CYBG cautions over ‘competitive’ market despite leap in annual profits
Glasgow-based CYBG saw pre-tax profits leap to £268 million in the year to September 30 thanks to gains in home loans and lending to small businesses.
The Clydesdale and Yorkshire banking group (CYBG) has notched up a near-250% surge in annual profits, but warned over price pressures in a “competitive” lending market.
Glasgow-based CYBG, which demerged from former owner National Australia Bank last year, saw pre-tax profits leap to £268 million in the year to September 30 from £77 million the previous year thanks to gains in home loans and lending to small businesses.
It added that on a bottom-line basis, it posted its first after-tax profit for more than five years, at £182 million against losses of £164 million the previous year.
The group announced its inaugural shareholder dividend payout, of 1p a share, after the profits cheer.
But it gave a more cautious view of the market going forward as it said it was facing stiff competition.
CYBG said: “The lending market will, we expect, remain competitive, especially for home loans.”
The group added: “It is likely that we will see future price pressure in the mortgage and unsecured personal loan market.”
Shares fell 2% after the results.
CYBG saw mortgage lending rise 8% to £23.5 billion, while lending to small and medium-sized businesses increased 6% to £6.8 billion.
Deposits grew 3% to £27.7 billion.
The group’s profit hike came in spite of a £58 million bottom-line impact largely from higher-than-expected payment protection insurance (PPI) mis-selling charges.
David Duffy, chief executive of CYBG, said: “We have delivered a strong performance in 2017 having met all of our targets and recorded our first statutory profit in over five years.
“As a result, we are pleased to be recommending an inaugural dividend to our shareholders.
“This is a good first step in our three-year plan.”
The lender added that cost cutting was ahead of plan, with underlying operating costs 7% lower over the year.
The group is targeting more than £100 million of cost savings by 2019 – a drive which saw the group announce plans in January to shut around a third of its branch network in 2017 and axe 400 jobs.