The firm said it had benefited from a strong pipeline of cases coming into the quarter, as well as good customer retention levels.
Overall the customer loan book rose by 1.4% to a total of £71.9bn.
However the lender’s net interest margin for the quarter dropped to 172bps, with CYBG forecasting that across this financial year it will drop down to between 165-170bps, which it put down to “sustained pricing pressure in the UK mortgage market”.
It noted that the dynamics of the mortgage market are likely to remain unchanged over the next 12 months, which means the lender is likely to see net mortgage lending growth for the year to fall “as we focus on optimisation of volume and value”.
Virgin Money integration hits £261m
CYBG purchased Virgin Money for £1.7bn in October last year. The purchase had led to £161m of ‘exceptional charges’ with a further £100m of integration, rebranding and restructuring costs anticipated across the rest of this financial year.
David Duffy (pictured), chief executive officer at CYBG, said the firm had made a good start to the year and was making “encouraging process” on the initial stages of the three-year integration programme with Virgin Money.
The statement from CYBG noted that the “rationalisation” of the top two layers of senior management was now largely complete, following the purchase, while the VM Digital Bank project has been closed down.
Duffy noted that in a “highly competitive environment” CYBG had delivered “ahead-of-market lending growth”, concluding: “Market conditions remain uncertain while we await the outcome of the Brexit negotiations, but we remain focussed on supporting our customers and delivering against the factors within our control.”