VIRGIN MONEY UK PLC (Reuters) - British lender CYBG Plc (>> CYBG PLC), home of Clydesdale Bank and Yorkshire Bank, said on Monday its first-quarter net interest margin was unchanged from a year earlier, in line with its expectations, as asset yields came under pressure.
The lender said net interest margin in the three months ended Dec. 31 was flat at 222 basis points, and that its trading in the period was in line with its expectations.
"As expected, asset yields came under pressure from the start of the period following the August 2016 base rate reduction, along with increased competition in retail lending markets," CYBG said.
"We saw the benefits of deposit repricing begin to offset these pressures towards the end of the period, alongside other measures to reduce funding costs, including a modest drawdown on the Bank of England Term Funding Scheme in December."
The challenger bank said its overall deposit balances was 27.3 billion pounds as at Dec. 31, up 4.7 percent on an annualised basis compared with Sept. 30, driven by both business and personal accounts.
CYBG, which was spun off from National Australia Bank (>> National Australia Bank Ltd.), said its mortgage book was 22.1 billion pounds as at Dec. 31, a growth of 4.4 percent on an annualised basis.
The lender's common equity tier one capital ratio – a key measure of financial strength – increased to 12.8 percent as at Dec. 31 from 12.6 percent as at Sept. 30.
The company said 574 million pounds worth of its lending was to small and medium-sized businesses in the first quarter.
CYBG, which is targeting more than 100 million pounds of sustainable cost reductions by 2019, said it was on track to record underlying costs of 690 million to 700 million pounds this fiscal year.
The company also maintained its other forecasts for fiscal 2017, including that net interest margin would be broadly flat with the year earlier.
(Reporting by Rushil Dutta and Noor Zainab Hussain in Bengaluru; Editing by Savio D'Souza)
