Clydesdale and Yorkshire Banking Group's share price drops as it crashes into the red

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Bank's share price drops on increase in provisions for PPI misselling (Source: Getty)

The Clydesdale and Yorkshire Banking Group (CYBG) has today said that it suffered a loss in the six months ended 31 March 2018 after boosting provisions for payment protection insurance (PPI) misselling claims.

Its share price fell by more than five per cent today after the news was announced.

CYBG, which recently launched a £1.6bn bid for challenger bank Virgin Money, revealed a £76m loss after tax which it attributed to PPI costs.

Read more: Branson-backed Virgin Money receives takeover bid from Clydesdale owner

It increased its provisions for legacy PPI costs by £350m to cover the cost of the end of the remediation programme and a revised estimate of 110,000 walk-in complaints.

The bank also increased provisions for other remediation costs by £18m.

It said that its underlying profit before tax was up 28 per cent year-on-year to £158m, before remediation costs were taken into account.

Chief executive David Duffy said: "In the first half of 2018, we have continued to make good progress in delivering our strategic priorities and developing CYBG as the leading alternative to the UK's big banks. In a competitive market, we have significantly increased underlying profit, up 28% to £158m, while achieving 5% annualised lending growth across both mortgages and SMEs.

Read more: Shares in Clydesdale Bank owner CYBG slump after bank takes new PPI hit

CYBG approached Virgin Money earlier this month with an offer that valued it at £1.6bn.

Under UK takeover rules, CYBG must now make a firm offer or retract its interest by 4 June 2018.

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