CYBG (CYBG) achieved a significant milestone in its first full-year results statement as a listed company, delivering pre-tax profit for the first time in five years. Admittedly, a change in the tax treatment of its deferred assets resulted in a £164m post-tax loss. However, the challenger bank has made good progress in its double-pronged approach to increasing profitability - growing its core mortgage book for small- and medium-sized (SME) businesses and bringing down costs. Operating profit before impairment losses (which also fell year on year) increased 9 per cent to £260m.
Conduct charges relating primarily to past mis-selling of payment protection insurance were substantially lower at £51m, compared with £486m the previous year. This is thanks to a capped indemnity from former parent Bank of Australia, which reimbursed its former subsidiary. The banking group managed to outperform its cost reduction target, pushing underlying operating and administrative expenses down to £729m. Staff numbers reduced by around 500 to just fewer than 6,500 by the end of September, and 27 branches were closed. Despite this, customer deposit balances increased slightly to £27bn.