CYBG reports solid third quarter as it continues digital transformation
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11:14 08/10/24
Clydesdale Bank and Yorkshire Bank owner CYBG made further progress towards its full-year guidance in the third quarter, it announced on Tuesday, with “solid” mortgage growth of 5.8% annualised for the nine months to 30 June, and record volumes of applications in the quarter.
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The FTSE 250 company also reported core SME growth of 4.7% annualised, with a “robust pipeline” supporting its £6bn three-year lending commitment.
NIM increased to 2.29% annualised in the nine months to 30 June, with management actions on funding moderating the impact of asset yield pressures.
CYBG said its efficiency programme was ahead of schedule, with its management team now expecting underlying operating costs for the full year to be below £680m, ahead of previous guidance of between £690m and £700m.
It reported an LDR of 119%, as the firm managed deposit balances following the restructuring and repricing of more expensive deposits in the first half of the 2017 financial year.
“We have delivered another solid performance this quarter, with increased momentum in mortgage and core SME balance growth despite the competitive environment,” said chief executive David Duffy.
“Further operational improvements during the year have enabled customer loan growth and cost efficiencies.
“We remain on track to deliver our guidance for the full year, and now expect underlying operating costs to be below £680m which is testament to the success of our restructuring programme.”
CYBG also reported a continued “robust” capital position, with a CET1 ratio of 12.4% at 30 June compared to 12.5% at 31 March, comfortably within the target range of between 12% and 13%.
An agreement was reached during the period to close the group's defined benefit pension scheme to future benefit accrual, which the board said would deliver a “substantial” reduction in the scheme's funding deficit.
The firm’s IRB application process remained “on track” and in line with previous guidance, the board added.
“The digital transformation of CYBG, focused around our market leading iB platform, continues apace and customers are already seeing regular service and products improvements from our £350m investment programme,” Duffy explained.
“We now have over 80,000 B accounts opened and the transition of Clydesdale and Yorkshire Bank customers onto the iB platform remains on track, positioning us well for the world of PSD2 and Open Banking.”
On that operational front, CYBG said it was delivering “enhanced” customer service and functionality, with a range of new products and services launched including the B credit card, Android Pay for B and a digital savings bond.
As Duffy said, more than 80,000 B current accounts had been opened since launch in May 2016, with “strong” deposit flows.
Yorkshire Bank and Clydesdale Bank were also named ‘Best Current Account Providers’ at the 2017 Moneyfacts awards.
The company also said the transition of Clydesdale and Yorkshire customers onto the iB platform was on track for the end of the calendar year, which the board said would simplify the business, enhance the customer experience, improve data management and reduce time-to-market.
“While the economic and political environment in the UK remains uncertain, we are focused on delivering our strategic objectives,” David Duffy added.
“We remain confident that the medium term strategy we outlined at our capital markets day in September 2016 will differentiate us from our competitors and deliver our full-year 2019 targets as we seek to build a better bank for our customers and staff and improve returns for our shareholders.”