Shares of Glasgow-based banking group CYBG — owner of Clydesdale Bank, Yorkshire Bank and Virgin Money — fell 11% on Tuesday after it said its net interest margins (NIM) were likely to be at the lower end of earlier forecasts as it reported a dip in mortgage loans and margins in its third quarter.

In a third-quarter trading update, CYBG said its net interest margin — the difference between what banks earn from loans and pay for deposits — stood at 168 basis points for the three month period ended June 30, down 3 basis points from the first half. 

The company now expects NIM for the full year to be at the lower end of its previously promised 165-170 basis points range.

CYBG said the value of its mortgage book had fallen 0.2% to £60.4 billion in the third quarter “due to higher redemptions in the period and lower new business volumes in line with the group’s optimisation strategy.”

Business lending inched 0.5% higher at to £7.7 billion, while personal lending rose 5.7% to £4.8 billion primarily due to strong credit card growth.

Customer deposit growth in Q3 was 1.8% to £62.8 billion.

CYBG CEO David Duffy said: “The group continues to deliver on its targets with another quarter of resilient performance including disciplined lending and deposit growth in line with our recently announced strategy.

“Our net interest margin is tracking as expected and we delivered further cost efficiencies in the period – even with the twin pressures of Brexit and the highly competitive mortgage market, we remain on track to deliver full year performance in line with our guidance.

“At our Capital Markets Day in June we set out our plans to disrupt the status quo with new propositions, as well as updated financial, customer service and market share targets.

“Our ongoing performance and refreshed strategy under the Virgin Money brand underlines the opportunity we have to create a new force in consumer and business banking.”