C Hoare & Co has paid £12.2 million in client redress over issues around a pool of loans and is to carry out an in-depth review of how it documents its loan book in future.
The payout was revealed in the private bank’s annual results, which also disclosed it received a cash consideration of £72 million for the sale of its wealth business to Cazenove.
The sale boosted C Hoare’s pre-tax profits by £42.8 million to £70.8 million over the 12 months to the end of March.
However, profit before tax on its continuing operations, stripping out the impact of the wealth management business, fell by 41% to £17.6 million, owing to the loan book costs and a charitable donation of £7.5 million.
The company reported income from continuing operations marginally increased from last year’s restated figure of £91.5 million to £92.9 million, while underlying costs, excluding customer repayment costs and charitable donations, fell slightly from £59.4 million to £57.7 million year-on-year.
Customer deposit balances rose by 7% to £3.9 billion and customer loans grew by 14% to £1.6 billion, equating to 40% of deposits at the year-end.
The sale of C Hoare’s £2.3 billion wealth division, which completed in February, marked a restructure of the business to focus on its core banking proposition.
Chairman Lord Macpherson said: ‘The bank has undergone a transitional, but successful year which included an organisational structure change, including the sale of the wealth management business [after] the board made the strategic decision to focus exclusively on banking.
‘Income has remained robust despite market and competitive pressures impacting on our margins. By bearing down on costs, the bank has been able to continue to invest in important customer service capabilities while maintaining a broadly stable level of overall ongoing costs.’
He added: ‘The cost reduction effort was affected this year as a one-time provision was set up to resolve documentation issues with a small pool of regulated loans.’
The private bank also revealed that it paid a Financial Services Compensation Scheme levy of £574,000, down from £758,000 the previous year.