Sunday 25 August 2019

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.

CYBG results
CYBG results

By Holly Williams, Press Association Deputy City Editor

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.

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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.

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