In the first half, CYBG (CYBG) executed well on its plan to grow its loan book while cutting costs - the challenger bank is on track to find £100m in gross savings by the 2019 financial year. However, like some of its peers, transformation costs continued to hamper profit growth. It incurred restructuring costs of £53m, after closing branches and cutting staff numbers. However, chief financial officer Ian Smith says the benefit of these actions will start to come through during the second half.
Mortgage balances were up 5 per cent on an annualised basis to £22.4bn, while an increase in average house prices meant impairment charges declined. Lending to SMEs was up 3 per cent on the same basis, with more than £1bn in new loans and facilities granted. Management has set a target to lend £6bn to these businesses between FY2017 and FY2019. As a result net interest income was up £11m to £411m.
Underlying costs were £5m lower at £348m. Combined with increasing income, this resulted in positive operating 'jaws' (the gap between the rates of growth of revenue and operating expenses). A lower cost of deposit funding also helped keep the net interest margin stable at 2.26 per cent.
Analysts at Shore Capital expect adjusted net tangible assets of 297p a share at end-September 2017, up from 284p a year earlier.
CYBG (CYBG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 275.6p | MARKET VALUE: | £2.43bn | |
| TOUCH: | 275.6-276.1p | 12-MONTH HIGH: | 307p | LOW: 204p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 368p | LEVERAGE: | 13.5 | |
| Half-year to 31 Mar | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 492 | 58 | 1.4 | nil |
| 2017 | 497 | 46 | 1.7 | nil |
| % change | +1 | -21 | +21 | - |
Ex-div: na Payment: na | ||||
