Clydesdale and Yorkshire Bank owner CYBG said it saw strong mortgage growth of 7.4% to £23.9 billion in the three months to December 31, 2017 — but that it anticipates that mortgage growth will ease over the remainder of full-year 2018.

CYBG shares fell about 3%.

“We saw strong growth in mortgages with balances of £23.9 billion, representing annualised growth in Q1 of 7.4%, driven by a particularly strong pipeline at year end,” said CYBG.

“We anticipate that mortgage growth will ease over the remainder of FY18, although we continue to expect mid-single digit growth in balances for FY18.

“Front book yields remained broadly stable through the period with spreads narrowing slightly due to the increase in swap rates not being fully passed on to customers across the market.

“While the mortgage market remains competitive, we expect to see price stability through the remainder of FY18.

“We maintained momentum in SME origination, with £567 million of gross loans and facilities written in the quarter.

“Strong new business drawdowns of £525 million were offset by reduced overdraft balances in our agriculture book.

“As a result, on an annualised basis net core lending grew by 1.4% in Q1.

“We continue to see a healthy pipeline to support new lending in 2018, in line with our asset growth targets and our commitment to lend £6 billion over 3 years to our customers.”

CYBG CEO David Duffy 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.“