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Trading in line with expectations

Clydesdale shares slide after mortgage alert

David Duffy

David Duffy: taking major strides


Shares in Clydesdale Bank parent CYBG slid 2% after it warned of slower growth and rising competition in a competitive mortgage market.

Profit margins were squeezed and, as guided at the full-year results, there was a reduction in the net interest margin – the difference between the loan rate and the interest generated for the bank.

Commenting on the first quarter update, David Duffy, group chief executive, said: “We have delivered another solid quarter of growth, despite a competitive operating environment, seeing continued momentum in both mortgage and SME lending.

“While the economic outlook remains uncertain we remain focused on delivering sustainable and prudent growth and are confident we will deliver our guidance for 2018 and the medium term.

“We also continue to take major strides in transforming CYBG into the UK’s leading digitally-enabled challenger bank, positioning us strongly for the future banking landscape.

“Our iB technology platform is ready for Open Banking today with full ‘plug and play’ fintech capability, meaning we can offer real-time, integrated services for our 2.8 million customers.”

Highlights

Continued sustainable growth in asset and deposit balances, despite competitive environment

  • Strong mortgage growth of 7.4% (annualised) to £23.9 billion
  • Core SME growth of 1.4% (annualised) with £567 million of new lending in Q1
  • Deposit balances up 14.8% (annualised) driven by strong performance in current accounts and personal fixed term deposits
  • Asset quality remains strong with a net cost of risk of 12 bps (annualised) in line with expectations

Q1 NIM of 216 bps in line with expected quarterly profile – impacted by strong deposit growth

  • Increase in deposit balances to enable pre-funding of lending growth
  • Mortgage market competition saw front book yields remain broadly stable in Q1 despite increased swap rates



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