CYBG en­joys rise in mort­gage lend­ing but sees slower growth

Bank’s book hits £23.9bn for quar­ter

Yorkshire Post - - BUSINESS - GREG WRIGHT DEPUTY BUSI­NESS EDITOR ■ Email: greg.wright@ypn.co.uk ■ Twit­ter: @greg­wrightyp

THE CLY­DES­DALE and York­shire bank­ing group (CYBG) has notched up a hike in first quar­ter mort­gage lend­ing, but warned growth would slow amid com­pe­ti­tion in the sec­tor.

Glas­gow-based CYBG, which de­merged from for­mer owner Na­tional Aus­tralia Bank in 2016, said its mort­gage book swelled to £23.9bn in the three months to the end of De­cem­ber, up 7.4 per cent on an an­nual ba­sis.

It said the mort­gage mar­ket re­mained highly com­pet­i­tive, which has hit its net in­ter­est mar­gins.

It added growth in home loans will slow, although it con­tin­ues to ex­pect a “mid-sin­gle digit” per­cent­age in­crease for the full year.

The bank, which has 2.8 mil­lion cus­tomers, be­lieves that mort­gage prices will also re­main sta­ble through­out the rest of its fi­nan­cial year in spite of in­tense com­pe­ti­tion.

Shares in CYBG fell 2 per cent af­ter the up­date.

The group posted a 3.7 per cent rise in cur­rent ac­count and sav­ings de­posits over the first quar­ter to £28.7bn – a 14.8 per cent surge on an an­nual ba­sis, helped by de­mand for its new dig­i­tal app-based ser­vice B, which now boasts 150,000 cus­tomers.

David Duffy, chief ex­ec­u­tive of CYBG, said: “We have de­liv­ered an­other solid quar­ter of growth, de­spite a com­pet­i­tive op­er­at­ing en­vi­ron­ment, see­ing con­tin­ued mo­men­tum in both mort­gage and SME (small-and-medi­um­sized en­ter­prise) lend­ing.

“While the eco­nomic out­look re­mains uncer­tain we re­main fo­cused on de­liv­er­ing sus­tain­able and pru­dent growth and are con­fi­dent we will de­liver our guid­ance for 2018 and the medium term.

“We also con­tinue to take ma­jor strides in trans­form­ing CYBG into the UK’s lead­ing dig­i­tal­lyen­abled chal­lenger bank, po­si­tion­ing us strongly for the fu­ture bank­ing land­scape.

“Our iB tech­nol­ogy plat­form is ready for Open Bank­ing to­day with full ‘plug and play’ fin­tech ca­pa­bil­ity, mean­ing we can of­fer real-time, in­te­grated ser­vices for our 2.8 mil­lion cus­tomers.”

Lend­ing to small busi­nesses lifted by a more muted 1.4 per cent to £6.8bn on an an­nu­alised ba­sis.

CYBG had al­ready cau­tioned over the out­look for the mort­gage mar­ket at its full year re­sults in Novem­ber.

But it posted its first af­ter-tax profit for more than five years, at £182m for the 12 months to Septem­ber 30 against losses of £164m the pre­vi­ous year.

It is also tar­get­ing more than £100m 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.

CYBG is one of a num­ber of banks that emerged af­ter the fi­nan­cial cri­sis to fill a gap in small busi­ness lend­ing and cap­i­talise on prob­lems at the big banks.

Both home-buy­ers and shop­pers are un­der pres­sure from a squeeze on real take-home pay as con­sumer price in­fla­tion rises while wage growth slows.

Com­ment­ing on the trad­ing out­look, the state­ment added: “De­spite the on­go­ing un­cer­tainty in re­la­tion to the terms of the UK’s with­drawal from the Euro­pean Union and its po­ten­tial im­pact on the out­look for the UK econ­omy, we re­main con­fi­dent in our abil­ity to de­liver the group’s FY18 (full year) and medium-term guid­ance.”

CYBG re­ported quar­terly net in­ter­est mar­gin of 216 ba­sis points, down from 221 ba­sis points in the fourth quar­ter.

The lender said its CET1 ra­tio was 12.4 per cent at De­cem­ber 31, which was “com­fort­ably” within its op­er­at­ing range.

DAVID DUFFY: ‘While the eco­nomic out­look re­mains uncer­tain we re­main fo­cused on de­liv­er­ing sus­tain­able and pru­dent growth.’ PIC­TURE: PETER DEVLIN

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