Yorkshire Bank’s owner reports continued reduced mortgage demand in ‘extremely competitive’ market
CYBG, the owner of Yorkshire Bank and Clydesdale Bank, has this morning reported an annualised year-to-date mortgage growth of 3.8% to £24.2bn but is preparing for overall growth at the “lower end” of its expectations.
Publishing its Q3 results, the bank, which is progressing with its takeover of Virgin Money for £1.7bn and expects the deal to complete in Q4, said it saw reduced Q3 mortgage drawdowns due to lower applications in Q2.
CYBG said: “In late 2017 we brought mortgage processing back onshore as part of our customer journey improvement initiatives. As guided at the interim results, during the implementation, servicing and fulfilment delays arose which reduced our application levels for a period and led to lower drawdowns in Q3 resulting in a broadly stable balance at 30 Jun 2018.
“We expect Q4 volumes to return to a level in line with expectations such that FY18 mortgage growth is at the lower end of our guidance range.”
It core SME market saw a growth of 4.7%, also on a nine month annualised basis, with £420m of gross loans and facilities written in Q3. New business drawdowns in Q3 were £453m, with YTD annualised net core SME lending growth held at 4.7%.
CYBG added: ” The mortgage market remains extremely competitive, with continued front book pricing pressure.”
It said that during Q3, retail asset pricing pressure was offset by improved SME margins and lower liquidity costs
David Duffy, chief executive of CYBG, said: “We have delivered another solid performance this quarter, achieving sustainable lending and deposit growth in a highly competitive market while maintaining a stable net interest margin and delivering further cost and process efficiencies in the business. We remain on track to deliver our guidance for FY18.
“Our position as one of the UK’s leading digital banks continues to strengthen: in May we launched our fully API-enabled account aggregation for customers and this month we announced a new innovative partnership with PayPal underlining our ability to work with tech players large and small to deliver new and convenient services for customers.
“The economic and political environment in the UK remains uncertain, but we remain focused on delivering our strategic objectives and capturing further growth opportunities. This includes the RBS Alternative Remedies Scheme where we plan to play a significant role following confirmation of the scheme timetable.
“We continue to expect our recommended all-share offer for Virgin Money to complete in calendar Q4 2018, subject to shareholder and regulatory approvals, creating the UK’s first true national competitor to the status quo.”
CYBG added: “We continue to see a healthy pipeline to support new lending in Q4 2018, in line with our asset growth targets and our commitment to lend £6 billion to our customers over 3 years.
“As expected, PPI complaint volumes remain elevated, but are trending in line with our expectations for the second half of 2018. We continue to expect a slow-down in complaint volumes into FY19 due to the impact of the Financial Guidance and Claims Act that became effective in July which implemented a fee cap and limits to cold-calling for Claims Management Companies.”
