Yorkshire Bank delivers profit surge boosted by SME lending

CYBG posts £268m in pre-tax figures

YORKSHIRE BANK owners CYBG delivered a near-250 per cent surge in annual profits and pledged to broaden the capability which it offers its SME base.

CYBG, which demerged from former owner National Australia Bank last year, saw pre-tax profits leap to £268m in the year to September 30 from £77m 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 £182m against losses of £164m the previous year.

The group announced its inaugural shareholder dividend payout, of 1p a share, after the profits cheer.

Speaking to The Yorkshire Post, group chief finance officer Ian Smith said that he expected the bank to further collaborate with fintechs but conceded there will be “a bit of come and go” when it came to its branch network.

“We are really pleased with the results,” he said.

“We can deliver on our promise with a dividend payment. We are slightly above where we expected to be but we are still fairly modest on growth prospects going forward, we think it has to be sustainable rather than heroic.

“We are firmly committed to SME lending. We are committed to lend £6bn over next three years.”

When asked about the advantages that becoming independent from the NAB group had brought, he said: “The SME market in particular we expect growth from, so to return to the market has been really good for us.

“It has helped grow our bank and deliver income for shareholders.

“Being back in the market is important as we implement the next phase as we offer a broader capability to our SME customers. It is a natural continuation of the journey.”

CYBG saw mortgage lending rise 8 per cent to £23.5bn, while lending to small and mediumsized businesses increased 6 per cent to £6.8bn.

Deposits grew 3 per cent to £27.7bn.

The group’s profit hike came in spite of a £58m bottom-line impact largely from higher-thanexpected payment protection insurance (PPI) mis-selling charges.

Earlier this month, Yorkshire Bank revealed a deal with fintech EzBob to speed up finance applications.

Regarding challenges to the banking sector from the likes of fintechs and challenger banks, Mr Smith said: “We work with fintechs, both in terms of EzBob but right across the business.

“We see them as partners rather than competitors. Fintech have understood that it is one thing to offer banking products and services but another matter entirely to be a bank and think they see the best route forward as partnering with us and that is proving to be very successful.

“For new entrants, it is very difficult to grow scale in banking and one of our advantages is that we have scale already because of our long history, and that allows us to make our products and services as innovative as possible.”

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.”

Gary Greenwood, an analyst with Shore Capital, described CYBG’s results as “better than expected” but expressed disappointment about the dividend payout to shareholders.

“The group also continues to make good progress with the roll-out of its digital platform, for which it is investing £350m,” he said.