CYBG (CYBG), which comprises the Yorkshire and Clydesdale banking brands, has more legacy issues than newcomers within the sector. Since its flotation in February the challenger bank has focused on reducing its costs and building its core mortgage and small- and medium-sized enterprises (SMEs) lending book. This maiden set of half-year results revealed mixed progress.
The mortgage portfolio increased by almost 5 per cent to £21.5bn, primarily as a result of more lending via intermediaries. However, while core SME loans were fairly flat at £6bn, the continued run-off of the non-core portfolio meant overall lending to these businesses was down 10 per cent to £6.9bn. Overall, group net interest income grew by £10m to £400m.
On the flip side the challenger has made good inroads into reducing its costs. The cost-to-income ratio fell to 82 per cent from 120 per cent in the previous financial year. Management now expects underlying costs for the full year to be £730m rather than the £762m announced in February's trading update. Branches continue to close, and a voluntary severance scheme for senior grade staff means 150 employees will leave during the second half.
Analysts at Macquarie expect net tangible assets per share of 324p at the end of September 2016, rising to 342p a year later.
CYBG (CYBG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 243.5p | MARKET VALUE: | £2.15bn | |
| TOUCH: | 243.5-243.75p | 12-MONTH HIGH: | 243.8p | LOW: 179p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 401p | LEVERAGE: | 11.8 | |
| Half-year to 31 Mar | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015* | 546 | 155 | 16.9 | na |
| 2016 | 492 | 58 | 1.4 | nil |
| % change | -10 | -63 | -92 | - |
Ex-div: na Payment: na *Pre-IPO figures | ||||
