CYBG shares up 14% as Q1 lending hits £72bn

CYBG CEO David Duffy

Shares of Clydesdale and Yorkshire Bank owner CYBG rose about 14% on Wednesday after it lifted its forecast for margin growth and reported a rise in lending in a tough UK mortgage market.

CYBG completed the acquisition of Virgin Money in October 2018.

In a first quarter 2019 trading update, CYBG said total customer lending grew 1.4% to £71.9 billion, with mortgage growth of 1.5% to £60 billion and SME growth of 1.2% to £7.6 billion.

“Now expect to deliver a NIM (net interest margin) of 165-170bps for FY19, at the upper end of previous guidance range,” said CYBG.

CYBG CEO David Duffy said: “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.

“In a highly competitive environment, we have delivered ahead-of-market lending growth for our customers and improved our NIM guidance for 2019.

“We have also made good progress on cost reductions and have now increased our integration synergy target to £150m.

“I am particularly encouraged by our performance in SME.

“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 SME customers that RBS are required to switch.

“We have also recently submitted our application for a grant from the RBS Capability and Innovation Fund, where we believe we offer the strongest case for delivering a genuine boost to competition in the SME market.

“Market conditions remain uncertain while we await the outcome of the Brexit negotiations, but we remain focussed on supporting our customers and delivering against the factors within our control.”

Investec analyst Ian Gordon said: “Refreshed NIM (net interest margin) guidance and strong loan growth, driven by mortgages, should be taken well, as should the updated cost synergy target from the VM deal.”