Shares in CYBG are down over 11.5 per cent this morning after the challenger bank warned that net interest margins (NIM) were likely to be at the lower end of its forecast.
The group, which owns Virgin Money, stood by its full-year guidance in its Q3 trading update but reported a dip in mortgage loans as Brexit uncertainty saps house buyers’ confidence.
NIM – the difference between what banks earn from loans and pay for deposits – for Q3 hit 168 basis points, down three points compared to the first half of the year. In response, CYBG said it expects its full-year NIM to be “at the lower end” of the 165-170 basis points guidance range.
The group’s shares had dropped 11.51 per cent by late morning to 175p, down from 198.90p at yesterday’s close.
CYBG acquired its former rival Virgin Money in a £1.7bn deal last year. It is hoping that fully rebranding as Virgin Money and retiring its Clydesdale and Yorkshire Bank brand names will help it take a bigger share of an increasingly competitive mortgage market.
It reported a drop of 0.2 per cent in the value of its mortgage book, which fell to £60.4bn in the third quarter. It saw rises in business and personal lending, however, which climbed 0.5 per cent and 5.7 per cent respectively.
“Even with the twin pressures of Brexit and the highly competitive mortgage market, we remain on track to deliver full year performance in line with our guidance,” said CYBG’s chief executive, David Duffy.