In its first set of full results since its takeover of Virgin Money, Clydesdale Bank owner CYBG (CYBG) trumpeted a “resilient underlying performance in challenging market conditions”. A less spin-filled description of interim figures might simply read 'flat'.
That’s no bad thing, given the broader struggles in UK banking. But on a pro-forma basis, there was little sign of a rebound in the six months to March 2019. While operating costs fell 3 per cent to £480m, a 60 per cent jump in impairments to £77m ultimately caused underlying pre-tax profits to drop 5 per cent, and knocked 13 basis points off the net interest margin, to 1.71 per cent.
This increase in the cost of risk should not come as a surprise, says management, pointing to the “normalisation” of interest rates. But areas where the bank might exert a little more control, such as attracting new customers, aren't exactly delivering. During the period, deposits grew by just 1.2 per cent to £61.7bn and small business lending rose by a similar ratio to £7.6bn.
Against this backdrop, investors have been promised a refreshed strategy and “new division overviews” at next month’s capital markets day. Consensus analyst forecasts are for earnings of 24.5p a share in the year to September, rising to 26p in FY2020.
CYBG (CYBG) | ||||
ORD PRICE: | 203p | MARKET VALUE: | £2.9bn | |
TOUCH: | 202.7-203p | 12-MONTH HIGH: | 367p | LOW: 172p |
DIVIDEND YIELD: | 1.5% | PE RATIO: | NA | |
NET ASSET VALUE: | 375p | LEVERAGE | 18.4 |
Half-year to 31 Mar | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 503 | -95 | -10.2 | nil |
2019 | 926 | 42 | 0.2 | nil |
% change | +84 | - | - | - |
Ex-div: | n/a | |||
Payment: | n/a | |||