Clydesdale Bank owner CYBG said it had made a “solid start” to its financial year, with its first-quarter net interest margin unchanged from a year earlier despite August’s Bank of England rate cut.
The Glasgow-based lender said that its net interest margin – the difference between what it charges on loans and pays on deposits – was flat at 2.22 per cent in the three months to end-December compared with the same period of 2015.
There’s still plenty to like about the bankNicholas Hyett
However, the latest figure was slightly down on 2.26 per cent last September and shares in CYBG – demerged from its former Australian parent company onto the London stock market last year – fell 5 per cent to 269.7p.
“As expected, asset yields came under pressure from the start of the period following the August 2016 base rate reduction, along with increased competition in retail lending markets,” the bank said in a first-quarter trading update.
CYBG, which also owns Yorkshire Bank, added: “We saw the benefits of deposit repricing begin to offset these pressures towards the end of the period, alongside other measures to reduce funding costs, including a modest drawdown on the Bank of England Term Funding Scheme in December.”
The self-styled “challenger bank” to Britain’s big five lenders said its deposit balances totalled £27.3 billion at end-December 2016, up 4.7 per cent on an annualised basis compared with 30 September 2016, driven by both business and personal accounts.
CYGB, which recently announced plans to close 79 UK branches, 40 of them in Scotland, with the loss of hundreds of jobs, said its mortgage book grew 4.4 per cent to £22.1bn in the latest trading quarter.
That was ahead of general mortgage market growth of 2.2 per cent for October and November based on Bank of England data. CYGB said £574m of its lending and facilities was to small and medium-sized businesses (SMEs) in the first quarter.
However, it added that its core SME lending book shrank £40m (0.6 per cent).
Nicholas Hyett, equity analyst at broker Hargreaves Lansdown, said: “Shares in CYBG are down after the bank revealed declines in its book of SME and unsecured personal loans and a slightly lower net interest margin compared to the full year.
“However, there’s still plenty to like about the bank, not least the £690m-£700m of cost savings it is targeting this year.”