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Categorized | Banks

Clydesdale posts first profit in five years

Posted on November 22, 2016

Clydesdale and Yorkshire Banking Group has posted its first statutory profit in five years and said that its engagement with Royal Bank of Scotland over a potential acquisition of Williams & Glyn is “ongoing”.

The challenger bank posted a pretax profit of £77m, reversing a £285m loss from the previous year in its first set of annual results after being demerged from National Australia Bank.

Clydesdale’s profits were boosted by an increase in mortgage lending in the year to the end of September, which grew by 6.5 per cent, and a 6.1 per cent increase in loans to small businesses.

David Duffy, chief executive of the banking group, said:

We are investing in our future, with an investment programme in the next two years of over £350m in part to unlock the potential of CYBG’s digital platform which will drive improvements in our customer experience and distribution capabilities.

As the only true full service, challenger bank of scale, we are perfectly placed to disrupt the status quo in the UK banking market.

The bank said that while lending remains sensitive to economic shocks, “broader based negative effects from Brexit have yet to be observed and prolonged economic stability underpinned by low interest rates and higher employment has supported customer confidence”.

The lender, which submitted a bid last month to acquire Williams & Glyn from Royal Bank of Scotland, said that this “engagement is ongoing” and that “there can be no certainty that any transaction will occur, nor as to the terms on which any transaction might be concluded.”

Costs amounted to £729m, some 4 per cent ahead of guidance given at the time of the initial public offering. The bank announced in September fresh cost-cutting measures, targeting more than £100m of cost reductions by the end of 2019.

Clydesdale said it is aiming for a double digit return on equity by the end of 2019, a cost-income ratio of 55-58 per cent and loan growth at a mid-single digit percentage rate.