CYBG upbeat about full-year targets despite mortgage dip

Clydesdale Bank owner CYBG said it remained on track to meet full-year expectations despite a dip in mortgage lending.

The third-quarter results come the same week as CYBG pledgedto be more transparent on the way it rewards executives. Picture: John Devlin

The Glasgow-based group said trading in the nine months to 30 June was in line with expectations as it faced down the "twin pressures" of heightened competition in the mortgage market and Brexit-related uncertainty.

It recorded a 0.2 per cent reduction in its mortgage book to £60.4 billion in the three months to June, pointing to higher redemptions during the period and lower new business volumes.

The lender blamed a subdued market for lower-than-expected business lending growth of 0.5 per cent to £7.7bn, but remained positive for a healthy finish to the year with a strong pipeline for the fourth quarter.

The group hailed "good progress" with its Virgin Money integration programme, estimating it has now delivered around £45 million of annual run-rate cost synergies, as it progresses towards a £200m savings target by the end of 2022.

CYBG will begin to rebrand under the Virgin Money name this year, calling time on the centuries-old Clydesdale and Yorkshire Bank brands following the £1.7bn takeover of Virgin Money, part of Sir Richard Branson’s Virgin Group, last October.

Personal lending was up by 5.7 per cent to £4.8bn in the quarter, primarily due to a strong credit card market.

Customer deposits grew by 1.8 per cent to £62.8bn, while customer lending crept 0.2 per cent higher to £72.8bn.

The third-quarter results come the same week as the lender pledged to be more transparent on the way it rewards executives following a shareholder revolt over boardroom pay at its last annual general meeting.

Chief executive David Duffy said: "The group continues to deliver on its targets with another quarter of resilient performance including disciplined lending and deposit growth in line with our recently announced strategy.

"Our net interest margin is tracking as expected and we delivered further cost efficiencies in the period - even with the twin pressures of Brexit and the highly competitive mortgage market, we remain on track to deliver full year performance in line with our guidance.

"Our ongoing performance and refreshed strategy under the Virgin Money brand underlines the opportunity we have to create a new force in consumer and business banking."