CYBG makes strong start to 2017

Holding company for Clydesdale Bank and Yorkshire Bank, CYBG, posted its interim results for the six months to 31 March on Tuesday, reporting a “stable” net interest margin at 226bps, which it said reflected “active” margin management against a backdrop of a competitive market.

The FTSE 250 firm said income growth was 1.2% at £497m in H1 2017, with continued cost reduction as underlying costs reached £348m - £5m lower than H1 2016.

Underlying earnings per share totalled 9.0p, which was up 25% on 31 March 2016, and the company’s asset quality reportedly improved with “continued low impairment charges”.

CYBG’s common equity tier 1 ratio remained stable at 12.5%, while its underlying return on tangible equity was 6.3% in H1 2017, up from 4.5% H1 2016.

Statutory profit before tax reached £46m, after the deduction of restructuring and charges for legacy conduct matters.

Annualised mortgage growth was 5%, which the board said was ahead of market, as mortgage balances increased to £22.4bn.

The bank’s core SME book growth was 3% annualised, with over £1bn of new loans and facilities granted under CYBG’s commitment to make £6bn of lending available to SMEs over three years to 2019.

“CYBG has had a good start to 2017, building on the momentum created in our first year as an independent business,” commented chairman Jim Pettigrew.

“We remain focused on our strategy to leverage our digital capabilities and scalable infrastructure to support our growth ambitions and deliver a superior customer experience.”

Pettigrew said the group's financial performance had been “good” in the first half of the year and it continued to target a modest inaugural dividend in respect of 2017.

“CYBG offers a true alternative in UK banking - a full service challenger bank designed around our customers' lives, which is supporting households and businesses across the UK.”

David Duffy, CEO of CYBG, added that in the first half of the year the company maintained momentum in delivering its strategic priorities and commitments, and as a result was delivering “significantly improved” financial performance.

“Our half year results show improved underlying profit, good loan growth, stable margin, continued delivery of our cost programme and improved returns - all delivered in a highly competitive market and continuing low growth, low interest rate environment.

“As the only true full service challenger bank of scale across both retail and SME in the UK market, we have been able to deliver ahead of market growth in mortgages and growth in core SME banking, as well as making a strong start to our commitment to provide up to £6bn of lending to SMEs over the next three years.”