The owner of the Clydesdale and Yorkshire banks said that it would beat its targets on cost savings and was enjoying solid growth in lending.
Mortgage lending at CYBG was up 5.8 per cent to £22.8 billion over the nine months to June 30. The bank said that it had attracted record volumes of applications in the most recent quarter. Lending in its core small and medium enterprise market grew by 4.7 per cent to £6.6 billion.
The bank also said that its efficiency programme was progressing more quickly than expected. Operating costs are forecast to be below £680 million for the full year, compared with previous guidance of between £690 million and £700 million.
CYBG said in January that it would close 79 branches and cut 400 jobs as part of a transformation plan that would mean it would invest more in digital technology. Ian Smith, chief financial officer, said: “We set out a programme of cost reductions and the improvement in guidance just reflects we are going a bit quicker than anticipated. It is improvements across the board rather than any one area.”
Mr Smith said that he believed the mortgage pipeline was strong. “The overall UK mortgage market isn’t growing, but we seem to be taking share. We seem to be able to do that through picking our spots in terms of the areas of the mortgage market we play,” he said.
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“We are also making life a lot easier through process improvements for people to do business with us and I really think that is starting to show in the volumes.”
As yet, the bank has seen few signs of business customers postponing investment decisions, even as Brexit starts to become more of a reality.
Mr Smith said that some importers were “feeling a bit of pain” from the depreciation of sterling, but added: “There is nothing overt in terms of putting decisions on hold. People are just being careful and thoughtful.”
Deposits were down 4 per cent to £26 billion, which Mr Smith said reflected some re-pricing and restructuring at the beginning of the financial year. Deposits in the quarter to the end of June were slightly lower than the bank had reported in its half-year results at the end of March.
CYBG also said that an agreement has been struck to close the Clydesdale Bank defined-benefit pension scheme to future accruals.
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Shailesh Raikundlia, at Panmure Gordon who has a “sell” rating on the stock, said he believed that other smaller banks offered better value, adding: “Steady progress is being made [in] cost reduction but loan growth, while improving, is still pedestrian.”
CYBG shares rose 24¾p to 292p.