Clydesdale Bank owner CYBG has hailed a “resilient” performance in the first half and said the integration of Virgin Money was on track.
Releasing its first full set of financial results for the combined business following the group’s £1.7 billion swoop on Virgin Money, CYBG posted a statutory profit before tax of £42 million for the six months to 31 March, compared with a loss of £95m a year earlier.
It said underlying profit before tax has nudged up 2 per cent to £286m, from the second half of 2018.
The headline figures were based on CYBG acquiring Virgin Money at the beginning of October 2017 to provide a comparable performance, though the actual completion of the deal took place on 15 October last year.
Chief executive David Duffy said: “I am pleased to report that the group has delivered a resilient underlying financial performance during the first half of the year and our three-year integration programme is making good progress.
“We have already realised £33m of annual run-rate cost synergies and have also increased our forecast of the total cost synergies available by £30m to a minimum of £150m by the end of financial year 2021.
“As expected, profit before tax has been impacted by the significant Virgin Money acquisition and integration costs.
“Despite sustained competition in the mortgage market and a continued uncertain economic backdrop, we have delivered solid growth in our mortgage book and we have seen signs that mortgage pricing has started to stabilise.
“In our SME business, we have maintained momentum in the origination of new customer facilities and we are also seeing good growth from our Virgin Atlantic credit card proposition.
“We remain on track to deliver 2019 performance in line with guidance and look forward to updating the market in June on our refreshed strategy and the significant opportunities for our combined business.”
The Glasgow-headquartered group also owns the Yorkshire Bank and B online banking brand. Like its peers, the lender has been down-sizing its branch network amid a surge in internet-based banking and smartphone usage.
At the time of the Virgin deal, CYBG confirmed that the retail brand for the combined group would transition to the Virgin Money name over the next three years, bringing an end to the centuries-old Clydesdale Bank name on Scottish high streets.
Earlier this month, legal action was launched against Clydesdale Bank and its former owner National Australia Bank in connection with the alleged mis-selling of tailored business loans. James Hayward, chief executive of litigation specialist RGL Management, said: “We are yet to receive a full public response from CYBG and its former owner, National Australia Bank, to the claims we filed in the High Court on 1 May. I look forward to hearing their explanation for what are a set of very serious allegations indeed.”
A CYBG spokesman has already stated that the group action claim would be defended “in the strongest terms possible”.