'Landmark year' as Clydesdale and Yorkshire banking group posts £77m profit
The Clydesdale and Yorkshire banking group has notched up its first annual profit in five years in a buoyant start to life as a standalone business.
Glasgow-based CYBG, which demerged from former owner National Australia Bank in February, hailed a "landmark year" as it posted bottom-line pre-tax profits of £77 million for the 12 months to September 30 against a loss of £285 million the previous year.
The group last month confirmed it had made an offer to buy Royal Bank of Scotland's 300-strong Williams & Glyn branch business, after Santander pulled out of talks .
But CYBG is also cutting jobs and shutting branches as part of a drive to slash costs by an extra £100 million.
It said in September that it will trim its branch network further, from 248 to less than 200 over the next three years.
Alongside the cost savings, it is investing more than £350 million over the next two years to overhaul the group, by improving its online banking offering and boosting technology platforms.
CYBG chairman Jim Pettigrew said: "2016 has been a landmark year in the long history of our bank, as we became independent for the first time since the 1920s.
"Our ambition is straightforward: to become the credible alternative to the big UK banks."
CYBG said it has seen a "limited" impact on its business from the Brexit vote, with mortgage lending still robust and lending to small businesses higher for the first time in four years.
But the group said lower for longer interest rates - following the cut to 0.25% in August - would put pressure on its interest margins, which would be only partially offset by the Bank of England's low-cost funding scheme for lenders.
The group grew its mortgage lending by 6.5% over the year and saw its small business loan book increase by 6.1%.
On an underlying basis, pre-tax profits rose to £221 million from £159 million the previous year.
It added that it has not increased cash set aside for payment protection insurance (PPI) compensation, despite the recent move to put back the deadline for claims by a year.
Shares in CYBG fell 4%, although the stock has risen by nearly two thirds since its demerger in February.