Britain’s CYBG, formerly part of National Australia Bank, believes consumer sentiment will continue to be hit by stalled Brexit negotiations, although the political situation is “unlikely to be armageddon”.
CYBG’s chief financial officer Ian Smith was speaking after the dual-listed bank delivered a messy interim earnings result, largely due to its acquisition of Virgin Money.
“Unless we can get a [Brexit] solution or some clarity people are going to keep their hands in their pockets. We are cautious about the economic environment,” he told The Australian.
Pro forma underlying profit before tax – which includes its Virgin Money purchase – slid 5 per cent to £286 million ($533.3m) for the six months ended March 31, on the same period a year earlier, as loan impairments rose. Pro forma before-tax profit, which took into account exceptional items including £214m in acquisition and integration costs, tumbled to £9m, while statutory net profit came in at £29m.
The group reiterated its guidance for an annual net interest margin of 1.65 per cent to 1.70 per cent as the first-half printed at 1.71 per cent against the backdrop of strong competition for mortgages. Underlying net interest income fell to £728m in the half, from £738m a year earlier.