the sterling market and benefiting from an order book populated by a list of the key sterling investors, many of you with us today. The recent Tier 2 was combined with our inaugural liability management exercise, not only retiring 86 of the less-efficient existing securities but also providing a liquidity event for investors, which represents a further stage in the maturity of our bond market franchise. These initiatives have not only supported net interest margin through fine pricing but also had a knock-on impact on the secondary market performance of existing bonds, supporting both our pricing and liquidity in credit markets, positioning us well for future debt issues. I am particularly appreciative of your support as we sort of actively engage the sterling investor base over the last 6 months or so. We also have an established presence into the secured funding markets, both private and public, and you'll shortly hear from Rebecca and Neil, whose businesses provide collateral use to secure these borrowings. Whilst established in most sectors, there still remains scope for growth. For example, one market we've yet to access is that for green bonds. I note the exponential increase in activity there in, and we work closely with our sustainability team to explore opportunities in that area. Access to that capital markets helped us to maintain and indeed extend our borrow long, lend short model with maturities typically well in excess of those available in retail deposit markets. The recent 10-year issue makes us better positioned to target additional longer maturities going forward. This is in part what we mean when we refer to a programmatic approach to issuance. Our Moody's rating of Aa3 is a standout within the U.K. and represents a real competitive advantage. That rating is derived in part from our loss-given failure framework, whereby protection provided by loss-absorbing liabilities generates an uplift in rating. Our recent Tier 2 issue should ensure that we retain that uplift as described. Let me turn now to our savings business, which, of course, represents a very different proposition to wholesale, particularly with regards to competitive pressures. Nonetheless, here too, we pursue a strategy of diversification and run a portfolio sourced through a wide range of channels and comprising a range of product categories and customer segments. The customer deposits transformation program supported growth in this area, reducing costs and providing further diversification. It has been genuinely game-changing. The program includes a full replacement of back-office systems, improving resilience and creating a strong foundation to grow our proposition. Since we launched in December 2018, we brought to market our new Notice account and ISA product ranges and our online portal, increasing customer choice. All of these have driven significant growth in customer deposits, particularly within the retail savings book. Retail deposits have grown by 41%, an increase of GBP 800 million, equivalent if you like to almost GBP 10 every second. Overall, customer deposits now stand at GBP 6.4 billion. Our mix of deposits has also shifted from being primarily the more expensive fixed term offering to include the less expensive Notice accounts and ISAs. ISAs, for example, are typically around 20 basis points cheaper than the non-ISA equivalent. This growth has also supported us in changing the mix between retail and business customers, helping reduce reliance on larger corporates, supporting both additional diversity and access to cheaper and typically more stable sources of funding. Had I been speaking to you 3 years ago, this part of our business would have been wholly reliant on postal applications for fixed-term deposits only. We now have almost 40% of our retail customers registered for online banking, many of whom are new to Close. This has also been particularly valuable in the COVID-19 environment as it has mitigated the challenge of offering a postal channel whilst working remotely. The platform also allowed a step change in operations, reducing manual processing and changing focus to strong customer service and product development and marketing. Our business is operating with the same headcount despite significant growth in deposit balances and customer numbers. And our savers seem to approve, we've maintained very high levels of service with a customer satisfaction score of 84%. Looking ahead, we are working to further extend the product range with easy access accounts, both inside and outside of an ISA wrapper under consideration. We're also building the Close Brothers savings brand, broadening customer reach and raising brand awareness through our targeted campaign, you may have seen the recent adverts we've been running in the Times newspaper. So to summarize, our approach to funding is aimed at ensuring that Close Brothers is in a position to maximize the opportunities available to us. We do this based on the principle of borrow long, lend short. We've established a presence across a wide range of both wholesale and retail markets. We continue to broaden and deepen that presence through both investments and market engagement. We retain a focus on optimizing our cost of funds in support of the bank's net interest margin, all of which leaves us well placed to continue to successfully fund and support loan book growth in the business. Thank you. I'll now hand back to Adrian.

Next, we'll look at the bank's lending businesses, starting with commercial, and I'd like to introduce Neil Davies. Neil is the Chief Executive of our Commercial business, a role he took up in 2020. He joined Close Brothers in 2007 and has run the asset finance and leasing business since 2016, leading the division and the delivery of several new initiatives since then. Neil has over 30 years of experience in business lending, which he brings to the role. Neil?

Thank you, Adrian. Commercial comprises 22 different business areas in the U.K., ROI and Germany, has around 800 staff and a total loan book of GBP 3.8 billion at April 2021. We're primarily a business-to-business lender and tend to work in specialized niches. Within the Commercial division, the asset finance business has got a loan book of GBP 2.7 billion with around 25,000 customers and provides asset financing, hire purchase and leasing solutions across a diverse range of assets and sectors. These businesses operate from 15 offices. Internally, we segment asset finance into transport, industrial equipment and specialist lending. Specialist lending includes areas such as energy finance, our Braemar business, which lends to professions such as dentists and wholesale fleet who deal with car contract hire companies. Another part of the commercial division, the Invoice and Speciality Finance business has a loan book of GBP 1.1 billion and works with around 5,000 small businesses and provides debt factoring, invoice discounting and asset-based lending. This area also includes some smaller specialist businesses such as Novitas and Brewery Rentals. Much of our lending is in specialist niches. Many of our customers are SMEs. And at one end, we'll lend GBP 10,000 for a dentist chair, GBP 40 million of invoice discounting into a temporary staff provider, through to GBP 80 million on a series of linked energy sites. The 2 longest established asset lending businesses are industrial equipment and transport. They've been lending for over 30 years, and they sustain long-term customer relationships. Average deal sizes are around GBP 70,000. The majority of their customers don't buy a new truck or a CNC drilling machine every month or even every quarter. But when they do want a new truck or a lathe, they may be part exchanging equipment already on a finance deal with us, or in some cases, may even be interested in our view on the 5-axis versus the 4-axis milling machine. They may just want a quick, easy deal from somebody that they know and trust. Of course, most of the equipment we finance is standard: trucks, vans, excavators, print equipment, industrial presses, cranes, crushers, trommels. But we also finance some leading-edge products, things like electric vans, large and small, compressed gas trucks. And we often do this in special arrangements with suppliers or customers. For example, we finance electric black cabs for London. But we also finance the same manufacturers' demonstration fleet of electric vans. We like to gain real life experience on a small scale to fully understand the issues and the benefits before expanding our appetite. We actively seek new business areas constantly. And often we find an asset type, we research the market probably doing a few deals. And if we like it, then trying to find a specialist or a specialist team to grow that business. Examples of this approach include ABL, asset-based lending and invoice, energy finance and personal contract hire. Nearly half the asset finance loan book is from post-2008 initiatives. Many SMEs are owner-managed. They remember who's helped them, who maybe had a difficult conversation with them, but we're clear and honest. Sustaining excellent customer service is hugely important to us. The latest Net Promoter Score for our Asset Finance business was over 70%, but I'm more interested in repeat business levels, maintaining strong relationships but with Close Brothers, not with individual employees. It's key to our long-term success, and it protects us against competitor activity. Much of the equipment we finance in transport and industrial equipment depreciates slower than the loan amortization, equity builds. This can enable us to lend new money more safely even with reduced deposits where necessary or even refinance existing equipment for a higher value than the outstanding loan. In market testing, we found that our customers like Close Brothers. They have a real rapport with our operations staff. And actually, most of them spoke more to operations than to sales. And they knew them by name. But that was a really important lesson to learn at the point we were designing new systems to take us more digital. When we examine our operational design, the spans and layers in our business don't look standard. Particularly in sales, we have many people with only 1 or 2 direct reports. But this ratio allows us to build specialist knowledge through the sales force. It helps us grow managers. It means that all significant customers have more than one point of contact and a more collegiate way of working. We operate a direct and indirect model to market, about half our business comes from a third party. That can be a manufacturer, dealer, adviser or broker. But regardless of how a deal comes to us, we like to see customers face-to-face. We believe that this leads to better credit decisions, lower fraud levels and better customer service. Our salespeople are also involved when the deal goes wrong. We find that helps with recoveries, and our salespeople learn from it. It helps them understand why we maintain discipline around our credit quality and also why we prioritize returns. In many markets, we provide standard finance and standard documentation. But particularly in our invoice and leasing businesses, we've got the expertise and capability to create bespoke transactions. This could simply be the mix involved in invoice ABL asset-based lending deal with debtor book, stock and property or a multicurrency transaction in leasing through to buying receivables based on a one-off document. All of our deals need to meet our credit criteria and pricing thresholds, no lost leaders. So how have we achieved our long-term track record? Why are we resilient? And how have we continue to both sustain our position and grow the business through the cycle? When our competitors lend more cheaply than us, when money supply is plentiful, and we won't change our pricing or our lending credit criteria, we do grow more slowly, but we still grow. Actually, we grow overall. Some of our businesses may not grow every year, but that's the benefit of a diverse portfolio of businesses even at a commercial division level. You can see that from the slide in years 2016-'18. Our strong focus on returns and pricing discipline can be seen through the consistent net interest margin we're able to generate. Our focus on credit quality and our prudent underwriting approach is also demonstrated through our bad debt ratio, which has remained relatively stable. Looking now at some of the recent deals we've worked on. We can't help every customer in trouble, but even a quick no is appreciated. Where it does make sense for us to support our customers who are experiencing cash flow issues, it's often rewarded with loyalty. My first example is a company in Anglesey. Over time, they will be creating a green-powered estate on the site of 1 of Anglesey's 4 largest employers until it closed in 2015. We have funded equipment from Blue Machinery with whom we have a vendor finance scheme. And this will enable the recycling of various materials. This includes taking non-recycled plastics back to oil. Our loan is backed by an 80% government guarantee, but we also have a GBP 200,000 deposit. We believe that the equipment value to be greater than the outstanding loan balance and that the gap between equipment value and amortized balance will increase in our favor over time. DecTek is a company based in Pontypridd in Wales. They're an award-winning printer and manufacturer of advertising, marketing and promotional products. Given the nature of their business, they were obviously impacted by COVID. We granted them a 3-month moratorium, but we also provided the CBILS facility to support the growth of the business as they entered into new markets. You'll now see a video from Mike, the Founder and Managing Director of DecTek. [Presentation]

The commercial division is a face-to-face organization internally and externally. But even before COVID, we recognized that not all of our customers were the same. And it is not always economic for us to spend too much time on lower value lending. 3 years ago, we had over 60 different documents for hire purchase transactions. We didn't have economies of scale. In some areas, nearly half our deals were administered and paid out in the last week of the month. What we needed was to standardize workflows to capture clean, rich data, to reduce unnecessary complexity, to have electronic documents, customer portals, but not to damage our model. And most importantly, to persuade our people to embrace the changes and work with the new systems. So we began the asset finance transformation program. This would automate or semi automate the non-value-adding parts of the customer journey, protect the business, whilst at the same time, giving us scalability and flexibility. A key decision was to buy not build. We moved to agile working in the project. This is adding value every 30 days. It means that we could launch a minimum viable product. As long as they worked and they were better than what went before, we launched to start seeing benefits and then continually improve and innovate. Often, we describe the asset transformation in 3 pieces: front office, a customer relationship management tool; middle office, proposal to pay out; and back office, bill and collect, but the hidden gem is the access to quality data. With the right data, we can open up digital channels for customers to use. We can more easily report, react more quickly to regulatory changes, seek more customers that look like existing good customers and manage the sales force better. During COVID, we took on the CBILS product. In-house, but based on our front office system, we automated the eligibility testing. This took us 10 days to build, test and launch, but it means that our look-back risk is significantly reduced because we had complete consistency. We were also able to approve to offer Bounce Back Loans, but we didn't view this as a value-adding product from us, at least with the vast majority of our customers. So we didn't give the product to our sales force, but our collections department used it for some customers where we believed it appropriate. Our total bounce-back exposure is over 106 deals and GBP 2.3 million. Without the new front office system, we couldn't have written CBILS deals as safely. We've already far exceeded the benefits case associated with the product -- project. We would also have struggled to report to the Treasury and the BBB. With new IT projects, people often talk about adoption or rejection. We treated our transformation as a people project. We've made using the new system part of the credit process. If a deal wasn't in the system, no credit approval. So we engineered adoption. But the last year has demonstrated the real value to our teams and now the system is fully embraced. The middle office product is currently in user testing for a late summer launch, and the supplier is contracted for our new bill and collect platform with work already underway. We know smaller SMEs often do their paperwork in the evening, that being able to get a statement from us at 9:00 p.m. would improve their experience with us. But I still want us to contact them the next day by telephone and ask, did they get what they wanted. Do they want us to schedule the same next month, next year? We don't want to lose that customer rapport which differentiates our model. The U.K. invoice finance market is worth GBP 21 billion. 70% of the market is with the 4 main clearing banks, and we sit in 6th position on the table with around 15 of the mainstream providers behind us. The model owes the same. We don't compromise on price or credit quality. I've got some customer quotes that nicely sum up this business. They were very accommodating. We're a privately owned business, and relationships are important to us. Our main operating issue is cash flow. So we have an invoice discounting facility with Close Brothers, but they also offer a stock fund -- a stock facility. Stock is the biggest item on our balance sheet, and it's not funded by mainstream banks. Now I'm not sure that their belief on stock finance is true, but that was a quote from the Finance Director of a large SME. Another quote is, we want to grow the business. Growing increases working capital requirements, but we also want to increase automation, which means capital expenditure. We think Close Brothers will support us on both requirements. We continue to invest in this business as well. Our factoring platform was replaced in May this year, and we are now in discovery for a significant upgrade of our ideal system. This is the system which takes data overnight from our customers' ledgers, and it gives us a real competitive advantage. M&A is currently increasing in our target markets and invoice discounting and/or asset-based lending is increasingly used to help finance changes in ownership. We view invoice financing as an early warning system for other parts of the business. It's a barometer of demand. And this is exactly what we saw in the lockdown during the last -- during the past year. The invoice finance sales volumes were closely linked to the performance of the wider economy. As various parts of the economy shut down, sales volumes dropped because SMEs were no longer generating invoices at the same level. Obviously, as the wider market activity picked up, so did our cash out volumes. The lockdown periods are mirrored in our cash out figures. Our business is also adapted during COVID, mainly to support our customers. Most of you will be aware that we have a brewery business. I think it's quite an interesting example of how our businesses understand their sectors and they adapt when required. When brewers couldn't sell their beer, they had 2 requirements: empty the kegs and casks in an environmentally friendly way and reclaim the prepaid VAT. We were the trusted partner chosen to decant more than 130 million pints of beer for many of the U.K. brewers and also provide an audit trail for HMRC. I said earlier that we constantly seek new ideas and markets. Two examples are energy finance and wholesale fleet, both of these followed the model: research the market, write some test deals, then employ the specialists we want to grow that market. In energy, our product mix has changed as the U.K. subsidy regime changed. Initially very weighted towards onshore wind, we now have a mixture of onshore wind, solar and reserve market installations. Turning to our wholesale fleet business. This has seen negligible credit losses throughout its history with hundreds of millions in volume each year. We still look at every deal on its merits, a bigger deposit, maybe a bigger supplier discount. It can make a deal work, make it assets secure. Our customers appreciate working with them to structure deals that work for them, but also for their customers and for us. They know that they pay for that service through the margin we charge. They may mention our rates to us regularly. But our customers are 36 out of the top 50 contract hire companies in the U.K. and all of them still deal with us every month. We were always at the front in lending on electric vehicles. And we now have a deal to finance the Octopus Energy product, which is offering electric-only cars to its customer base. This is a coherent profitable business. We maintain the key elements of the Close model: face-to-face, consistent underwriting and pricing, niche specialists, bespoke where it adds value. Our new systems will add consistency and scalability, and we'll enter new business areas where it makes sense. Thank you.

Now moving on to the bank's retail lending businesses. I'd like to introduce Rebecca McNeil. Rebecca joined Close Brothers in April 2018 and was appointed CEO of the retail business in 2020. And with responsibility for motor and premium. Prior to joining Close Brothers, Rebecca was at Barclays, latterly as the COO of Business Banking. Rebecca?

Thank you, Adrian. Retail predominantly provides loans to consumers and small businesses through our intermediary broker and dealer partners across premium and motor finance. Motor provides point-of-sale finance for customers to purchase used cars, motor bikes and light commercial vehicles and funding for dealers' forecourts, partnering with over 6,000 dealers and brokers across the U.K. and providing finance for around 280,000 customers, typically financing used cars around 3 to 4 years old and at the GBP 7,000 to GBP 8,000 price mark. Premium finances insurance policies for businesses and consumers from home and motor policies to indemnity and broader business insurance, serving over 3 million consumers and providing finance to 1 in 7 families in the U.K. Combined, the businesses have a loan book of GBP 2.9 billion, representing 35% of the total bank loan book. We've seen consistent growth across the business over a number of years. Our retail business is complementary and cyclical. We saw loan book growth in our motor business in 2012 to 2017, which then plateaued and premium enjoyed a premium -- a period of growth from 2015 to 2019. More recently, we've seen motor return to growth following our investment program. The complementary nature of the 2 businesses supports the organizational decision to bring them together under a single leadership. The NIM is high for the markets we operate in, though pricing pressure exists in each market, driven by growth of motor lending in Ireland and consolidation of brokers in premium. We see strong Net Promoter Scores across both businesses which performed favorably amongst our U.K. banking peers, a testament to our human fronted tech backed approach to customer service. And we remain confident in the overall quality of the retail loan book underpinned by our prudent underwriting and pricing discipline. The bad debt ratio for the 2020 financial year primarily reflected the impact of COVID-19 on the forward-looking recognition of impairment charges under IFRS 9. The bad debt ratio for the first half of the 2021 financial year is reflective of an improvement in the macroeconomic forecasts and scenario weightings, but also good progress on curing forborne loan balances. When looking at our motor finance business, you can identify 4 strengths to our model. Firstly, longstanding relationships with our dealer partners, who we support through our local sales network. We've consistently seen strong dealer satisfaction, demonstrating the strength of our relationships and value proposition centered around consumer finance, dealer funding, compliance education and business insights. Secondly, the service provided by our operations teams who continually work to uphold the best standards. Over 3/4 of dealers state that we are their first choice provider and 90% rate our service as very good. Next, our prudent and consistent underwriting based on a complete view of the customer, partner and asset with only a small proportion of our business written under high-risk PCP products. Underwriting speed and capacity will further improve as we launch our new underwriting platform in late summer, which will increase auto decisioning and improve our accept rate. Lastly, our reputation in the market has strengthened year-on-year, which has been demonstrated through the continued rise of our brand equity score from 61 -- sorry, to 61 from 46 back in 2017, with the highest score amongst our direct competitors being 52. Within motor, we operate across 5 dealer segments, predominantly smaller independents with some focus on mid- to large-sized national dealerships. Within these dealer segments, a typical motor finance customer is in full-time employment with good credit history, and their car is essential to them. As well as consumer finance, we add value to our dealer partners with levels of service and expertise. Within Motor Finance, we operate across 5 dealer segments, predominantly smaller independents with some focus on mid- to large-sized national dealerships. Within these dealer segments, a typical motor finance customer is in full-time employment with a good credit history and their car is essential to them. As well as consumer finance, we add value to our dealer partners with levels of service and expertise and our commitment to lend through the cycle. To improve the service we provide our customers and dealer partners, we invested GBP 33 million in a program to develop our proposition, enhance operational efficiency, improve our underwriting and collections processes and upgrade legacy technology, increasing sales effectiveness and customer experience. This has resulted in substantial benefits and improvements to the experience for our customers and partners culminating in overall increases to the new business volumes in our U.K. business. Our half 1 2021 U.K. new business volumes were 57% higher than that of half 1 in 2018, highlighting the success of the investment to date. We'll ultimately deliver more efficient and accurate lending decisions and improved control environment in process, new digital capability and increased Net Promoter Scores and brand equity scores of plus 65 and 61, respectively. And with the deployment of our new underwriting platform through our credit optimization project, we're forecasting an increase in accept rates amongst other benefits. Our typical asset is a used vehicle, which enables us to avoid any sharp initial depreciation as the asset leaves the forecourt and also enables us to minimize the impact of emerging trends as we can monitor their impact. And a good example of this being the rise of the electric car in the new car market. The time to flow through to the secondhand market gives us greater ability to learn and design the right products. Our typical customer sees their car as an essential asset. This, coupled with the lower balance, lower value associated with used rather than new cars makes our portfolio less susceptible to changes in legislation, sentiment and demand. We perform regular in-life valuations with residual value and auction performance analysis to ensure residual value at inception remains adequately and conservatively set. This, along with most agreements being on high purchase or conditional sale rather than PCP or PCH further reduces our levels of residual value risk. A strength of our model is the ability to continue to lend through the cycle, as we did in 2008, which enabled us to exceed growth in the market. Since the easing of COVID-19 restrictions, we've again outperformed the market by sticking to our model and continuing to lend through the cycle as our competition retreats. We mentioned earlier that one of our strengths is our long-standing dealer relationships where we are more than just a finance partner. The quote you can see provides an example of how we focused on providing continuing strong service levels through the COVID-19 pandemic. And also, we have a video from one of our dealers, Comber Commercial Center, who had the pleasure of visiting in 2019, sharing thoughts on their -- on our compliance expertise. [Presentation]

The ideas and initiatives outlined on this slide represent exciting growth opportunities for us as a business. We embrace the explosion of digital disruptors into the automotive ecosystem and at an industry level, celebrate the fact that this is creating more frictionless and digital means for a consumer to find a vehicle to suit their needs. We don't primarily see this as a competition or a threat, rather an opportunity to partner with these organizations and help Close Brothers motor finance wherever the customer is going to be for their automotive needs. Through our transformation program, we've developed a set of data links called APIs that enable us to connect into various partners and allow our finance to be positioned at the appropriate point in the customer journey. Of course, we'll continue to digitize the end-to-end customer journey, and we'll do this through the continued evolution of our own offering, but increasingly partner with organizations who are developing digital capability. We continue to see the dealer as critical in the automotive ecosystem, and our continued high-touch account management service is evident of the fact that we will continue to support our dealers. And many of the dealers I've just spoken about are creating new digital routes into -- the partners I've just spoken about are creating new digital routes into the dealership itself. We focus on supporting our dealers with funding for their business and helping them act in a compliant manner the retail finance solutions we offer, and we are increasingly developing our insights to better proposition to better help the dealer manage stock on the forecourt, which will help the dealer increase the speed of sales and profitability as well as mitigate the potential for loss. The rise of alternatively fueled vehicles is welcome, and one we very much support as part of our sustainability agenda. However, these changes are not yet filtering right through to the used car marketplace. That said, we're readying ourselves for this and have been developing our credit policy to support our dealer partners as AFCs hit their forecourt. And we've developed insight and information to educate our colleagues and our dealers on the options for AFCs so they can, in turn, support consumers with their buying decisions. Now looking at our premium finance business, there are 4 distinct strengths to our model. Firstly, long-term broker relationships developed by ourselves and operational teams who support our brokers in the long term with an average broker relationship lasting 10 or more years. Secondly, our SME and consumer credit lending expertise enables us to support our brokers with their regulatory and compliance requirements, and we deliver an accredited sales training program to our brokers to further aid them. Next, we deliver our service through technology and processes, which are fully integrated with the brokers' insurance or software houses to provide excellent speed of service. We also offer additional value through our payment services and data analytics capability, which are unrivaled by our competitors. Lastly, all this technology is underpinned by strong operational resilience, which has resulted in limited downtime and consistent availability of our service. Premium services: 2 primary groups of customers, personal and commercial. Our personal lines customers represent a broad range of demographics, age and affluence who we support by helping to make insurance more affordable by spreading the cost of insurance payments over 10 or 11 months. This would typically cover commodity products such as household and motor insurance, and we fund insurance to 1 in 7 families in the U.K. Our commercial lines customers are typically within construction, transport and manufacturing sectors who use our products to improve cash flow and preserve lines of credit. We fund insurance for 1 in 20 businesses across the U.K. and Ireland. And Premium Finance approves a new loan every 2.4 seconds. We're focused on achieving great customer outcomes across both our personal and commercial lines products, and this can be evidenced through our NPS score of plus 62, which is higher than our U.K. banking peers, as well as our positive customer service metrics and low level of complaints. The high barriers to entry in the premium finance market, from compliance and regulation, to technology, infrastructure and expertise mean that our direct competitors remain broadly the same over time. However, the strength of our service and relationships is key to maintaining an excellent customer experience and maintaining our position in an extremely competitive market, with high levels of M&A activity seen between brokers. The diagram on the right-hand side of the slide shows the breakdown of the GBP 50 billion total non-life U.K. insurance market. Of this market, approximately 14% is funded by third parties, including ourselves. To continue to stay ahead and to retain our broker relationships and market share, we invested over GBP 30 million in improving our business and proposition to enable us to continue to provide superior service and experience to our customers and brokers. This investment enabled us to increase our loan book by 49% since its initiation and win some significant broker relationships, driving GBP 1.2 billion of additional volume since 2015 annually. Looking to the future, data and digital are key trends for premium finance. We were able to use data to provide our brokers with better insights and to help them build their customer proposition and to ensure great customer outcomes. And building on out our automation and digital platforms will help our partners and customers to self-serve where they want to and if they want to leaving space to higher-quality conversations where they are needed, developing on our aim to become a human-fronted tech-backed organization. In summary, we aim to deliver great customer outcomes, have a strong growth record, a differentiated proposition, a stable business, a strong reputation bolstered by experienced colleagues and are well positioned for future growth.

Next, we will discuss our property lending business, and I'd like to introduce Frank Pennal. Frank will take you through our property business and strategy. Frank spent 36 years in specialist property finance, the last 24 of those were Close Brothers, 16 of them as Chief Executive of the property business, driving its profitable growth during that time. Frank?

Thank you, Adrian. The Close Brothers property business comprises of 2 main businesses: Close Brothers Property Finance, which amounts to around 75% of our loan book; and commercial acceptances, which makes up the remaining 25%. More recently, we have established a bridging business in Manchester, which I will touch on later. Property Finance was established about 38 years ago and has been a continuous lender to the residential property development market ever since, and including through a recession of the early '90s and the credit crunch of the late '90s. Commercial Acceptances was established in 1982 and acquired by Close Brothers in 2008. It similarly has lent through good and bad times. Both businesses provide a similar high-quality customer proposition based on market understanding and speed of delivery, provided by our specialists who are widely acknowledged as the best of their type in the market. The businesses are run as 2 separate brands, targeting different niche areas of the property development market but both share common characteristics. Both businesses' core activity is residential development. The primary differentiator being the property finance principally funds new build development throughout the U.K., whereas commercial acceptances finances conversion of existing stock, principally within the boundaries of M25. Both have market-leading positions within their specific areas of operation. The businesses complement each other with cross-referrals a regular feature. Importantly, we have no exposure to buy-to-let or developments for the marketed solely to investors, nor do we provide mezzanine debt, and we tend to avoid developments where planning is not in place at point of land. We are not involved in the longer-term mortgage market. We have seen significant growth in our property loan book in recent years, and the book now stands at around GBP 1.6 billion, approximately 20% of the bank's loan book. To further illustrate the growth, when we acquired Commercial acceptances in 2008, it had a loan book of GBP 80 million and a staff of GBP 8 million. The loan book has since increased to approximately GBP 400 million supported by our team of 30. The average loan size is around GBP 1 million. This is down to the mix with commercial acceptances at GBP 500,000 and against GBP 2 million for the average new build property finance development. Loan tenor also varies. 6 to 12 months is the average for commercial acceptances, And property finance is longer between 12 and 18 months, a function of the larger development size entertained by property finance, and the fact that it is funding new build, whereas the majority of commercial acceptances loan are refurbishment projects. We lend with a maximum loan to gross development value of 60% and typically in the range of 50% to 60%. The average across the loan book is 55%. I mentioned that commercial acceptances also provides bridging finance. It's approximately 30% of its loan book. This is short-term secured lending, typically against property acquired at auction, where speed of finance delivery is critical. And from a lending perspective, the asset is key. We have a strong position in the residential development finance market where we are the largest nonclearing bank lender by market share. Latest Cass Business School research evidences that we have a 10% share of the total residential development market. This slide illustrates what when taken collectively, differentiates us from the rest of the market. We have consistently lent to the market and actively grew the loan book during the credit crunch when virtually all other lenders stopped lending. We have not sought to change the terms of our core offering, and this consistent approach is recognized by the vast majority of our clients, and certainly all those who traded through the credit crunch period and were let down by other lenders. We very deliberately sought to expand our offering in the regions in 2014. Whilst historically, we had always promoted ourselves as a Mainland U.K. lender, at the time, the majority of the book was within London in the Southeast. As the regional economies recovered, we sought to expand our presence in the stronger cities and market towns across the U.K. Now virtually 50% of the property finance loan book is outside London and the Southeast, predominantly supporting family-owned businesses building traditional family housing. We have strong presence in Scotland and more recently lost the Mainland U.K. tag as we have built up a small business in Northern Ireland. We have recently expanded the bridging model by opening an office in Manchester, and the business is now consistently profitable within 18 months of setup. We are confident in our regional exposure where the quality of borrower is high and on a par with that seen in London and the Southeast. The expertise and quality of our team are critical to our success, and approaches from other lenders are a regular feature. However, in the past 25 years, we have only seen 2 senior departures to other lenders. And whilst we pay our people well, this says more about the culture we have created than anything else. The experience of our lenders means they understand our credit appetite facilitating speed of service with our mantra being a quick yes and a quicker now. Our clients recognize the quality of service and lending all markets approach, and this is reflected in the level of repeat business which consistently topped 75%. We lend within conservative parameters and aim to attract like-minded borrowers who see the sense in not overstretching themselves in the knowledge that they are dealing with a bank that has been and will be around for the long term and has a consistent appetite to lend aided by highly experienced specialist lending teams. Virtually all other specialist lenders in our market are now lending in the range of 65% to 75% loan to gross development value. The vast majority of our borrowers are not driven by the highest percentage lend. They have equity. We are only willing to write business on our terms and with developers we want to work with, and it follows they want to work with us. This slide supports our lending through the cycle narrative with the loan book peaking in 2019. However, the COVID impact is clearly evidenced in the loan book, as lower drawdowns and higher repayments saw the loan book reduce in FY '20 and half year '21, with the Q3 loan book broadly stable on the position at half year '21. Drawdown levels were impacted both by on-site COVID measures and develop a hesitancy around new developments and repayments by a combination of pent-up demand post lockdown and buyers taking advantage of the stamp duty holiday and the since revised Help to Buy scheme. The repayment levels have since started to moderate, and we should return to loan book growth as the stamp duty holidays phased out and the new Help to Buy scheme, which are less favorable kick in. We have a solid undrawn pipeline of just over GBP 1 billion, up 11% on half year '20, which leads us to anticipate growth as repayment levels fall. It is evident from the graph top right, but we have not sought to compete on price with the NIM still running ahead of 7%, nor have we sought to compete by increasing our loan to gross development value ratio, which remains the lowest amongst the specialist lenders at a maximum 60%. And this is reflected in the levels of bad debt seen in recent years. Prudent lending at attractive margins justified by a best-in-market service-driven proposition means that loan book growth will continue to be an output. We are blowing our own trumpet a little bit with this slide. We received numerous testimonials from our clients and 3 are shown on the slide. Nicholas King Homes, a longstanding client, operates in the [ Bucks, Sparts and Harts ] region typically building family houses. We are their lender of choice. Nicholas is a vocal supporter of what we do and has encouraged a number of other developers through his senior position within the Homebuilders Federation to make use of our services. Beechcroft are one of our larger clients and backed by the Carlyle Group. They operate throughout the south of England in the upmarket retirement home sector. I have known Chris Thompson, the CEO since he joined Beechcroft in the 1980s. Beechcroft only borrowed from Close Brothers. The third testimonial is from the Managing Director of Amara Property, who is featured in one of our adverts and shown on the right-hand side of the slide. Our clients range in size from small family-owned businesses operating out of 1 or 2 towns within a county to large regional but still privately owned developers. We provide finance to 2 of the top 3 privately owned house builders in the U.K., both of whom featuring the top 20 largest housebuilders list. The average value of new build residential units sold is about GBP 550,000. And at any point in time, the Property Finance business is financing in excess of 5,000 units across the U.K. Briahaze are a good example of a smaller developer and one of many long-standing borrowers. They illustrate nicely what our business is about. [Presentation]

This slide addresses the current lending market dynamics. Put simply, the market remains competitive for both property finance and commercial acceptances. Whilst the early days of first lockdown saw a number of lenders pull out, pause lending or scale back their offering. Virtually, all have returned and many are more aggressive than previously, with some as a consequence of CBILS use, and with others, an undimmed appetite to grow their lending, in many cases, uplifting loan to gross development value support to do so without necessarily uplifting pricing. This is particularly true of the specialist lender and private equity-backed market. Clearing bank's appetite continues to reduce as they struggle to get the level of returns to make it an attractive sector to continue to operate in and fail to offer the level of service and expertise that might justify a better return. We've established developers. Our name in the market means that we are usually the first thought of call when a developer funded by a clearing bank is looking either to replace or add to the lenders they deal with. In the context of COVID, the uplift in market values in 2020 caused by the stamp duty holiday and rush to benefit from the old Help to Buy scheme, led to house prices growing by 7% when a fall in values might otherwise have been expected. The extension of the stamp duty holiday has continued to underpin activity and house price growth in 2021, in part due to continued low level interest rates. However, as the stamp duty holidays phased out, and the furlough finally ends, we anticipate that some of the intensive competition we are seeing will reduce. Other factors impacting the dynamics in the market include a continued shortage of housing and a desire on the part of the government to see more houses produced. I mentioned earlier that we built up our business in Northern Ireland. And we have recently established a bridging business in Manchester, which in its first full year of trading will show a profit and is trading ahead of our plan pre-COVID, which, given it was a start-up, is very pleasing. In determining to effectively replicate the commercial acceptances model in the North, we did look at the possibility of making an acquisition, but we could not find the quality of loan book or management, hence, the startup approach. Whilst commercial acceptances have a small percentage of their loan book outside the M25, they are essentially following existing clients when lending outside their core geographic area. The opportunity for further growth of this business via regional representation in the Midlands and Southwest is currently under consideration. In addition, and with an eye to a future and tomorrow's developer, we have set up an in-house team largely comprised of our younger lenders to determine how best we might attract early the next generation of developer, with funding being one of the greatest barriers to entry into the development market. In essence, we will be offering a mentoring program, utilizing the expertise that exists within the business, alongside those via professionals we employ, legal, valuation and build monitoring experts and aligning with the likes of the Homebuilders Federation, who are running a similar program and whose membership accounts for 80% of all houses built within the U.K. We have good visibility of the future pipeline. We are well positioned to deliver future growth over the long term, and our priority will be to maintain our margins and the high quality of our loan book, and take advantage of opportunities that arise to grow our loan book, both on the back of initiatives and adjustment to the market dynamic. In summary, prudent lending at attractive margins, providing excellent service and with loan book growth remaining in output. Long-term growth, a continued focus on lending to high-quality counter-parties in the regions. Although the lending market is anticipated to remain highly competitive, we remain confident in the high-touch model and have no plans to adjust lending criteria. We are proactively developing ways to identify and capture the next generation of developers early. Thank you.

That concludes the presentations for our banking businesses, and we'll now move to Q&A on the presentations we've seen so far on the Group, Treasury and the Banking businesses. You can ask your questions by the telephone conference line or by typing into the webcast. I'll now hand over to the moderator to start the Q&A.

[Operator Instructions] The first telephone question today is from the line of Raul Sinha from JPMorgan.

I've got quite a few, but perhaps might start there with 3 and come back if we get more time. So firstly, I think you reiterated it quite a few times that loan growth is -- this is an output of your strategy and your pricing discipline. But this cycle is obviously quite different from historical ones in the sense that mainstream banks are coming out with very strong capital liquidity, which is very, unlike the case post the GFC, where you saw strong loan growth. And yet, what we have seen this year is your loan growth has picked up again to roughly 8% from being flat in the previous year. So I was wondering if you could talk a little bit about what you are seeing in terms of the combined sort of competitive landscape across your many businesses? And what that means for the loan book trajectory going forward? That's the first one. The second one is on your cost outlook commentary. I was wondering if you could give us a little bit more color on your statement that your cash investment spend is expected to stabilize over the next few years. If I just look at the numbers, the investment spend is -- it's doubled over 3 years. It was up 30% over the past year. So a little bit more color there would really help. And then thirdly, just trying to understand the technology and your positioning in terms of technology platforms. Could you give us an overall sense of how many of your businesses are on brand-new technology platforms? How many of them are on legacy or, let's say, platform that could be upgraded, just to give us a sense of where you are in the technology transformation process?

Thanks, Raul. And I'll take each of those in turn. As you rightly picked up, it was reiterated a number of times during the presentation. Loan book growth will always be an output. And as you also alluded to, we're an interesting stage of the cycle. If I look back a year ago, just leading into lockdown and then the 2 months afterwards, if you look at our Q3 statement last year, the loan book had actually turned down, the growth had actually turned down slightly. And since then, we've seen quite interesting growth across the businesses that we've alluded to at our full year statement in September and the half year in March. And we've seen different growth across each of the businesses as we've touched on. You rightly point out, the cycle is different this time. The banks have better capitalized. We've seen a unique position of government support, both for consumers to avoid unemployment and SMEs to avoid insolvency, that clearly has had a very positive impact on the U.K. economy. It's also kept a number of banks in a position where they can keep lending. If I look at our -- the growth that we've seen, the 8%, I think that's a good number for the position we've seen. It's been well managed, and it's spread well across the businesses. Particularly notable, you'll have picked up in the Motor Finance U.K. business, we've seen growth from a business that's a good margin business. It has been shrinking, as Rebecca indicated in previous years, and it's returned to a really good core growth for us. So that's good. And Asset Finance as well, another key business for us, as Neil highlighted, we benefited from the CBILS loan scheme. We made a really good strategic decision there not to go for banks back in my mind where it's much lower margin. It's a 2.5% gross yield, so a NIM of 1%. And also, it's effectively self-verified by the SME, so lower risk as well. So in that business, we've seen good growth as well. So loan book growth overall at 8%. Your question is a little bit forward-looking, of course, and what do we expect to see. So as I alluded to, the competition of state in the market, that's been possible because of the government support. But we're seeing a lot of that change as we stand. If we think about it, the furlough scheme is a bank to fall away, the CBILS scheme and the Bounce Back schemes ended at the end of March. There's a drawdown period on various types of product up to the end of November. But clearly, those schemes are coming to an end. In the property market, the stamp duty cut up to GBP 0.5 million is being phased out in the period up to September as well. So there's a lot of support moving out of the market. There's a lot of customers now, SMEs who will have to start paying rents again. They'll have to start paying an HMRC holiday as well. So there's a lot still to play out, I would say here, and that's where our preparation we've talked about on the playbooks and simulations have helped. Interestingly, we had a strategy event with our Group Board last month, and we went back to the playbooks, and we looked at a couple of simulations. Let's say -- let's hope the one we hope we'll see is a smooth move to the economy from here. The vaccines work. There's no further significant lockdown in the winter, et cetera. I think 8% is good loan book growth in that environment, and I'll touch on each of the businesses in a second. And we also look to the more discontinuity, more bad news sort of environment. Clearly, that is more likely to show the 20% opportunity. That's where I think some of the players in the market may struggle more. Peer-to-peer lenders, we've already seen some impact on. And that's where our expert model, our high-touch model, I'll repeat, lending through the cycle and the benefit of having 90% of the business secured or structurally protected really comes out. I'll just touch on the businesses as the chief executives have done very quickly on where they're placed. If we look at the businesses, Asset Finance has performed really well with the CBILS scheme. We still have a pipeline to draw there, as I alluded to, up to September sort of November time, so that's positive. We have an application agreed with the British Business Bank on the recovery loan scheme as well. Also, interestingly, we wrote record volumes in Asset Finance when lockdown lifted in -- from lockdown lifting in last June. We estimate that about 50% of the business that was on CBILS would have written anywhere as well. So the asset finance business is well placed, together with some of the initiatives that Neil talked about. Invoice Finance, Neil highlighted the sort of the volatility of that cash outlook that follows the sales volumes of SMEs. Clearly, as the economy rebounds, we'd expect the cash out for our loan book in Invoice Finance to pick back up. Importantly, we still have the clients there. In premium -- sorry, in Premium Finance, let's move on to the retail businesses. We did have a seasonal downturn, the usual seasonal downturn in January. And in the most recent lockdown, we have seen a little bit of new customers not moving into a used car so -- or a new car and not needing a motor policy. So that's been a slight impact as well along the way. And there haven't been new drivers able to sit for driving tests, so haven't needed a policy for the first time. Clearly, we'd expect that to revert as we go forward. Motor, I think, has been a great story the way that business has adapted. And as I mentioned, moved the volumes up. And we saw record volumes throughout the period after lockdown lifting last June. I think that's really interesting because there has been talk about the Motor Finance business that we have been open to disruption. Clearly, after lockdown in April and May last year, that would have been a point where consumers could have thought, I don't really want to see a car dealer. Now is the time to go to an online-only finance house. Very clearly, that's not what we saw. So the motor finance business going well as well. And lastly, in Property, Frank highlighted the undrawn pipeline we had of GBP 1 billion that stands out at the moment. We have very good long-term relationships with our customers. So I think the loan book position overall for the bank benefits from the diversity of those businesses, and we're well placed as I opened up the answer. I'll move on now, Raul, to the cost position that you asked about. In the bank, we've had the cost-to-income ratio over a long period in the range of 48% to 52%. And it's been pretty stable in that range for quite a while. BAU costs are very strongly managed by us across the piece. And they've been pretty flat, as Mike's chart showed earlier as well, apart from they dipped last year as we had a reduction in the discretionary bonus pool and a bit of T&E saving in lockdown. But pretty much, if you look over the long term, the cost of BAU in the bank are being pretty flat. I don't apologize for the investments that we've made in the business That's what supports the very strong NIM that we've had. And all 3 of the presentations we saw from the bank CEOs showed the NIM well above the market average, the U.K. banking average near a 3%, and our NIM stabilizing at 7.5%. The investments we've made, whether they're in motor driving that new business in asset finance, all of those investments drive that. If I look at the other areas of the group, Winterflood has a highly variable cost base. So we'll talk a little bit after the Q&A about the Winterflood business that's done really, really well, clearly since lockdown started. The cost base is pretty well correlated with the income line there. And in Asset Management, the cost base is driven in part the increase by our investment in new hires that are driving the strong total client assets that we've seen as well. So overall, the cost base is performing well, I would say, Raul, and the investments deliver that, which is where your last question went on technology platforms. And I'll touch on each of those now. We touched on these with some of the investments that chief executives talked on. So starting with the Commercial business. Neil highlighted that we're doing a full replatforming, the final stage of which it started with salesforce that's in and new and working well and has led to some of that new business. And it's moving through middle office, that's advancing. The last stage is our bill and collect system, where we're moving from an old version of a platform with [ Alfa ] onto their new version, and that will take place in the coming years. In Invoice Finance, we've just replatformed a part of our business at those factoring. We'll also be looking at our invoice discounting side ideal in the coming years as well. That's a very important product for us, and I believe gives us an advantage in the market for having an interaction with our customers on a day-to-day basis with their accounting package and reducing fraud. Moving on to the Retail businesses. In Motor, we have an historic system. Cars that drives the business is the core platform. That's working well. It's very stable, but will need upgrading, and we'll look to whether we can move that at that time to the platform that asset finances on as well to drive efficiency. We'll look at that in future years. In Premium, we do have a legacy system. And what we've done with the investment that Rebecca talked about was basically removed some of the wrappers around it and put in other platforms that worked well with it. So that system, again, is working well. And Rebecca described the barriers to entry, and that system is a key part of supporting our place in the market. If I move on to some of the other businesses, you'll hear from Martin Andrew and Phil Yarrow shortly, but I would contend that we have a technology advantage in Winterflood that Phil will talk on. And similarly, Martin will talk about the replatforming of our business that's well advanced in asset management and is moving into the final stages in full year '22. Thanks, Raul.

Next telephone question is from the line of Benjamin Toms from RBC Capital Markets.

Two for me, please. Firstly, conceptually, what level of NIM does management think that the banking division can get back to in a normalized world post COVID-19, assuming no rise in interest rates? And then secondly, probably a question for Andy. What's the longer-term correct level of CET1 ratio for this business? And if you're not able to put a number on it, perhaps you could give us some color why unlike the bank Close Brothers doesn't use CET1 management target externally?

Thanks, Benjamin. I'll answer both of these. I might come in on some more detail on CET1 as well. If I start with NIM, the 3 charts that each of the chief executives showed a -- I call it a moderation over the last, let's say, 7 or 8 years. But clearly, our NIM, as it stands today, at 7.5% underlying, as I touched on, compares very favorably with the U.K. banking market of about 3%. We benefit from the diversity of our businesses that we've already highlighted. So -- and some of the businesses are at higher NIM than others. We disclosed at the level of the 3 businesses we've presented so far. I did give effectively some guidance at the time of the full year results in September. We -- and if you look back at our investor presentations at the full and half year, you will see a chart with some up and down through COVID, where we peeled back and showed the underlying position. So in the first half, we had a reported NIM of 7.5%, what we're saying the underlying is 7.5%. I think that's a good guide for what we're seeing going forward in the stable environment that you talked about with no interest rate rises. I think that's a pretty good indicator of what we're seeing and what we expect to see. Now clearly, there are some ups and downs, I mentioned. So for example, in the commercial businesses, as a result of CBILS, we have a small pass-through to recognize the benefit of the 80% government guarantee. Over time, that will unwind, as an example. In the Retail businesses, I talked about the premium has seen some seasonal fall down and some COVID impact. That's one of our higher NIM businesses, of course. So when that pick back up, that will help for the future. In Motor, notably, the growth has been in our U.K. business, which has a notably higher margin. We have a different operating model in the Republic of Ireland. So growth in that business is good as well. So overall, I think 7.5% is a good guide. You're also alluding to what we saw last time, and we did actually manage to increase NIM after the GFC. Clearly, as Raul's question led to as well, it was a different picture then. There were banks pulling out, we haven't seen that yet. I think that sort of opportunity to accrete NIM is more likely in a discontinuity scenario, the one we all don't hope for, of course. That's why we're more likely to see this. I would say 7.5% NIM is a good performance and a standout for Close Brothers. If I move on to the CET1, you're right that we don't have a target. As Mike's slide showed, with the CET1 at 15.3%, we're broadly double the regulatory minimum we have there. There are some headwinds that are helping at the moment. We have the software intangibles, probably around a 40 basis benefit there. The IFRS 9 transition broadly maybe 100 basis points benefit. Those things will unwind over time. CBILS also obviously has a lower weighting and standard higher purchase for SMEs to reflect the 80% government guarantee. That benefit will unwind over time. On the other side, we will have IRB coming in. As Mike highlighted, we expect about 18 months from here to go through the process and then implement the IRB ratings. So that will have a change in our CET1 at that time. I think it's highly important that we have a standout CET1. So our investment thesis is very clearly 3 clear ticks on capital, liquidity and funding. Our distinctive model that we've talked about, and that leads to the progressive dividend we've had. I think the CET1 is important in that. Now also of relevance, and it fits with the question that Raul had on the loan book growth rate. Broadly speaking, at around 7% with CET1 neutral, that's what supports the CET1 growth in the loan book. If the growth will stay 5%, we'd accrete CET1. If it was 9%, we consume a bit. And I've given an indication of where we see loan book growth already. So I think the CET1 is at a strong position, as I've mentioned. I was asked at the time of the annual results, what our position is on returning capital to shareholders? Our position is very clearly, we need to be prepared for whatever the economy shows next, and that includes a strong CET1 to support loan book growth if it's there. And I think that's the right answer for our shareholders. We're not dogmatic, though. And if it turns out that the loan book growth does moderate, and we do accrete a lot more capital. Clearly, that would be an open question at that time. I think you have another question on the call.

Next question is from the line of Jason Napier from UBS.

I must say thank you for the massive amount of effort that you've obviously put into preparing all the material for today. There's a lot of material. I'm going to have to go back to study. First one, I guess, Adrian, for you and coming back to one of the questions that's already been posed around operating leverage in the business. Quite clearly, banking has delivered negative jaws for the last 3.5 years, and there has been a lot of investment. But I guess it's sort of natural modeling on the sell-side to assume faster revenue and expense growth going forward. And so I just wonder in a sort of a par environment what sort of operating leverage you would be encouraging shareholders to expect from the business? And how much faster should income grow than costs given the shape of some of the plans that you have for the business? That will be the first one. Secondly, a question probably for Frank or for Neil on the sort of Commercial and Property side. IRB approval may see capital allocations fall by 20% or 25%, I would guess, in something like Property. Would that actually matter to the volume outlook? If we model it through someone like a [ Tarragon ] it seems that they might be able to drop their incoming yield on property from 10% to perhaps 8%. Would that actually when you any more business if you were allocating less capital to that? Or is it more about the high-touch relationship side of the business? And then thirdly, clearly, investors are still really worried about credit quality, and you've alluded to some of the sort of potentially transient benefits that your customers might be seeing from things like furlough and so on. I wonder whether you could talk a little bit about what the high tempo data on credit risk is saying. Your invoice finance chart shows that revenues looks like going through your customers' books are as high as they were pre-COVID, although they're not discounting as much as before. What are you seeing on credit risk from those sorts of measures? How far forward can you see? And sort of how worried should investors be?

Thanks, Jason. And firstly, thanks for your feedback. I do agree that the IR team have done a stunning job here in particular. So thank you for that. If I move on to the operating leverage question and building on the point I had before on the bank being in a pretty solid range of 48% to 52%. You are correct that we've had negative jaws for recent years. And quite clearly, shareholders and investors would expect over the long term that the income would grow faster than costs. I completely agree with that. We've highlighted that the BAU cost is in a very solid management position. That's correct. And we've also highlighted the merits of the investment programs. And I think they are absolutely key. They are at different stages. So the premium finance program where Rebecca highlighted the major broker wins and transformational in our loan book there. That's concluded. Motor Finance transformation is moving towards the end. Neil highlighted that we're advanced on our asset finance program, I guess, broadly half the way through. Similarly, when we get to asset management, you'll hear that, that it will be concluding broadly in 2022 as well. So we do have these investments, and they're at different phases. The deposit platform that Andy talked about also is effectively concluded. And that's where Mike highlighted that the cash spend has effectively stabilized, but there will be some depreciation pickup that will continue in the coming years as well. So that means BAU costs under very strong management. And clearly, we look at opportunities there to push back on those costs. But I also need to highlight the importance of supporting the NIM, supporting this high-touch model as well. So those are the key things I would say. On the other side of the cost income ratio, of course, is income itself. And I think it's important when we talk about disciplined growth to look at the top line, and that's one of the nuances that we've done with this change to protect, grow and sustain and bring out the importance of disciplined, well-managed growth. And we saw a top line story in half one of plus 13% on the income line. That clearly compares well with the major U.K. banks. And that's something that I think is also an important part of our model, and fits in that model fit assessment framework that we have. So we don't look at cost as a single dynamic. It's part of the overall story that we have and the overall picture of how we drive the group. And Mike has very strong management of that with the chief executives going forward. I'll touch on the IRB, and then I'll hand over to Frank or Neil to build on the question. As we mentioned, we won't see the benefits from IRB probably for 18 months or so, and we're not disclosing what the capital gain might be on CET1. It's worth noting, most importantly, that we won't change our pricing position on our risk as a result of IRB. If I look back to when there was the change maybe 5-or-so years ago in the property residential property development market as a result of the EBA requirement of 150% weighting on all property, whether it was some, let's say, [ Dodge ] development in Greece relative to a very high quality with planning agreed development in the U.K. and it went to 150%. We didn't change our pricing position, and we didn't change our risk. We have a long-term view for our customers and what's right. We will continue in that vein. We price for the relationship, we price for the service, and that's what we will do. Frank, would you build on that in any way and how you see your position in the market?

Yes. I mean I would say the IRB benefit that we get will be for the benefit of the bank generally. And as Adrian has already said, we're providing a very high-touch service-driven proposition and have absolutely no plans to adjust our pricing same way. Again, as Adrian has said, we didn't adjust our pricing when our weighting went up to 150%. So no plans to adjust the pricing at all. Continue with the high-touch service-driven approach.

Neil, and I think in -- so the first 3 books that we have in IRB are the energy books, so it's not the whole of asset finance, to be clear. It's the motor finance where we've had an established core for a long time in the plant property business. In Energy, we have the slotting model. So that's the one that it will be first in IRB, and I don't see any change there either in our approach. Okay. And if I move on to the last question, which was about credit position and our forbearance position. In the Q3 statement, we highlighted that our forbearance book have moved down to GBP 1 billion. And we also have highlighted that the amount of customers that haven't resumed payments within that is very modest. We haven't disclosed the exact percentage, but it's very modest within that. I'm very comfortable with what we're seeing in our books across the piece. And we have coverage of our various stages under IFRS 9 of 3.3% as well. Most fundamentally, as all of the chief executives highlighted, we have our expert model. 90% of our lending is secured and has structural protection. So even if an agreement does move into a problem position, we have our good recovery prospects as well. If I look at the trend that we've seen on bad debt from half 1 '20, the half 1 trend since then, it was 0.9% in half 1 '20. It was then at 3.7% in half 2 '20 as we took the large impact of IFRS 9. In half 1 of this year, it was 1.3%, so a significant drop. And you will have seen from the Q3 statement, it's moved to 1.1% now for 9 months. So that shows the trend. To help with the question, we're not seeing anything dramatic in our books that's leading us to concern at all. We're comfortable with the staging that we've done. And it's worth noting that we took a highly prudent approach. So for example, in commercial, we put any SME that asks for a payment holiday into stage 2 under IFRS 9. That wasn't a regulatory requirement at all. It was a prudent approach in line with our approach overall. And we kept those customers in stage 2, even when they started repaying at this stage as well. So I'd say we have a prudent approach, and we're well positioned. On the Invoice Finance business, you talked about, Invoice Finance is a business that can be suspect in -- particularly in downturns to fraud from the customer. If the customer is struggling, they may look to make a fictitious invoice. I already talked about the investment answer about our ideal system. That's really got an advantage of spotting such an issue early. We're not seeing events in our invoice finance book either that are giving us concern at this stage. Clearly, that's an important aspect across the business. And as we've highlighted all the way through, credit quality and pricing are our 2 fundamentals of what drive us. It's worth noting, even on the Motor business, where we've seen record new business volumes, it's at a slightly better credit position as well despite record volumes that we've seen. I think we've got a question from the webcast now.

The first question comes from Jens Ehrenberg of Citi. On growth expectations within property, what is your expectation for the regional split going forward, having a relatively equal split between London and South East and other regions? Do you expect this to become more skewed towards other regions over the next 3 to 5 years?

Thanks, Jens. I'm going to hand that to Frank quite quickly. And as you will have seen on the slide, we have moved from a position where the regions have grown so broadly 50-50. And clearly, to achieve that in recent times, the new business in the region has been stronger than London and the South East. Frank, would you build on that?

Yes. I think in the short term, at least over the next 2 or 3 years, I would see the growth in the regions continuing. I think it's important to stress the quality of our borrowers are as strong in the regions as they may be in London and the South East. So we don't have any concerns on that front. And the types of developments that we're considering are also similar across both marketplaces. In the longer term, I mean, it very much depends what happens in the London market. So there may well be, if there is more of a move back to London. At the moment, we're seeing the opposite in terms of people migrating away from London to some extent, and that's obviously helping with the regional growth. But if that were to change and perhaps we're probably looking beyond the 3-year time horizon, then we'd be perfectly open to growing our book in London and South East. I think to answer your question, I can see the 50% perhaps moving up to 60% over the next 3 years.

Then we have a second question from Jens of Citi. On the growth initiatives for Retail, particularly on alternatively fueled vehicles and other new areas to consider, can you give us any indication as to what you would expect this to come into effect?

Okay, Jens. If I interpret that question, I think you're looking at when the Retail initiatives will kick in and the benefits from them, particularly on the AFVs, and I'll hand on to Rebecca in a second. Clearly, AFVs are a growing share of the market, and it's largely led in the used market at the moment with hybrids. But we surely expect that electrics will come into the second market at one stage. So as we alluded to, we're doing quite a lot of work on how we can move into that market, what the residual position and how we should play. Rebecca?

So with the partnership opportunity that we talked about, we're seeing that now disruptors are in the market. Close Motor Finance has 33 years of providing finance, and that puts us in a very strong position to work with potential partnerships. So that's an opportunity that's live now, and we have a few conversations that are ongoing. Equally, the conversation with dealers and growing our dealer base and also growing what we do with the dealers that we already have on book is live now following our transformation. The implementation of sales force, better sales tools, our credit optimization platform, the APIs, we talked about, all of those things enable us to do more with the dealers that we already have on book. So both of those growth opportunities are live. AFV is further out, that's very much an emerging market for the used finance market. However, what we can do is see what's coming down the line because we can watch the new car market, and we can watch what's developing, what new cars are coming down the track, what that might mean for credit policy. And one of the things we can do is enable our colleagues and our dealers to be on the front foot when they're talking to consumers about what is potentially the right car for them. So we spend a lot of time, produced a lot of collateral for our colleagues and for our dealers to use with consumers to educate them on the different types of electric and alternatively fueled vehicles. But what we see that being much further down the line for the used car market.

We've got another webcast question, I think.

The next question is from Ian Gordon at Investec. You've now written over GBP 1 billion under the various government-backed schemes, mainly CBILS. Firstly, what do you see is your likely peak to aggregate lending under such schemes, including existing CBILS pipeline commitments and/or the recovery loan scheme? And secondly, how do you think about the concept of risk transformation in your book implicit from the 80% government guarantee and presumably a lower loss given default?

Thanks, Ian. I will hand on to Neil to give some more extra detail in a second. So as we talked about, you're quite correct, GBP 1 billion is broadly correct. And the vast majority of that is on CBILS. We have around GBP 25 million on the larger CBILS scheme and as Neil alluded to less than GBP 3 million on bounce back. And I've already touched on why we see the CBILS was more suitable for our customers and more suitable for our model. We do have a limit agreed with the business bank that we're not disclosing, but it accommodates our pipeline well. And Neil will touch on in a minute how we're working through the pipeline and the sort of timing of the events that, that comes through. The recovery loan scheme, we do have a limit agreed with the British Business Bank of GBP 300 million. I do see that scheme as less attractive for customers, and I think there will be less demand. The main reasons being, there is no free period for a year on interest and fees. And also, it needs to be a loan where the bank wouldn't have agreed a loan without the government guarantee. So a green loans where you don't really want to isn't directly in our sweet spot, clearly, given that we are focused on credit quality. So Neil will touch on that in a minute. In terms of the risk transformation and the 80% guarantee, I highlighted the CET1 benefit of that. We didn't really take a different lending approach at all though. The benefit of the CBILS, in my mind, is we went through our standard credit approach. Neil touched on the investment that we've made in our system that enabled us very quickly to effectively verify the application from one of the CBILS prospects met the screen criteria. That's great as an audit trail for the British Business Bank ultimately. And then we did our standard credit work. We took our standard security package as well. So the loss profile clearly will be less because if a customer fails, there would be a risk share with the government. But that's not why we lent on this. We lent because it was the right thing to do for the customers. And we think that the lending stood up in relative terms on its own right. Neil?

So on CBILS, we've still got some way to go because term loans that can be paid out through the end of August. Asset Finance deals until the end of November. Obviously, we'll see how they flow through. The RLS is of more interest to invoice then to Asset Finance. We've identified a couple of types of deals where it will be applicable. But the basic premise is that it's a deal that we wouldn't ordinarily do. And if we wouldn't ordinarily do it, we're not sure that technical guarantee is something that would take it through to us. We could see it have some benefits where we've got an existing customer that we think we should be supporting. On the LGD side, we did some CBILS where it was unsecured loans, but very few. Most of the business we wrote was standard business that we would have written probably anyway. And the expected losses on our normal book isn't hugely dissimilar to the 80% guarantee when a deal goes wrong. So we're not expecting it will change our LGD significantly at all.

Thanks, Neil. And again, the pipeline that Neil alluded to broadly runs through until the end of November to draw, Neil, I think it is. So we've got some visibility for the coming months there as well. I think we have another webcast question.

The next question comes from Gary Greenwood at Shore Capital. Why do you run with such a high liquidity coverage ratio more than 1,000%?

That's a good question, Gary. I'm going to ask Mike to step in on that one probably in a second. So it is over 1,000%, and it has been for some time. And I mentioned our investment thesis are very strong 3 clear ticks on capital, liquidity and funding. Mike, do you want to talk us through the number there?

Yes. Thank you, Adrian. Yes. Gary, yes, I mean, in very simple terms, Gary, it's because we borrow long and we lend short. We have strong liquidity levels, as you know. And as we went into the pandemic, we increased those. So they had been running around about GBP 1.3 billion, and we pushed those further up to around about the $2 billion level. But it's really down to that borrow long, lend short.

Thanks, Mike. The next question, we've got some more on the webcast. I can see. I think there's 3 or 4, yes, 5. Good.

The next question comes from David Coyne at Setanta. Firstly, can you discuss what new areas of lending you are considering or testing? Secondly, I haven't heard the group talk about open banking before. Does the group fall under its remix? And if so, how has or will it impact the group and how much investment has been made to date?

Okay. Thanks, David. On the new areas of lending, each of the chief executives highlighted areas they're looking at the moment. And also our very strong track record of not only driving the core business and the strong NIM, but also finding sensible extensions that fit with the -- with our model. The new development we talked today about was the model fit assessment framework. And each of the chief executives is constantly looking with their teams at sense of extensions that fit with those. And we touched on a number of those in the presentation. Open banking, as I see, is more strongly correlated with current accounts and banks there. So we haven't needed to make an investment to look at open banking. We don't do current accounts to start with. Now clearly, some customers would like to tie in potentially their deposit products. And I guess that's more realistic now that we've made the deposit platform transformation that we've done. But this open banking is not a big issue for Close Brothers. The next webcast question?

We have a question from Alvaro Ruiz de Alda at Morgan Stanley. Can you provide any guidance regarding the funding plan, including any AT1 issuance in the near future?

Thanks, Alvaro. And I will hand over to Andy on this one in a second. Andy highlighted the very successful Tier 2 that we've done in the last couple of weeks where we've got very favorable pricing in the market. I think the tightest pricing on loan instrument that's been seen in the U.K. banking market for a decade or so. And clearly, we have a very simple capital stack, as we talked about. And AT1 is something we've not used before, but it's a very favorable market. Andy, do you want to talk a little bit about that?

Yes. Thanks, Adrian. So really what we phrased we've started using increasingly is taking a more programmatic approach to issuance. To illustrate that, we've been back to the sale market twice within just over 6 months, having been fairly sporadic prior to that. So we've been asked, what might that mean in practice, when you say programmatic, there's probably 2 or 3 aspects. I would like to think we'll be relatively predictable and regular. I've been happy to say that we would think that, that will translate into at least one market transaction a year, maybe 3 every 2 years. Then we would ensure that our different asset classes get supply. Whether that's senior, whether it's subordinated or indeed secured. And the other aspect that's interesting, I think, is it is ensuring that we've got a range of maturities across, I mentioned in the past earlier that we've gone out to 2030 now. Well, having this pricing curve, allows both ourselves and investors to assess what fair value look like, both in the secondary market or a primary issue. And of course, if there are obvious periods, which don't have bonds there, then that's something all things being equal, we would look to target. In terms of additional Tier 1, as you can imagine, we've been asked about it very recently, both during and following the Tier 2 transaction. But I'm not sure I can add much to -- adding to the comments the fact that we've had some capital and tailwinds. We do recognize it will be very well received if we did so, but no immediate plans.

The next webcast question?

We have a question from Jackie Ineke. When do you expect to implement the IRB approach? And what is the expected impact in CET1 or capital ratios?

Thanks, Jackie. As Mike indicated, we -- based on the other banks that we've seen implement IRB in the pathway through the PRA. It's broadly we expect 18 months from here before the initial models that we have, as I touched on, Property, Energy and Motor will be implemented. We're not giving any guidance on the capital benefit that may accrue to when we -- in that 18-month time frame. Clearly, that's in discussion with the PRA as they assess our models, and we'll keep the market updated on that as we move through the coming 18 months. The next webcast question?

We have a question from [ Jerry Upshaw ]. Regarding premium finance, please, could you clarify your market share, which you saw to 7%? My understanding was that you had a much higher share of the U.K. premium finance market.

I'll hand that on to Rebecca quite quickly, [ Jerry ], and that's largely because of the independent space that Rebecca had a slide highlighting around GBP 3 billion for the independent. That's where the higher share of sort of 40% comes through. Rebecca?

Yes. It's a fairly full market in that insurers may choose to self-fund. There may be direct debits. Consumers may pay with credit cards and then also you have premium finance, of which there are a few main players, which broadly stay stable over time because of those barriers to entry that we talked about previously. So when we talk about our market share, we're looking at a very large market overall for how consumers may choose to finance their insurance premium. And then we look at a smaller subset of that, where there is premium finance provided by a few main players in the U.K. market.

Thanks, Rebecca. I think we have one more question on the webcast.

We have another question from [ Jerry Upshaw ] on Motor Finance. Please, could you comment on the potential for Close Brothers to leverage its model into the below Prime segment, either organically or by acquiring an existing lender such as Advantage Finance?

Good question again, [ Jerry ]. Clearly, we look at available spaces in the market all the time. We are largely in the primary end, clearly, than the subprime there, and that's been a conscious choice. We have looked at the subprime market before. And the risk dynamics, we were less attracted to. Rebecca?

We'll scan for opportunities across the market and many opportunities will come to us as well-being a very established player. No one that we are looking to purchase currently, but we'll continue monitoring that. And as Adrian says, our spot is generally used car market and towards that more prime end.

Okay. Does that conclude all the questions that we have? We've now got a 10-minute break, by remarkable coincidence, we were planning to take that break at 11:15, and that's where we are. So if we could reconvene and I'll kick off again at 11:25, and we'll revert with Winterflood and Asset Management. Thank you. [Break]

Welcome back. Now we'll move on to our Wealth Management business, Close Brothers Asset Management, and I'd like to introduce Martin Andrew. Martin joined Close Brothers in 2005 and has been CEO of CBAM since 2008. He's led the impressive growth in assets under management, and you'll see we have significant potential to continue CBAM's growth and development. Martin.

Thank you, Adrian, and good morning, everyone. Over the last decade, we built a distinctive wealth management business, which has delivered strong growth by executing a clear strategy and business model and by making disciplined long-term investments. After 13 years as CEO, as I look forward at the changes in the U.K. wealth market and our position in it. I feel extremely confident about our future prospects, and I'd like to explain why. First, some facts and figures. CBAM is a vertically integrated Top 20 U.K. wealth manager, with GBP 16 billion of total client assets generating 10% of the group's AOP. Our core capabilities are advice, multi-asset investment management and custody, which we then combine to create different propositions tailored to client preference and client size. Our clients range from mid- to high-net worth individuals, mainly resident in the U.K. and overall, we directly serve around 22,000 client families. Our strategic aim is to gather assets into our investment management and platform through 3 main distribution channels: our financial advisers, our private client investment managers and via third-party IFAs. The success of our model is evidenced by the fact that 93% of our total client assets across these channels are under our investment management. We're a national business operating out of 11 locations with around 90 advisers, 65 investment professionals and 700 employees in total. We differentiate ourselves in ways that are important to clients and that maximize our success. For example, we delivered propositions to clients through strong personal relationships that last for many years, often decades. These personal relationships are founded on excellent service, investment expertise and prudent advice using the extensive experience of our practitioners. We operate a fiduciary style approach in which our clients' interests are paramount. Our culture supports this approach. For example, we have a collegiate culture because we recognize that it takes all parts of our firm to provide excellent service and because we also recognize that debate and teamwork create better results than individuals working alone. We recognize that private clients have a different attitude to risk and return from institutions, and we reflect this in the way we construct portfolios and the way we measure performance and risk. Over time, great propositions and service and a strong culture, build our reputation. Our reputation is critical because most of our new client growth comes from referrals. Our reputation in turn is built day-by-day through the work of our practitioners for clients. And we're proud that this has been recognized by a number of industry awards over the years. Finally, our business model is distinctive. We were an early adopter of vertical integration before the implementation of the FCA's retail distribution review at the end of 2012, and we've also built a degree of balance in our distribution that's rare in the market. This provides us strategic strength and flexibility. Some vertically integrated businesses are integrated at the firm level, for example, by owning an asset management business and separate advice and platform businesses, perhaps under different brands. We believe that our advantage comes from integrating at the client level by having the technology and culture to support that by providing propositions at an attractive price and by making our investment management accessible across several channels. Our strategy has delivered a strong track record. Over the last 7 years, our net inflow rate has been strong at between 6% and 10% of opening assets, above the majority of our peers. This has enabled us to double our assets under management in the same time period. We've also maintained our operating margin while simultaneously investing heavily in both top line growth and technology. And finally, our return on equity has remained high and has significantly contributed to overall group returns, highlighting the diversification benefits to the group. We believe that our strategy positions us well in the changing U.K. wealth market. The market is large and mature with structural growth drivers. Beneath the headline growth, there are significant changes underway. For example, advisers increasing use of platforms has been evident for many years and is set to continue. There's mounting consolidation in the IFA sector, driven by demographics and economic pressures and fueled by private equity interest in restructuring a fragmented market. We see increasing adoption of vertical integration and increasing trends for discretionary wealth managers to offer advice. We see new entrants from retail asset managers as they look for new growth to offset the impact of passives on their core business, and from U.K. banks as they seek fee income growth from wealth management. Against this backdrop, we believe that our long experience of operating a vertically integrated model, a multichannel approach to distribution and our progress on building the technology to support our model put us in a strong position to succeed. In addition, we believe we're well placed to respond to any changes in client preferences because we offer propositions at different price points. For example, telephone as well as face-to-face advice, passive as well as active investment and our self-directed investment portal without any advice. This slide explains multichannel distribution and vertical integration and why we adopted this model. Firstly, in terms of distribution, we wanted to maximize the number of channels that could provide growth as shown across the top of this slide. We, therefore, set out to grow our teams of practitioners, and we deliberately chose to have both advisers and investment managers because we believe we can reach more client opportunities with both of these roles than we can with just one. We expanded our advisers through acquisitions and hiring, and we've expanded our investment manager team through hiring. We also built a sales force covering third-party IFAs to provide additional flows into our investment management. At the time, some people said we couldn't have both our own advisers and also serve third party advisers, but we have found that it's been possible. So our advisers, our investment managers and third-party IFAs are our main distribution channels. In addition, we've also built a self-directed investment portal, which is currently small scale, but in the longer term, offers interesting optionality if we want to develop digital or hybrid investment advice as an additional distribution channel. Having established our main distribution channels, we also wanted to maximize the revenue potential through those channels. This brings in vertical integration as shown down the left-hand side of this slide, where we deploy our advice, investment management and platform in various ways in each channel. With our overall assets under management split roughly 50-50 between our Bespoke teams and our funds team. This vertical integration helps to mitigate the threat of margin compression and maximizes revenue potential. By example, our advisers have the greatest revenue potential because for the majority of their clients, we earn fees for advice, investment and platform. The overall cost for clients is competitive, and we share economies of scale with them. Our advisers are restricted to CBAM for investment advice, but the high level of choice within our investment propositions has enabled us to capture just over 80% of our advised clients' investment needs within CBAM. Our Bespoke investment managers principally earn investment fees, which include an element for platform. Our investment managers are increasingly referring clients to our advisers, or they are pitching together with our advisers to offer a holistic wealth service for new high net worth clients. Third-party advisers, by definition, will only generate investment management fees. Looking horizontally across this chart, we aim to be as efficient as possible. For example, we leverage the same custody capability across all 4 channels. We also offer the same investment management propositions at the same price across all channels. It's helpful for our own advisers that we distribute the same investment propositions that they use to third-party IFAs because success through external IFAs demonstrates to our advisers and their clients that being restricted does not mean second-class. Not all restricted wealth managers offer their investment propositions outside their own captive advice channel, and we believe our open channel approach gives us a transparency advantage. Our approach to servicing clients is distinctive. First, our clients are looked after by a qualified practitioner, either an adviser or an investment manager or perhaps both, whose role is to serve clients and act in the clients' best interests. Our clients aren't looked after by a generic relationship manager, whose role can be to focus more on the firm's best interests by maximizing sales or revenue. Second, our investment managers have a combined role of relationship management and investment management. This delivers a high level of personal accountability for clients, and it helps build trust. It also helps to attract talented investment professionals who want to work in an active investment team. Third, all our investment managers, whether they manage segregated portfolios or our funds, work openly together in a collegiate culture of ideas and debate. All investment managers therefore benefit from the combined expertise of the firm, and clients benefit from the wisdom of many, not just their own manager. Finally, our clients typically have a very long time horizon for their wealth, usually across generations. Their relationships with us last for very many years. We therefore align our thinking as a business to their long-term time horizon. For example, our investment management time horizon is measured in years. When we look at investment performance, we focus on longer-term measures, not short term. When we invest in growth, we take a long-term perspective as is evidenced by the evolution of CBAM over the last 10 years. When we invest in technology or change, we also take a long-term perspective, and we believe that a strong alignment in the time horizons between clients and the business is key to building a great private client business with lasting value. We've invested consistently to create the technology to support our business model, and we're a long way through implementing a number of key technology projects. This leaves us well positioned to grow and scale the business in the future. The aim of our technology strategy is to improve efficiency, operational resilience and client experience by using best-of-breed applications, digital technology and selective in-house development. The overall technology architecture is complex because it has to cover advice, investment management and platform and different usage of these services across our client base. We have therefore established a significant and experienced in-house change management team, who have designed our technology strategy and led its implementation. To gain access to best-of-breed technology, we established a strategic partnership with IRESS for many of our core applications. Our journey with them started with a major replatforming project which we successfully implemented between 2017 and 2019, which put all of our clients onto the same custody and investment administration system. At the same time, we also introduced a common digital portal for all our clients using IRESS technology. This portal also includes an execution capability, which enabled us to launch our self-directed digital investment portal for a modest incremental investment. We're currently working on a major CRM project with IRESS, which had its first implementation in March this year. In stages over the coming months, we'll extend this to all our clients, bringing significant efficiency and client experience benefits. Importantly, it will also provide the backbone for further digital developments, such as integrated client video conferencing, electronic document exchange and signing, online fact-finds and online account opening. Over recent years, we've also developed our own in-house investment management and risk management systems, which we've tailored to our investment process. They will help improve our investment manager's productivity, thereby releasing them to spend more time on investment and client issues. And finally, we're investing in a number of technology automation projects in areas such as client onboarding, dealing, settlements and reconciliations, to increase efficiency and resilience. We expect most of these technology investments to be behind us by the end of calendar 2022. We also see scope for operating margin improvement with greater scale and greater efficiency. We've delivered strong assets under management growth over the last 7 years, and maintaining this level of growth requires consistent success in a number of different areas of growth. The foundation layer of growth comes from serving our existing clients to a very high level. This requires value-added advice, good investment performance, slick administration and low turnover of relationship personnel. Doing this well produces growth by clients rewarding us with a greater share of their wallet and also referrals to new clients. The next layer of growth comes from our business development activities in a number of channels, including IFAs, professional intermediaries, such as trustees and consultants, and our relationships with employers, where we are a leading provider of financial education in the workplace. We also work with our colleagues in the Banking division to source client referrals. An additional part of our business development focuses on developing our propositions and finding new markets to generate growth. For example, we are planning to strengthen our proposition to international clients. And to that end, we've recently opened a Guernsey office. We are also focusing on expanding our charities proposition. The final layer of growth is inorganic, where we look to hire talented professionals who can build a client bank or where we look for bolt-on acquisitions. For example, over the last 4 years, we have hired 17 additional private client investment managers, representing around a 50% increase in our team and enabling us to open 3 new investment management locations, including a new office in Mayfair. In addition, over the last 11 years, we have made and successfully integrated 7 IFA acquisitions, and we continue to look for further infill acquisitions, both on the advice and investment sides of our business if we can find high-quality businesses which fit strategically and culturally at the right price. Our fortunes in each of these layers of growth will ebb and flow to a certain extent over time. The important thing is that we strive to remain active in all of them over time, with the aim of trying to keep our net inflow growth rate in its historic range of 6% to 10% a year. ESG has become a significant aspect of our business over the last few years and is here to stay. We believe that the distinction between ESG and non-ESG propositions will blur over time, and our whole investment proposition will become increasingly sustainable. In the long run, we therefore believe that this will not be a major source of differentiation or additional growth, rather it will be an essential feature to maintain our historic growth. We've actively responded to the increasing focus on sustainability and ESG issues. For example, 3 years ago, we embedded ESG criteria into our in-house research. We also launched a socially responsible investment proposition. More recently, we've launched 2 sustainable funds, and we're currently developing further ESG and SRI propositions for our Bespoke managers. We are signatories to the UN Principles of Responsible Investment. We've strengthened our approach on stewardship and voting and have appointed a dedicated head of responsible investment. More broadly, we have established an ESG Committee to develop our overall ESG strategy. This will cover not only the development of our ESG investment propositions, but also a framework for engaging with our clients on their ESG preferences and reporting on them, complying with regulatory disclosure requirements at the product and firm level and overseeing our own corporate ESG agenda, for example, by reducing our carbon emissions and promoting diversity and inclusion. The business is an excellent strategic fit with Close Brothers. We believe our vertical integration and multichannel model is the right one to succeed in the changing U.K. wealth market. We've demonstrated our strategy's success in our growth track record and strong returns. Importantly, we are confident that our culture and people will continue to support this success in the future. Given the attractive opportunities we see in the market, we will continue to invest in this business to deliver long-term growth. Thank you, and I will now hand back to Adrian.

Finally, we'll look at our Securities business, Winterflood, and I would like to introduce Phillip Yarrow. Phil has been at Winterflood for over 20 years, initially leading the development of our electronic trading capabilities and building the client base. He's been the Chief Executive of Wins since 2015, delivering impressive returns and growth. Phil?

Thank you, Adrian, and good morning. Winterflood is a leading market maker, providing liquidity in all U.K. equities, from the FTSE 100, down through the small-cap stocks and of course, complete coverage of the AIM market. We also provide extensive execution services in North American and European equities as well as trading in the fixed income markets. We have 4 main business lines. Firstly, market making and electronic trading. This is our core business. Our model is quite unique in that we are single capacity, and we focus primarily on trading. We've been acting as a market maker on the London Stock Exchange for over 30 years. And with over 90 traders and sales traders, Winterflood has one of the largest trading floors in the City of London that underpins our high-touch trading model. Think of us as a daily trading business reacting to the order flow from our clients and the trading situations that present themselves each day. Secondly, our investment trusts team was established in 2002, and this is the only area where we are full capacity and provide the full range of services of corporate finance, corporate broking, sales and research and of course, market making. We act as corporate broker and adviser to over 55 corporate clients, with a combined market cap of GBP 33 billion across a diverse range of conventional and alternative asset classes. Thirdly, Winterflood Business Services has been operating for 10 years now and provides outsourced dealing and custody solutions. And lastly, we also provide sales trading services to institutional clients, both here in the U.K. and in the U.S. The U.S. initiative is relatively recent, with our new U.S. broker-dealer receiving authorization from FINRA and the SEC in the summer of 2019. This allows Winterflood to trade directly with major U.S. institutions, and it extends our geographical reach into a new market, with access to new clients. The majority of Winterflood's income are related to our trading services as a market maker, but you can see from the pie chart that 15% is derived from sales trading commissions, administration fees from WBS and of course, corporate broking fees. As a market maker, we are required to provide continuous prices and liquidity regardless of how volatile market conditions might be. We have a very strong reputation, and our clients really value our service, especially during periods of heightened volatility that we have experienced in the past year, evidenced through our very strong performance during the COVID-19 period. We actively compete on price to win order flow from clients, both directly on the London Stock Exchange and through our electronic trading engine that is linked to our clients' trading platform. Our main trading engine is called Winner. It's a high-volume trading system developed in-house and handles over 90% of the firm's client business by volume of trades and is absolutely key in supporting the trading websites of online stockbrokers. For example, in 2020, based on recently published reports, we can see that Hargreaves Lansdown executed over 35% of its U.K. equity trading with Winterflood by value, rising to 55% in exchange-traded funds, making Winterflood a key execution partner for the firm and its retail clients. In terms of clients, we only trade with regulated counterparties such as retail agency stockbrokers and institutional asset management companies. We do not deal directly with private investors. However, they can access our prices through their stockbroker or wealth manager. Turning to investment trusts. Here, we provide not only market making services, but also research, sales and corporate broking. Our highly rated research team delivers high-quality research to 2,400 registered clients, whilst our corporate team have built a market-leading position in fundraising across both primary and secondary issuance. Winterflood has a leading corporate client base, both by number and diversity. Recently, we were delighted to act for the Baillie Gifford Schiehallion Fund's recent placing in April, one of the largest fundraisings for an investment trust in the last few years, raising $700 million. We are also currently supporting the IPO of the Liontrust ESG Trust that was announced in May, which we expect to list later this month. We are also always seeking to grow our client base, and we believe that our Business Services division will allow us to attract new clients such as platform providers who wish to provide their IFA clients with access to a wider range of asset classes outside of traditional mutual funds. And finally, whilst we focused on protecting our market-leading position in the retail markets, we are also continuing to grow our market share of institutional trading. We are making positive progress in expanding our institutional client base who are keen to gain access to our liquidity. 2020 has enhanced our reputation with long-standing institutional clients and has also accelerated our relationships with many other institutions who have traded with us much more frequently. Our distinctive strengths are built around our people, our technology and our culture. These 3 factors underpin Winterflood's proven resilience -- sorry, Winterflood's proven and resilient business model. When I talk about Winterflood, I always make a particular reference to our amazing people as it is they who drive the success of our firm. Today, we employ 300 staff, broadly split 100 in the front office, supported by 200 staff in operations, technology and WBS. We have a one-team mentality, and we think of ourselves as being part of the Winterflood family. We take a long-term view to developing talent and succession planning. Our senior traders, who oversee the firm's trading books, have, on average, 14 years of experience, and they pass that knowledge and expertise onto the new talent that we continue to grow. Not all of our traders were with us during the global financial crisis over 10 years ago, but this long-term approach has ensured that the latest generation of traders have passed the recent market stress of the pandemic with flying colors and have shown real resilience since March 2020 by trading in this volatile market. Credit to them, and it gives the whole firm and its staff huge confidence to take on future challenges that may come. Technology is, of course, key to our business. Some 50 staff support and develop our in-house trading and back-office systems and of course, our customer-facing systems. Building our own software allows us to design bespoke solutions for our customers and to further embed our services into their platforms. In fact, 97% of all client orders are received and executed electronically. And this gives us more capacity, freeing up human traders to focus on the larger, more complex trades for our clients. Our technology gives us tremendous capacity and has allowed us to trade well in excess of 100,000 trades a day regularly since November [ close of ] trading. The firm has a strong culture, too. The staff defined the firm's values many years ago, and these are set into our code of conduct, which we refer to as "Our way." And this sets out how we expect everyone to act and behave. And lastly, our focus is very much on a high-touch model. Our traders provide risk capital through their market making activities and our sales are solidly profitable and resilient with good returns on capital even in the most challenging of markets. We have stuck to our core business model of trading, and we do what we know best. In FY '20, our return on capital was 50%, rising to almost 70% in H1 this year, which is really extraordinary and reflects this current super cycle in the equity market. Even in the [ quarter ] years, such as 2019, when retail investor appetite was at a very low level with daily bargains at 56,000, Wins still produced GBP 20 million of operating profit. During FY '20 and HY '21, our operational capacity was able to handle the significant increase in daily volumes. Our daily average messages being processed by our client system Winner rose from 440,000 in 2019, to 1.2 million messages a day in 2021, with a record of over 2 million messages set in the 9th of November when the Pfizer vaccine was announced and we did 227,000 trades on that day alone. So record volumes and some very big days in 2020. And this is where you can see we are a technology firm that has scale and resilience. Also, our highly skilled traders have a strong focus on risk management, which is evidenced by minimal loss days and volatility of earnings. We have not had a single loss day in the last 14 months. Our competitors generate a smaller proportion of income from market making and are more reliant on nontrading revenue streams and related to corporate broking. Winterflood's coverage of U.K. and international equities is very broad and deep, from large-cap, to micro-cap stocks. We also trade a huge range of exchange-traded products as well as investment trusts and fixed income. This diversity across different markets and sectors helps create a portfolio effect and to an extent, protects us through the cycle as different sectors are in or out of vogue. We have a market-leading position in trading AIM and smaller company stocks, with significant expertise at this end of the market, with the AIM market sector very much in vogue with investors during the last 18 months, finishing up 21% for 2020. This diversification also makes us more attractive to clients as we become a one-stop shop for their trading needs. Clients like being able to trade everything from FTSE to AIM, to all the U.S. stocks via a single electronic connection. The scale of our market making business in U.K. equities is very significant. The tables on the right-hand side of this slide are based on Bloomberg data and show our market share in U.K. equity trading in 2020 relative to our competitors. In 2020, our turnover in U.K. shares alone was over GBP 521 billion, with a value of GBP 135 billion. So according to Bloomberg, that ranks Winterflood as #1 in terms of shares traded and seventh by total value traded in U.K. equities. Winterflood has a leading market share in U.K. retail equity trading. This retail market is showing signs of continued organic growth, and that is very encouraging for us. The pandemic has had a structural impact on retail trading, encouraging people sitting at home to look at their finances and consider the equity market as a savings vehicle. Many of our stockbroking clients have reported very strong growth in new account openings, especially from a younger demographic, with Hargreaves Lansdown recently noting the average age of its new clients has fallen from 45 to 37 over the last 8 years and reporting record net new clients in the latter half of 2020. We have now seen 15 months of very strong volumes at Winterflood, and we do not think that volumes will return to the pre-COVID levels or circa 57,000 trades a day. So this is very encouraging for us. And we hope a new generation of younger investors will continue to grow the wider U.K. retail equity market, and that will continue to grow our trading volumes. With WBS, we saw an opportunity to grow into an adjacent market, with a focus on retail platforms, and targeting a different client base, providing different revenue streams. WBS provides outsourced dealing, assessment and custody services to asset managers and retail platforms. Today, WBS provides services to over 90,000 retail clients on this platform and over 50 institutions. WBS has a sticky annuity-style income stream based on assets under administration, and we also benefit from trading commissions, so quite different to our core trading business. WBS has grown significantly in the last few years and had assets of GBP 5.7 billion under administration at the end of April. We continue to see potential for strong growth with a good pipeline of prospective clients. Our award-winning proprietary technology is highly scalable and allows us to support this growth in assets and trading volumes. WBS has benefited from the growth in passive investing as the use of exchange-traded funds has proliferated, with our innovative system supporting fractional share trading for ETFs. WBS supports not only well-known platform clients, but also fintech clients that wish to offer equity-style trading and savings wrap accounts. And pleasingly, WBS has also become one of the largest electronic trading clients for Winterflood, delivering significant equity flows from its platform customer base. So in summary, we take a long-term view to strategy and are patient and disciplined when building our growth strategies. We stick to what we know best and believe that our unique high-touch model will continue to deliver a strong and consistent performance. While we are mindful of the longer-term trends, and we'll adapt our business accordingly, and that is what you see with our 2 ongoing growth strategies of WBS and also extending our institutional client base, both here in the U.K. and in the U.S. We continue to protect our market-leading position across the equity markets that we have built up over the last 30 years. And we protect the firm's reputation and we ensure that we operate with the highest standards of integrity to protect our culture. We are proud of our long-term track record of profitability throughout the cycle, and we are very pleased with our exceptional trading performance in 2020 and in this financial year. Thank you. And I'll now hand over to Adrian.

Thanks, Phil, and that concludes our presentations. And we'll now move to questions on CBAM and Wins and any other questions that you may still have. As before, you can ask a question via the telephone conference line or by typing in to the webcast. We'll now move to the moderator.

[Operator Instructions] The first question from the phone line today is from Benjamin Toms from RBC Capital Markets.

I've got 2, please. Firstly, for -- probably for Martin, what portion of the bank's AUMs can be classed as sustainable, responsible investment funds? And then this is kind of more a broad ESG question. When do you think that Close Brothers might sign up to the Net-Zero Banking Alliance? And then, Phillip, I think you mentioned in the presentation that Winterflood's trading level have been very strong now for every year, and you also stated that the business has moved on from 60,000 trades a day. What do you think a post-COVID-19 average number of trades a day looks like?

Okay. Martin, would you like to kick off on the split of the AUM and the ESG elements of that?

Yes. The -- thank you, Benjamin. The proportion of our assets under management during our discrete ESG or SRI propositions at the moment is relatively small because they're relatively new. They are growing quite nicely. More broadly, as I mentioned, we've embedded ESG criteria into our equity research for the last 3 years. So to varying degrees, you could say that ESG criteria are embedded in a very, very large proportion of our overall assets under management.

Thanks, Martin. Moving to the wider ESG question. As I said, we are completely supportive of the ambitions of the Paris agreement. On Scope 1 and 2 opportunities, we'll be operating net zero, our target, by 2030. And as I mentioned, we'll be doing a Scope 3 audit more widely, probably kicking off later in 2021. I would say we've made a good start here. Group-wide, our Scope 1 and 2 audits, emissions are down 10%, full year '21 on full year '19. Our fleet vehicle emissions are down 10% in full year '21 over full year '20 as well. Senior management, we have our incentive plan targets that relate to ESG. And I'm pleased to say that we recently had a B-minus score from CDP in their assessment on corporate carbon capture as well. Other wider points I would just bring out, we have no exposure to fossil fuel extraction or mining. As Neil highlighted on the energy team, we've written broadly GBP 725 million since our energy renewables team joined in 2014 as well. On our own emissions on fleet cars, we stopped for our own staff being able to take a petrol, diesel in August last year, and they won't know this yet, but [ we're withdrawing ] any other than electric from January next year. So we're moving to electric only there from next year. And Martin highlighted a number of the ESG funds that we're launching and our overall trend towards more ESG investing. Phil, would you like to pick up the bargains points?

Yes. Of course, Adrian. We do feel that the structural impact that we've seen in retail trading response to the pandemic will continue. And we've observed Hargreaves Lansdown and AJ Bell, both of them actually reporting strong trading volumes, significant growth in customer numbers and also growth in customer numbers from a younger customer demographic. And Winterflood has certainly seen strong trading volumes during the last 15 months. So we don't expect our daily trading volumes to revert back to those pre-COVID levels of around 57,000 trades a day, but we are seeing a moderation in trading volumes as we go into the final quarter of this financial year. And we anticipate trading levels will moderate to somewhere between the pre-COVID levels and the elevated levels that we've seen during the COVID-19 pandemic. And just to remind you, we did say that in our Q3 trading update, that the average daily bargains were at 120,000 trades a day in Q3, and during the first half of the year, they averaged 97,000 trades a day. So moderation in trading volumes in the final quarter, and we expect to see our volumes going forward somewhere between pre-COVID levels and the levels that we've been seeing so far this financial year.

Thanks, Benjamin.

Next question is from the line of Jens Ehrenberg from Citi.

I got 2 questions on CBAM, so they will probably end up being for Martin. The first one was, I think, on Slide 77, you mentioned that you consider inorganic growth acquisitions as well. Can you just give any more indication as to what part of the value chain you'll be looking at? Was that the sort of trying to consolidate within the financial planning space, more on the product side? Yes, any additional color there would be helpful. And the second question I had was pretty much on your sort of vertically integrated business model. I think on Slide 75, you mentioned that fewer investment managers are also taking the role of relationship managers. And I'm just curious, given that you, sort of, you have the in-house advisers and yes, third-party advisers, are third-party advisers completely comfortable that -- so the investment managers build relationships there as well, given that you have an in-house advice business. Or has there ever been any concerns, or just any particular way of how you manage that? Yes, any color on that would be appreciated.

Martin, if you could pick those 2 up?

Yes. Thank you, Jens. Taking the first one, so what part of the value chain would we be interested in on acquisitions. There are really 2 sorts of acquisition opportunities we're interested in. One is infill acquisitions of IFAs, which we've done 7 in the last 11 years, as I said in the presentation. So there, the opportunity is to integrate an advice business into our vertically integrated model. And off the back of that, the main benefit to us is a revenue synergy. The other sort of acquisition we're interested in, again, more infill and more bolt-on, is on the investment side, where we've looked at a number of opportunities over the years. And the opportunity there is to -- if we can find a high-quality business that will fit well culturally and strategically. The main benefit to us is gaining more scale in an operationally geared part of our business and potentially obtaining some cost synergies from the middle and back office. So that's what I would say on the acquisitions. And on the question you had about third-party advisers. Yes, there are potential sensitivities around how we manage client relationships that come through us through third-party advisers and those that we manage directly ourselves, either through our investment managers or our advisers. And we are very, very strict. There is a Chinese wall that we put around any client who is sourced -- introduced to us via a third-party IFA. And our own advisers will never go anywhere near those clients. So we're very, very strict on that because it's absolutely fundamental to give confidence to third-party IFAs that they can trust us by introducing their relationship to us. And if they do so, we recognize that they're their clients and they're in charge of that overall relationship, and we're very much supporting them in their relationships.

Thanks, Jens.

Next question is from the line of Ed Firth from KBW.

I guess I had 2 sort of related strategic questions. I mean if I look at the wider banking market at the moment, we -- I guess, you would say it's characterized by a massive change in terms of digital new entrants, application of artificial intelligence, people targeting new markets, et cetera. And I'm just struggling a bit to get a sense of what are you seeing from your competitors in your market? I mean my sense is it's not changing an awful lot. Is that fair? Or are you seeing a lot of new people attacking some of your more lucrative segment? So I guess, that would be my first question. And then my second question would be, it's probably a question you get very bored of being asked, but I'll ask it again anyway. If I look at some of your businesses, they're not obviously related to others of your businesses. And obviously, Asset Management would be an obvious one. And I'm just wondering why you think you're the best owner necessary for that business. I think you talked about further acquisitions to scale it up. I guess Asset Management is a scale business. And I'm just questioning or wondering why it wouldn't make more sense for that business to be scaled up into some of the huge mega asset managers that are around, if that makes sense.

Thanks, Ed. Thanks for those, too. Just on the wider banking market, you're absolutely right. Clearly, there is a lot of investment, new entrants, et cetera. What we brought out is the merits of our model, the service expertise and relationship, the high touch, the experts that we have, the face-to-face on a number of our businesses, whether it's going to see a motor dealer, going to see an SME or going to see an Asset Management private client as well. We see real value in a space in the market that will continue for that high-touch model. And that's evidenced by -- I gave the example of motor finance after lockdown lifted, and effectively, the pent-up demand that have built during April and May in lockdown last year led to a big rush into motor dealers and a finance opportunity for us. So I absolutely believe there's a place in each of our markets into the future. We do look at disruption potential extensively. I mentioned earlier the May strategy event we have with our Board. Not only did we talk about the playbook, we also talked about the disruption potential in businesses as well. And that is different in different markets. We've highlighted some of the barriers to entry that we benefit from, whether it's the proprietary technology we have in Winterflood, whether it's the face-to-face direct expert sales force we have in Asset Finance as well. So I believe we have a wide strength of businesses. What we're looking to do with some of our investment programs is digitally enable our experts to make our experts even more valuable. And clearly, that's where I think we'll have a price to play, and that's where we will generate the higher NIMs as well going forward into the future. Some of our competitors largely have undifferentiated models, low-touch models, factory service-type models. And that isn't where you provide that very high level of service that gets the Net Promoter Scores, the return levels of business that we've talked about as well. And that's where we think absolutely the Close Brothers model is different and wins. If I look at the wider business and the corporate strategy question you raised. If you look back to Slide 9, you'll see there the merits of Asset Management and Winterflood as well. And when I talked about the model fit assessment framework, one of the circles is diversification. So as an example, what that slide is highlighting after the GFC, when the bank incurred some bad debt losses after the financial crisis and indeed, also again when COVID hit and the bank had some IFRS 9 uplift, the real diversification of Winterflood seeing its trading revenues pick up at that time really stood out. So that's absolutely key. And similarly, with Asset Management as well, both businesses have attractive ROEs on any measure, over 30% as we stand today, very attractive. And Martin has highlighted the sort of areas we're looking to grow Asset Management in into the future. Thanks, Ed. Next question...

Say, could I just come back...

Please, one...

Well, could I just come back on the competitive question? Are you seeing -- I mean broadly speaking, is it the same competitors who you have been competing with for the last 5 years? Or are you seeing new sort of digitally enabled, with the tech-type guys coming in? How is the landscape changing or not at all?

Well, it's different in different markets. One of the beauties that we've highlighted is the diversity of our businesses. I'll touch on them very briefly, on each of them. So if we look at Property Finance, as Frank highlighted, it isn't really the major banks where we're playing. So for example, some of those in the sub-10 million space, the lower scale of that, have moved to more a factory approach, where it isn't a relationship manager calling on the client. So that's the change there. On the other side, in that market, we have seen other players. You'll have seen OakNorth, as an example, coming into the market. And they -- as Frank highlighted, there's players like that as well. There's been some peer-to-peer lenders in the property space, and some of those have widely been covered as running into some problems. In the Commercial space, Neil highlighted, in Asset Finance, there's broadly 200 competitors. Some of them -- or most of them actually didn't have access to CBILS. The government scheme will bounce back in that period. So I would say the market there is fairly similar on competition. Even before COVID, we saw some players pulling back, moving away, I won't quote the competitors here, but some of them moving away from the broker space, as an example. Invoice Finance, I would say, is pretty similar. It's been 40 or 50 competitors for broadly 15 or 20 years now. And in the retail spaces, Rebecca highlighted where we play in the independent space, I would say, broadly consistent competition there. Motor, there's been a lot of new entrants, as we talked about, particularly in the digital space. And you'll have seen some of them advertised on TV. Our objective is to improve our customer journeys across all of the businesses and to compete on in that method along the way. Ed, does that answer your question?

Yes. No, that's very helpful.

Next question is from the line of Jason Napier from UBS.

The first question for, I guess, Martin, on CBAM. The sort of total income margin of around 90 basis points, I would guess that you wouldn't be uncomfortable in saying that, strategically, you're planning for that number to ebb lower over time. But correct me if I'm wrong on that. And I just wondered what the sort of moving parts are in defending the PBT line, if you like, against that and strategically, whether that has to drive some kind of reaction around shape of the business and so on. And then, secondly, on the Winterflood side of things, Phillip, for you, the Winterflood Business Services piece, I guess, is quite small. It looks like it's about GBP 5-ish million of revenue at the moment. But the counterparties that you list on the slide are vast, and the AUM is not. So I just wondered what drives revenues in that business. Is it really the AUM side of things? Is it trading volumes? And how significant might that business be given that you're dealing with the likes of Vanguard and Aviva?

Thanks, Jason. Martin, do you want to kick off with the CBAM operating margin?

Yes. Thanks, Jason. I think the question is around the income margin around 90 basis points. And yes, I mean, you're right that there is downward pressure on revenue margins, I think, endemic in the industry. We're not immune from that. The source -- the causes of that are intense competition and regulatory pressure, I would say. Our observation would be that most of that is manifesting itself in clients or advisers switching to lower-cost solutions rather than the prices of specific solutions declining over time. And we're not immune to that business mix shift, which I'll comment on in a moment. I think we're well placed, though, on that because we do have a choice of lots of different propositions at different price points. I mentioned we've got passive investment rather than active investment. And if our clients switch from one to the -- from active to passive, we will see a drop in revenue margin, but we're keeping the client. And given the cost of acquiring a new client, far better. I would far rather keep them, albeit a lower revenue margin than lose them all together. So I think how our revenue margin behaves over time is going to be as much driven by the mix change within our business than the declining fees overall. So for example, if we grow our Bespoke investment management business quite quickly, that's at a lower -- slightly lower revenue margin than the total, so that will bring it down. On the other hand, if we were able to do some IFA acquisitions and integrate those into our vertically integrated model, that side of our business has a higher revenue margin than the average, and that would increase it. So I think probably our expectation would be probably stable to gentle decline, but largely determined by the shape of our underlying business mix. And then in terms of your second question of how we defend our profit against that sort of backdrop. It's really a twin track approach. The first is to grow and gain scale because we know there are scale economies in the business. So that's one of the reasons why we're so keen to invest for long-term growth because we think that greater scale will offset, to some extent, any compression in revenue margins. And the second part of the approach to deal with that is to use technology to try and take operating costs out of the business as the business grows to try and become more efficient over time. And I've talked about a number of our technology investments designed to do that.

Thanks, Martin. Phil, do you want to pick up on the WBS, AUM scale versus the client base?

Yes, of course. And thank you for your question, Jason, and thank you for your comments around the counterparties. So we're very proud of the list of -- the blue-chip list of counterparties that we have for WBS. WBS is interesting for us because it diversifies the Winterflood income streams. And it helps support our market making business. It provides diversification. It's a fee-driven model. So the mix of revenues from WBS is a mix of fees from administering assets for our clients, but also commissions driven from trading volumes. WBS' revenues are -- tend to be sort of, because of the fee-driven nature, much more annuity-style income stream. They're more sticky. And therefore, they're less cyclical in nature in comparison to our market making business, which is very much a daily trading business. We're certainly delighted in the growth in assets under administration at WBS in the last year. It's a growth of just under 40% from GBP 4.1 billion, up to GBP 5.7 billion as at the end of April. And we do have a healthy pipeline of clients, and we expect that AuA to keep growing. WBS is now very much part of the Wins family, and it benefits from this sort of operational business support that Winterflood can provide it. WBS does have a healthy profit margin after direct costs, and we expect that profit margin to continue to grow and improve as the business scales and benefits from our technology economies of scale. So I described WBS as being a relatively small part of Winterflood right now, but it's a business that we continue to develop and is a very interesting opportunity for us in the longer term.

Thanks, Jason. We've got a couple of webcast questions, I think.

These questions come from Gary Greenwood at Shore Capital. Firstly, to what extent does CBAM's customer base overlap with the rest of the group, i.e., are there any cross-referrals? Secondly, you mentioned scope for operating margin improvement in Asset Management. When technology investment completes, where do you see the margin normalizing to?

I'll start off from the first question, and then I'll hand over to Martin. Clearly, Martin highlighted the client base in Asset Management, and it's in the wealthier end of individuals. In our savings base, clearly, we have a range of wealthy individuals as well. And we've touched on we have limited interaction between the bank and CBAM, but there is some. So there is the opportunity, let's say, for retail saving investors who have got more than the GBP 85,000 of deposit over the government guarantee to introduce that over to CBAM. We have, over the last 5 or 6 years, have an emerging program where we look at relevant bank businesses and potential for introductions to CBAM at some stage in the future. And that can be quite a long burn. It might be a property developer, unlike the video we've seen, doesn't have children to pass the business on to and is looking for an exit, there may be a chance there. Similarly, directors or owners of SMEs, who may want to exit the business and therefore have capital come in at that time, there's a chance to introduce. And motor dealers. So we have some type of introductions across the group. We've also seen some success from members of staff also moving over to Asset Management. It's a great system. I'm there myself. And on the other way, we do have some Asset Management moving into the bank as well. Martin, would you build on that answer and then offer the operational margin as well?

Yes. I would echo what you said on the overlap for the client base, I think there are some opportunities, and we've done a good job in the past in exploiting those. In terms of operating margin improvements and where it will stabilize to, I would make 3 points really. Firstly, as we've said, there are scale economies in our business, and we know that all other things being equal, as the business grows, our operating margin should drift upwards. It's worth noting that relative to a number of our listed peers who have higher operating margin, we have a lower scale than quite a number of those, which I think is worth bearing in mind. Secondly, when you look at operating margins. It's also worth looking at net inflow growth rates at the same time. And if you look across the listed wealth management players, there is somewhat of a negative inverse relationship between net inflow rate and operating margin. Our net inflow rate has been higher than many of our peers, but our operating margin is a little bit lower than some of our peers. And that is because we've been investing in growth. And we, as we said in the presentation, we very much believe in that, and we're taking a long-term view. We have been rewarded with a high level of growth, and we expect that to feed through to profits over the medium and longer term. And the third thing I would say is just pointing out the technology and operating model changes that we're making, which would give another source of improvement to operating margin over the medium term.

Thanks, Martin. We're actually coming towards the end of time. So to conclude today's event, could I say thank you for your time this morning and for your questions. I hope you've enjoyed hearing insights from each of our businesses, their distinctive strengths and where we see the trends and opportunities in their markets. In banking, we're well positioned to maximize opportunities in the current cycle, and we see long-term structural opportunities in several of the businesses. We continue to assess potential in new initiatives whilst further penetrating our existing market niches. And I'm particularly excited by those arising from the sustainability space, for example, growing our green energy business and alternatively fueled vehicles. And we see opportunities arising from customers involving preferences to use digital, as we've mentioned. In CBAM, we see long-term structural growth opportunities in the wealth management space. And in Wins, we've seen a structural shift in retail trading volumes since the onset of COVID-19 as well as the continued growth of WBS, which is capitalizing on the trend for outsourcing. We have a distinctive business model and a strong culture, which drives our long track record of growth and profitability. Our strategy is focused on protecting, growing and sustaining the business, ensuring we continue to deliver for our customers, for our people and for our shareholders over the long term. We have a diversified portfolio of businesses, each well positioned in their respective markets to continue to deliver disciplined growth whilst maintaining our focus on service, expertise and relationships. We're well positioned to make the most of the current market opportunity and also continue to assess new opportunities in new and adjacent markets to take the business forward. Thank you, and I look forward to seeing you in person soon.

This presentation has now ended.