CYBG shrugs off funding setback

CYBG shares jumped 5% on Wednesday after a strong set of results that beat City expectations and suggested the integration of Virgin Money is going well.

The bank was seen as one of the favourites to land money from the Banking Competition Remedies board to shake-up business banking, but lost out to smaller rivals.

Chief executive David Duffy said: “We’re surprised by the outcome of the BCR process – we put together an ambitious and deliverable plan and we’re the only bank with a realistic chance of breaking through the 5% market share target and creating meaningful competition in the SME space in the short to medium term.”

Revenues for the half-year were flat at £843 million despite “challenging” market conditions. The shares rose 10p to 202p.

Duffy warned that the UK economic outlook is uncertain and said competition is tough, though there are signs that the cut throat mortgage market is easing.

It will hold a capital markets day on June 19 when it will give further details of the Virgin Money integration.

Donald Brown, head of private clients at Brewin Dolphin Edinburgh said: “Today’s results from CYBG continue to highlight the substantial impact from the 2017 acquisition of Virgin Money. UK domestic earners are clearly under pressure and the growth in customer lending, which is likely thanks to some leveraging of the Virgin brand, can be viewed as encouraging for the group.”

CYBG has seen a rise in bad loans to business and credit card customers. Impairment losses rose from £48 million to £77 million.

Profits were down 5% to £286 million.