LONDON (Alliance News) - CYBG PLC, the owner of Clydesdale & Yorkshire bank brands in the UK, on Tuesday said it swung to a loss for the first half due to increased provisions for mis-selling of payment protection insurance.
For the six months to March-end, the company recorded a pretax loss of GBP95 million, compared with a profit of GBP46 million in the year earlier period, on a net interest income of GBP426 million and GBP411 million, respectively.
Exceptional costs relating to PPI totalled GBP220 million in the period, up sharply from GBP19 million a year ago. The lender has concluded that a further charge of GBP350 million will be required to close-out the PPI remediation programme.
On an adjusted basis, CYBG recorded pretax profit of GBP158 million for the first half, compared with GBP123 million in the year ago period.
For 2018, the company expects net interest margin of 220 basis points and underlying costs of less than GBP640 million. Net interest margin for the first half stood at 2.18% versus 2.26%.
CYBG said its CET1 ratio on March 31 was 11.3%, down from 12.5% a year before.
"While the economic outlook remains uncertain, CYBG is well positioned to continue executing our existing strategy and to capture future growth opportunities across both our Retail and SME businesses in the year ahead," said Chief Executive David Duffy.
Shares in the company were trading 6.0% lower at 303.80 pence Tuesday morning.
CYBG last week made an GBP1.60 billion stock offer to acquire rival Virgin Money Holdings PLC in a bid to create "UK's leading challenger bank". Under the deal, CYBG offered to buy all Virgin Money's issued share capital at an exchange ratio of 1.1297 new CYBG shares per Virgin Money share. CYBG provided no update on the bid in Tuesday's statement.
