Bank delivering commitments

Clydesdale ‘robust’ and on target for first divi

David DuffyClydesdale Bank is delivering a “differentiated customer experience” and is on target to deliver its first dividend, according to its half year statement.

The Glasgow-based bank’s parent CYBG unveiled a 15% rise in half-year underlying profits of £123 million and says its capital position is “robust and stable”.

Statutory profit before tax of £46m is £12m lower than the period to March 2016, reflecting restructuring expenses, separation costs and charges for legacy conduct matters.

It will build on it B digital platform with the launch of a B credit card, and a B for business banking proposition to help small businesses manage their finances.

David Duffy, chief executive, said: “So far B is attracting a higher percentage of customers from our target markets of younger, more affluent consumers and has generated a higher net promoter score than the rest of our business.”

He added that the bank is meeting its commitments to small business. “In the SME segment, we have grown lending to our core customers, following last year’s strong performance, with annualised growth of the core SME book of 3% in H1 2017,” he said.

In the first half of this year we have maintained momentum in delivering our strategic priorities and commitments, and as a result are delivering significantly improved financial performance.

“Our half year results show improved underlying profit, good loan growth, stable margin, continued delivery of our cost programme and improved returns – all delivered in a highly competitive market and continuing low growth, low interest rate environment.

“As the only true full service challenger bank of scale across both retail and SME in the UK market, we have been able to deliver ahead of market growth in mortgages and growth in core SME banking, as well as making a strong start to our commitment to provide up to £6bn of lending to SMEs over the next three years.

“We are building a bank focused on a differentiated customer experience that will put customers more in control of their money.”

Jim Pettigrew, chairman, added“CYBG has had a good start to 2017, building on the momentum created in our first year as an independent business.

“We remain focused on our strategy to leverage our digital capabilities and scalable infrastructure to support our growth ambitions and deliver a superior customer experience.

“The Group’s financial performance has been good in the first half of the year and we continue to target a modest inaugural dividend in respect of 2017.

“CYBG offers a true alternative in UK banking – a full service challenger bank designed around our customers’ lives, which is supporting households and businesses across the UK.”

The bank’s dividend ambition remains unchanged, targeting a modest inaugural dividend with respect to 2017 with a longer term goal to pay out up to c.50% of earnings.

H1 2017 highlights

·        Underlying profit before tax – up 15% to £123m

Net Interest Margin (NIM) stable at 226bps reflecting active margin management against a backdrop of a competitive market

Driving positive “jaws” through income growth up 1.2% (£497m in H1 2017) and continued cost reduction – underlying costs £348m, £5m lower than H1 2016

Underlying earnings per share (EPS) of 9.0p per share, up 25% on 31 March 2016

Asset quality improved with continued low impairment charges – cost of risk of 15bps

Robust and stable capital position – common equity tier 1 (CET1) ratio of 12.5%

Underlying return on tangible equity (RoTE) 6.3% in H1 2017 up from 4.5% H1 2016

Statutory profit before tax £46m, after deduction of restructuring and charges for legacy conduct matters

Growing customer lending and relationship deposits in competitive markets

Mortgage growth of 5% annualised was ahead of market – mortgage balances increased to £22.4bn

Core SME book growth 3% annualised – over £1bn of new loans and facilities granted under our commitment to make £6bn of lending available to SMEs over three years (2017-19)

Focused on prudent underwriting standards reflecting uncertainty in the economic environment

Strong growth in current account balances and B savings

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