PPI costs push CYBG into losses

In its preliminary results for the year ending September 30, CYBG reported it had paid £352m in PPI provisions during 2018 and a further £44m in other legacy conduct costs.

These costs offset an underlying profit before tax of £331m at a growth of 13 per cent year-on-year.

Whilst the bank described the additional PPI provision as "disappointing", it said the cost had been absorbed without impact on "strategy and future ambitions".

The bank also recommended the shareholders’ dividend be increased to 3.1p per share.

In June 2018 CYBG agreed a £1.7bn takeover deal of Virgin Money in a move it claimed would create "the first true national competition to the large incumbent banks".

The deal completed in October following "overwhelming" shareholder support and the bank reported £37m in acquisition costs incurred by the takeover.  

David Duffy, chief executive at CYBG, said: "In a competitive market, we have delivered an increase in underlying profits, returns and capital generation - all of which means we are delighted to recommend an increase to last year's inaugural CYBG dividend, payable to all shareholders."

Mr Duffy said Brexit negotiations meant the external political and macro economic environment remained "inherently uncertain".

He said: "We have planned for a period of uncertainty, but it is impossible to ignore the lower levels of business confidence, especially for SMEs, while the final specific outcome of negotiations remains unclear."

He added: "CYBG has a bright future with a unique combination of growth opportunities.

"We will participate strongly in the RBS alternative remedies schemes, have a stronger competitive edge as the first IRB accredited bank since the financial crisis, can fully leverage our iB platform in the new Open Banking landscape, and, of course, our combination with Virgin Money creates a genuine national competitor to the banking status quo."

rachel.addison@ft.com