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CYBG mortgage lending falls but completions ‘at better margins’
CYBG, which owns Clydesdale Bank, Yorkshire Bank and Virgin Money, has revealed a dip in new mortgage lending during the last three months, but said this was at better margins than the previous period.
Mortgage originations were “lower” in Q3 compared to Q2 “but at better margins as pricing stabilised”, the lender’s latest trading statement said.
It also blamed “a large volume of redemptions” for a contraction in net mortgage lending in its financial third quarter ending 30 June 2019.
The mortgage book reduced by 0.2 per cent to £60.4bn as of end-June, down from £60.5bn at end-March.
The bank’s net interest margin fell by 3 basis points (bps) to 168 bps in Q3 owing “to the refinancing impact of a large volume of mortgage redemptions”.
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Net interest margin is the difference between what it pays for deposits and earns from lending.
The bank expected that net interest margin for the full year would come in at the lower end of the previously stated range 165 to 170 bps owing to the mortgage redemptions.
Performance on track
CYBG outlined its strategy for mortgages in June this year having completed a takeover of Virgin Money in October 2018.
David Duffy, CYBG chief executive (pictured), said: “Our net interest margin is tracking as expected and we delivered further cost efficiencies in the period – even with the twin pressure of Brexit and the highly competitive mortgage market, we remain on track to deliver full year performance in line with our guidance.”
The group reported business lending growth of 0.5 per cent to £7.7bn and personal lending up 5.7 per cent to £4.8bn in Q3.
Customer deposits grew by 1.8 per cent to £62.8bn.
CYBG was the latest lender to be hit by competition in the mortgage market after Santander reported net interest income down 8 per cent in H1 owing to attrition of standard variable rate deals.