Clydesdale Bank and Yorkshire Bank owner CYBG has cheered a hike in lending and upped its cost savings target after the £1.7 billion takeover of rival Virgin Money.
Shares in CYBG jumped 9% after it increased its cost-cutting targets following the Virgin Money deal – now expecting annual savings of at least £150 million by the end of 2020-21, against the £120 million previously announced.
It reported a 1.4% rise in customer lending to £71.9 billion in its first quarter to December 31 and said the group’s full-year net interest margin (NIM) – a key measure of performance for retail banks – would now be at the upper end of previous guidance.
But it warned its net mortgage lending growth will be lower for the full year amid intense competition in the UK mortgage market and flagged up Brexit uncertainties.
Chief executive David Duffy said: “The group has made a good start to the year and we are making encouraging progress on the initial stages of the three-year Virgin Money integration programme.
“In a highly competitive environment, we have delivered ahead-of-market lending growth for our customers and improved our NIM guidance for 2019.”
The group added: “The political situation in the UK remains highly uncertain and the potential impact on the UK economy remains unclear, but the group remains focused on unlocking the opportunities from the Virgin Money acquisition and delivering our FY19 margin and cost guidance.”
CYBG said first quarter mortgage lending lifted 1.5% to £60 billion and small business lending rose 1.2% to £7.6 billion, while customer deposits edged 0.2% higher to £61.1 billion.
The lender also reported payment protection insurance (PPI) complaints of about 1,800 a week, but said this was in line with expectations.
Its figures come just a week after it saw an investor backlash over bonuses for top bosses, with more than a third of shareholders voting against its executive pay plans.
The group said 34.2% of investor votes were made against its pay plans at its annual general meeting (AGM) in Melbourne, Australia.
A further 7.4 million shareholder votes were withheld.
While the plans were approved by 65.8% of shareholders voting in favour, CYBG pledged further talks with investors.