CYBG Q3 2019 earnings are much in line with market expectations but highlight ongoing margin pressure.

In Q3 the CYBG net interest margin is down by 3 basis points to 1.68% from the prior quarter.

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CYBG’s financial year runs from October to September.

For the full year, CYBG says its net interest margin will be at the lower-end of its 165-170bps guidance range.

CYBG Q3 2019 highlights:

  • Cost reductions targets remain on track.

CYBG is aiming for around £200m of net cost savings by fiscal year 2022. At the end of the third quarter the bank had realised £45m of annual run-rate savings. The bank says it is on track to deliver FY19 underlying costs of below £950m.

  • Customer deposits rise by 4% for the year to date to £62.8bn, and
  • Personal lending is up by 13.6% for the year to date to £4.8bn.

CYBG Q3 2019 less positive metrics

The bank’s mortgage book falls by 0.2% to £60.4bn due to higher redemptions. Modest business lending growth of 0.5% to £7.7bn with lower new business volumes reflects a subdued market.

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CYBG’s share price remains depressed and is down by 10% following release of the trading update at £1.77.

As a result the CYBG share price is again trading below its January 2016 IPO price.

Previous owners National Australia Bank set the IPO at £1.80 per share, giving the demerged bank a market value of £1.58bn.

NAB paid £420m for Clydesdale Bank in 1987 and £900m for Yorkshire Bank in 1990.

Following the IPO, the CYBG share price peaked at around £3.47 last July. As a result, the share price has almost halved in the past 12 months.

CYBG says that good progress is being made with its Virgin Money integration programme.

All re-branding and other integration plan timings remain in line with those communicated at CYBG’s Capital Markets Day in June.

CYBG Chart by TradingView