Analyst warns that CYBG could be heading for a full-year loss

THE owner of Clydesdale and Yorkshire banks has experienced little reprieve amid heightened competition in the mortgage market and could now be on track for a full-year loss, an analyst has warned.

CYBG’s interim results showed a reduction in mortgage drawdowns in the three months to June 30 due to lower applications earlier in the year, and stressed that the mortgage market “remains extremely competitive”.

Pricing pressure in its retail banking operations has been offset in part by improved margins in its division serving small and medium-sized businesses. However, it is still expecting fullyear mortgage growth to be at the lower end of its guidance range.

Mortgage growth has risen 3.8% to £24.2bn in the year to date, while growth in its core small and mediumsized business division grew 4.7% so far this year, with £420m of gross loans and facilities written in the third quarter.

Deposit balances have risen 4.5% so far this year.

It also noted that complaints over the misselling of payment protection insurance (PPI) “remain elevated”, having already been knocked by an extra £350m charge in additional provisions in the first half of the year.

Chief executive David Duffy said it was a “solid performance” for the lender, but questions have been raised over the bank’s ability to deliver fullyear profits.

Ian Gordon, a banking analyst at Investec, said it was an “underwhelming” interim statement which “illustrates the challenges which should ensure a loss in FY2018”.