2023 – the year ahead, according to Neil Davies…

We’ve been confirmed in the latest Asset Finance Europe 50 report that we are – again - the third largest asset funder in the UK and that we are the only ‘traditional’ UK funder on the list to have grown. To quote from the report: ‘In the UK, banks were responsible for much of the reduction in receivables, as four out of five recorded declines; only Close Brothers reported gains’. And, at 8.7% growth, we are the fastest growing asset finance company in the UK of those on the list, and 8th in Europe by % increase in receivables. 

But, more than anything, what this demonstrates is our continued strong support for the UK and Ireland’s SMEs during what has – for many – been very difficult times.

A key message I want to communicate – and will be repeating throughout this year – is that our doors remain open to both new and existing customers – we are proud of backing businesses throughout all economic cycles, and will continue to do so.

Looking ahead

While we would like to focus on the positives, it would be remiss of me not to acknowledge that businesses face an almost unprecedented number of headwinds – our detailed research findings indicate:

Energy prices:

• 70% of firms have reported a rise in energy costs in the past six months
• 63% say their profitability has been impacted by rising energy costs
• 47% of businesses have taken additional finance to cover their increased energy costs

Cost of doing business:

• 48% of SMEs have experienced cashflow issues
• 83% of businesses have had to either fully or partially pass on additional costs to customers, fuelling inflation
• For 44% of respondents, rising business costs are the biggest concern about the future of their business

Inflation:

• 72% of firms have been negatively impacted by rising inflation
• 62% have raised staff wages to help employees keep pace with the cost of inflation

Knowing this helps us understand in the detail the issues our customers are facing, and we can put in place plans to work with them to ensure they can continue to meet their commitments; however, we do anticipate arrears will inevitably increase.

One positive is we expect supply chain issues to ease, based on the feedback we’re getting from our research, where it’s fallen down the list of concerns business owners are facing.

While we have a good handle on the current set of issues, recent events have highlighted just how difficult it is to predict – and plan – for the next challenge.

Financial outlook

As a division, we grew our loan book and profitability despite the backdrop of heightened market uncertainty, continuing to focus on delivering disciplined growth, and because of this we are well positioned to successfully navigate this challenging period. 

Our proven and resilient model, strong financial position and deep expertise enable us to continue supporting our customers and clients.

This is a key message for our nearly 32,000 customers - and one I cannot stress this strongly enough – we aren’t going to stop providing funding just at the time businesses need it most.

Equality and diversity

Inclusivity, diversity, equality and social mobility are issues very close to my heart because I know that with diversity – cultural, ethnic, racial, gender, sexual orientation, etc. – comes the gifts of creativity, new ideas and different ways of working. Creating an inclusive culture where all colleagues are supported to thrive is fundamental to the continued success of our business. 

We rely on our people’s expertise in delivering excellent service and building long-lasting relationships with our customers, clients and partners, all based on trust and integrity.

We want our colleagues to feel as though Close Brothers is a great place to work and are signatories to a wide range of charters and commitments across a broad spectrum of inclusion themes and social enterprises, including:

• The Race at Work Charter (our target is to have at least 14% of our managers to identify from an ethnic minority background by 2025)
• The Social Mobility Pledge,
• Women in Finance Charter
• The Valuable 500

We also partner with leading diversity organisations, including Stonewall and the Business Disability Forum, to help inform our thinking and subsequent actions. We are committed to inclusive recruitment practices, using gender decoders to avoid the use of gender bias wording in adverts and job descriptions, and seeking balanced shortlists and diverse interview panels to alleviate bias in the process.

Social mobility is one of our inclusion pillars and we continue our partnership with upReach, a charity committed to transforming social mobility. This year’s summer internship programme offered six-week placements for six university students from lower socioeconomic backgrounds. The proven success of these internships has supported us to broaden our talent pool for entry level roles, with some interns successfully obtaining permanent roles within the firm.

2023 resolutions…

Many of us start the year with the best of intentions – to make it interesting I asked members of my senior team to tell me what their personal ambitions for 2023 are – starting with mine:

• I need to be in Austin, Texas when my daughter delivers my grandson – the issue is timing: knowing that if I arrive too late, or leave too early, I will never be allowed to forget!

• Matt Roper, CEO Invoice & Speciality Finance: ’Successfully navigating the byzantine property transfer system and move home to be nearer the children’s school, while also training to run the 50km Serpent Trail race in July.’

• Steve Gee, CEO, Industrial Equipment Division: ‘My eldest daughter gets married in September this year so I need to make sure I Iose a bit of weight and get my dancing steps right for my Dad & Daughter dance with her!!’

• Martin Stanley, CEO, Specialist Asset Finance: ‘I’d like to lose 5kgs and get hypnotherapy to help with my fear of heights!’

• John Fawcett, CEO, Transport: ‘I’d like to improve my work / life balance, which will allow me time to get to the gym to lose some unwanted pounds. I’d also like to spend more time with my Mum, who unfortunately has dementia.’