CYBG swings to profit as Virgin Money, lending drives growth

Clydesdale and Yorkshire Bank owner CYBG swung to an interim profit on the back of higher lending, despite the UK's Brexit woes and lower margins on its mortgage book, sending the shares higher on Wednesday.

The company, which also owns Virgin Money UK and the app-based bank B, recorded a pre-tax profit of £42m for the period compared to a loss of £95m a year earlier.

Underlying operating income was flat at £843m after accounting for last year’s acquisition of Virgin Money as lower margins on its mortgage book were offset by an increase in non-interest income from credit card fees, while underlying profit before tax dropped 5% to £286m.

Meanwhile, total operating income climbed by 84% to £926m as net interest income leapt 92% to £820m and non-interest income rose 38% to £106m.

Chief executive David Duffy described the results as "resilient...in challenging market conditions".

CYBG bought Virgin Money in October 2018 for £1.5bn in a deal that made the company the UK's sixth largest bank.

AJ Bell investment director Russ Mould said the market response to the results were not surprising "given the lukewarm numbers served up by its larger peers of late and the disaster story unfolding at Metro Bank".

"A weak performance for the share price heading into the financial results should be considered in the context of today’s bounce," he added.

CYBG's shares were up 4.58% at 200.00p at 0917 BST.