CYBG eases recovery fears to enjoy its best day on FTSE 250

CLYDESDALE and Yorkshire Banking Group soared on a wider market buoyant from strong corporate earnings as investor concerns that the ambitious challenger bank’s recovery had been knocked off course subsided.

Improving margins and an accelerating restructuring programme in its third quarter helped the bank record its best day on the FTSE 250 since being spun out of National Australia Bank last year. Shares jumped 24.8p to 292p.

Investors cheered CYBG lowering its full-year cost guidance to below £680m and improving margins on the back of increased investment after years of neglect by its former owner.

The banking group said that results were on track and that it was targeting an inaugural dividend this financial year.

Shares in CYBG, which mooted a deal for Co-op Bank and had targeted the RBS division Williams & Glyn for a takeover, dived 5.8pc over two days in May as fears mounted that a drop in deposit balances was a sign of its turnaround blowing off course.

CYBG has been derided by some analysts for its lofty ambitions but yesterday they conceded that the strengthening restructuring programme pointed to an improving picture. Morgan Stanley said that CYBG lowering its cost guidance implied an approximately 5pc upgrade in underlying pre-tax profit.

Its accelerated cost reduction plan and top line momentum looked “decent”, the broker said. However, Numis warned clients that rising competition and Brexit headwinds could make it difficult for CYBG to hit its 2019 “double digit” return on tangible equity target.

On the FTSE 100, a bumper batch of earnings from blue-chip big hitters helped the index jump 51.66 points to 7,423.66 despite the pound rising against the dollar on strong UK manufacturing PMI data and the ongoing political quagmire in Washington. Engineer Rolls-royce’s 91p advance to 979p and product tester Intertek’s

394p rally to £46.95 were the pick of the earnings -inspired movements on the benchmark index.

Astrazeneca’s rally following last week’s lung cancer drug trial setback couldn’t extend into a third day after UBS and Jefferies dealt out their punishment for its flagship programme yielding disappointing results. The brokers cut their target prices for the pharma firm, which finished the biggest laggard on the FTSE 100 index, sliding 79p to £44.90. Finally, struggling construction giant Carillion slid 3.6p to 53.3p after broker Investec downgraded the stock from “hold” to “sell”, citing risks of further writedowns following last month’s profit warning.