PPI charges hit CYBG’s bottom line

The Clydesdale and Yorkshire banking group has notched up a 15% hike in halfyear profits as it slashed costs and grew mortgage and current account business.

Glasgow-based CYBG, which demerged from former owner National Australia Bank last year, posted underlying pre-tax profits of £123 million for the six months to March 31, against a £107m return a year earlier.

It was helped by cost cutting as part of efforts to save more than £100m by 2019, including a programme to axe almost a third of its branch network.

But the costs of this restructuring and another £150m bill for payment protection insurance (PPI) mis-selling left bottom line profits 21% lower at £46m and shares fell during trading.

The group said the half-year figures kept it on track for a “modest” maiden shareholder dividend payout for 2017.

Jim Pettigrew, CTBG’s Dundee-born chairman, said: “CYBG has had a good start to 2017, building on the momentum created in our first year as an independent business.”

The group declined to comment on whether it was interested in buying troubled rival the Co-operative Bank.

It was among those said initially to have been keen to snap up some or all of the Co-op Bank, although Virgin Money reportedly pulled out of talks recently.

A spokesman for CYBG said: “We don’t comment on rumour or speculation.”

In its half-year results, CYBG said the housing market had continued to grow in its first half, although it cautioned over the Brexit squeeze on consumer finances.

It said: “The impact of higher inflation and its influence on consumer confidence will continue to be a key area of focus with potential knock-on implications for consumer spending and business activity.”

The group saw current account balances rise by 4.5% in the half-year, while its mortgage portfolio rose 5% to £22.4 billion.

CYBG added that it remains “cautious” on unsecured lending, which fell by 3% in the half year amid weakened consumer sentiment and competition from rivals.

Shares closed down 9.5p at 280.6p.

Picture: Dougie Nicolson. CYBG chairman Jim Pettigrew said the group has had a good start to 2017.