6th Feb 2019 08:37
LONDON (Alliance News) - Lender CYBG PLC on Wednesday said it had a solid first quarter, while its full-year net interest margin should be at the top end of expectations.
Shares were 9.8% higher early on Wednesday at a price of 196.30 pence each.
For the first quarter ended December, CYBG's net interest margin was 172 basis points.
For its year ending September, the bank expects its net interest margin to be between 165 and 170 basis points. This would be down year-on-year, as expected due to pricing pressure in the UK mortgage sphere, but towards the top end of prior guidance.
For the financial year ended September 30, 2018, CYBG's net interest margin was 2.17%.
CYBG's first quarter lending grew 1.4% year-on-year to GBP71.9 billion. Mortgage growth was 1.5% to GBP60.0 billion and small and medium enterprise lending by 1.2% to GBP7.6 billion.
The company's integration plan is going well, it said, and CYBG now expects at least GBP150 million of annual savings by the end of its financial year ending September 2021, from GBP120 million previously guided.
CYBG is "strongly" capitalised, it continued, with the common equity tier 1 ratio at 14.5% at December's end, 60 basis points lower than September 30.
Payment protection insurance complaints were 1,800 per week in the first quarter, CYBG also said, in line with expectations.
"The group has made a good start to the year and we are making encouraging progress on the initial stages of the three-year Virgin Money integration programme," said Chief Executive David Duffy.
"In a highly competitive environment, we have delivered ahead-of-market lending growth for our customers and improved our net interest margin guidance for 2019. We have also made good progress on cost reductions and have now increased our integration synergy target to GBP150 million," he continued.
"I am particularly encouraged by our performance in small to medium enterprise. We are well prepared for the start of the RBS incentivised switching scheme and we hope to attract a large proportion of the 120,000 small to medium enterprise customers that RBS are required to switch."
"We have also recently submitted our application for a grant from the RBS Capability & Innovation Fund, where we believe we offer the strongest case for delivering a genuine boost to competition in the small to medium enterprise market," Duffy concluded.
Looking forward, CYBG is on track to achieve its objectives despite the "highly uncertain" political situation in the UK, and the unknown potential impact on the economy.
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