CYBG, the owner of Clydesdale and Yorkshire Bank, has reported a rise in profits after cutting costs by seven per cent in the year to 30 September.
CYBG posted three per cent deposit growth to £27.7bn, along with lending growth of six per cent. This was made up of £23.5bn in mortgage lending, up eight per cent, and core small business lending of £6.8bn, up six per cent compared with the previous year.
The company swung to a profit of £182m, compared with a loss of £164m in 2016.
Why it's interesting
Shares were down 2.39 per cent at the time of writing, despite CYBG unveiling its first statutory profit in more than five years (last year, the challenger bank posted its first pre-tax profit in five years).
However, investors still have a reason to be cheerful today - the group announced its inaugural dividend. CYBG will pay out 1p per share, subject to approval by the company's shareholders.
Looking ahead, the company said it expects the lending market to remain competitive, "especially for home loans", but added that the pipeline in both its mortgage and SME businesses is "strong and supports our plans to deliver continued asset growth".
What CYBG said
Chief financial officer Ian Smith told City A.M.: "We're quite chuffed with the results" owing to "significant profit growth".
The firm's cost-cutting programme is well advanced, with £54m of the £100m targeted by the end of 2019 already achieved through branch closures balanced with reinvestment in remaining branches.
The next phase of growth will come as the returns of investment in its digital offering come through, Smith said, with a new platform for small business lending set to be launched early in the new year. The existing platform allows a much swifter lending process, he added, with a 50 per cent year-on-year increase in same-day credit decisions.
Making an inaugural dividend payment is a "signal of confidence" in the outlook for the business, he said.
Chief executive David Duffy said: "We have delivered a strong performance in 2017 having met all of our targets and recorded our first statutory profit in over five years."
"As a result, we are pleased to be recommending an inaugural dividend to our shareholders. This is a good first step in our three-year plan and we remain fully focused on the delivery of our medium-term targets, which factor in our cautious view of the economic outlook.
"We continue to leverage our unique focus in Scotland and the North of England, with our powerful Clydesdale and Yorkshire Bank footprint delivering ahead of market growth in both SME and mortgages."