Clydesdale owner CYBG overcomes difficult conditions
● First-half results described as ‘resilient’ as integration of Virgin Money progresses
Clydesdale Bank owner CYBG has hailed a“resilient” performance in the first half and said the integration of Virgin Money was on track.
Releasing its first set of results for the combined business following its £1.7 billion swoop on Virgin Money, Glasgow- headqu arte red CYBG said the solid outcome came despite intense competition in the mortgage market.
It posted a statutory profit before tax of £42 million for the six months to 31 March, compared with a loss of £95m a year earlier.
Underlying profit before tax nudged up 2 per cent to £286m, compared with the second half of 2018, or down 5 per cent, year-on-year.
The headline figures were based on CYBG acquiring Virgin Money at the beginning of October 2017 to provide a comparable performance, though the actual completion of the deal took place on 15 October last year. Chief executive David Duffy said: “I am pleased to report that the group has delivered a resilient underlying financial performance during the first half of the year and our three-year integration programme is making good progress.
“Despite sustained competition in the mortgage market and a continued uncertain economic backdrop, we have delivered solid growth in our mortgage book and we have seen signs that mortgage pricing has started to stabilise.
“In our SME [small and medium-sized enterprise] business, we have maintained momentum in the origination of new customer facilities and we are also seeing good growth from our Virgin Atlantic credit card proposition.
“Were main on track to deliver 2019 performance inline with guidance and look forward to updating the market in June on our refreshed strategy and the significant opportunities for our combined business.”
CYB G said gross mortgage lending rose to £60.5bn from £59.1 b na year earlier, but cautioned mortgage lending growth would slow in its second half as it looks to overcome some of the pressure on pricing.
Like its peers, the lender– which also owns the Yorkshire Bank and B online banking brand – has been down-sizing its branch network amid a surge in internet-based banking and smartphone usage.
At the time of the Virgin deal, CYBG confirmed that the retail brand for the combined group would transition to the Virgin Money name over the next three years, bringing an end to the centuries-old Clyde sdale Bank name on Scottish high streets.
The group recently upped its cost savings target after the Virgin Money deal and is now expecting annual savings of at least £150m by the end of 202021, against the £120m previ - ously flagged.
Donald Brown, head of private clients at Brewin Dolphin Edinburgh, said: “Significant acquisition and integration costs still remain so CYBG shareholders may be waiting another year to start reaping the rewards of the merger.”