CYBG shares soar as it boosts mortgage lending but warns of ‘uncertain’ market conditions
CYBG has unveiled 1.5 per cent mortgage growth for the first quarter of its financial year, but warned of uncertain market conditions ahead.
The bank, which acquired Virgin Money on October last year, said mortgages had hit £60bn in the three months to 31 December, which it said was the result of a strong pipeline and good customer retention.
Its small and medium enterprise lending business grew 1.2 per cent to £7.6bn with around £600m of drawdowns.
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CYBG said “good progress” had been made with the integration of Virgin Money. The results treat the two companies as if they had merged in October 2017, to allow comparisons between current and past performance.
CYBG said it now plans to deliver £150m in synergies by the end of the 2021 financial year versus the £120m figure that was previously announced.
Shares jumped 13.2 per cent to hit 202.4p in the afternoon.
Chief executive 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."
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