First statutory profit in five years
Clydesdale ‘delivers on promises’ in maiden results
In its maiden figures since floating on the stock market in February the bank’s chief executive David Duffy said it had “delivered on our promises”.
The bank has benefited from strong growth in mortgages, SME lending and deposits, and ongoing cost-cutting.
It declared an underlying profit before tax of £221m for the year, against £159m last time. Statutory profit before tax came in at £77m (FY2015 loss of £285m).
There was a 9% increase in operating profit before impairment losses of £260m (FY2015 £237m).
The bank has seen only a “minimal impact” on its business from the EU referendum.
On PPI it said : “We have not made any further changes to existing unutilised provisions related to PPI. We consider that the total cover remaining of £1.5 billion (unutilised provisions and conduct indemnity) is sufficient to cover the costs of dealing with all legacy conduct matters, including PPI.”
It confirmed that it is targeting “a modest inaugural dividend” in 2017 with a longer term goal to pay out up to half of earnings.
David Duffy, chief executive, said: “In our first year as a Plc, CYBG has delivered on our promises to our customers and shareholders, building strong foundations for our future growth and positive momentum going into 2017.
“We are investing in our future, with an investment programme in the next two years of over £350m in part to unlock the potential of CYBG’s digital platform which will drive improvements in our customer experience and distribution capabilities.
“As the only true full service, challenger bank of scale, we are perfectly placed to disrupt the status quo in the UK banking market.
Jim Pettigrew, Chairman CYBG PLC, commented:
“2016 has been a landmark year in the long history of our bank, as we became independent for the first time since the 1920’s.
“Our ambition is straightforward: to become the credible alternative to the big UK banks. We intend to achieve this using our scalable infrastructure to support our growth ambitions, and our enhanced digital capability to streamline process and deliver a superior customer experience.
“I would like to thank the board, the Executive Leadership Team, and my colleagues throughout the business for their hard work in delivering a successful set of results in 2016. Everyone has played a part in making this a landmark year for our business.
“Our focus for next year is to build on the progress and achievements of 2016, and continue to build a culture that puts the customer at the heart of everything we do. I am confident that we can deliver on our strategy, further improve our performance and enhance returns for our shareholders.”
Strong loan and deposit growth across business
6.2% underlying growth in deposits across Retail and SME
4.7% loan growth
6.5% growth in mortgages
Core SME book grew 6.1%. Over £2.2 billion of new loans and facilities granted, 15% up on FY2015
Delivered on key financial metrics:
Net Interest Margin (NIM) stable – 226 bps, 3 bps increase vs FY2015
Cost reduction programme on target – £729m underlying costs, 4% ahead of initial IPO guidance
Well capitalised – CET1 ratio remains strong at 12.6%, consistent with guidance
Medium term targets updated in September 2016 – better and faster:
Double digit Return on Tangible Equity (RoTE) by FY2019 (previously FY2020)
Cost-to-Income Ratio (CIR) 55%-58% by FY2019 (previously below 60% by FY2020)
Loan growth mid-single digit per cent compound annual growth rate (CAGR) to FY2019