The chief executive of new Virgin Money owner CYBG has hailed the merged group’s North East workforce following a positive half-year performance.
David Duffy used the combined group’s interim results to detail how progress has been made in bringing the banks together, with CYBG now aiming to challenge the Big Five of the UK banking market.
The merger brings together expertise across the different banks, combining CYBG’s strengths in personal and business banking with Virgin Money’s strong mortgage and credit card operations,.
Mr Duffy hailed the Gosforth base for its innovation and people, describing genuine excitement for the future across the group as the merged firms move forward.
He said: “Over the past six months we have been working with the combination of Clydesdale Bank, Yorkshire Bank and Virgin Money and it’s a very exciting future. I’ve been up in Newcastle fairly relentlessly and it’s a fantastic facility.
“The quality of the staff we’ve had conversations with is very high and the innovations and the way they do things has been fantastic.”
Mr Duffy highlighted how two Virgin Money directors – Peter Bole and Hugh Chater – are now part of the senior executive team, and that 40% of the leadership team is made up of Virgin Money staff.
“I would say I have had tough things to do in terms of managing th business but we have seen a fantastic commitment by the staff on both sides,” he added.
Looking ahead, Mr Duffy said there are new opportunities for the Gosforth workforce to get involved in, including growth of work with SME businesses , while the North East team has been passing on expertise on design and innovation.
His comments followed CYBG’s interim results for the six months ended March 31, in which it cheered a resilient half-year performance in the wake of market pressures and costs over its £1.7bn takeover of Virgin Money.
Shares in the group rose as much as 10% before settling 6% higher as investors welcomed a robust underlying performance, in spite of ongoing signs of an impact from intense competition in the mortgage market.
Exceptional costs had been removed from the underlying performance of the business and included acquisition and integration costs of £214m.
CYBG – which moved into sixth place in the lending market after its Virgin Money acquisition last October – said it swung to a £42m profit for the six months against losses of £95m a year earlier.
On a pro-forma basis and including the Virgin Money business dating back to October 2017, underlying pre-tax profits fell 5% to £286m, although this was better than expected.
With costs of the takeover and integration expenses included, pro-forma pre-tax profits crashed 80% to £9m as it also took another hit from the payment protection insurance (PPI) scandal.
The group said it put by another £33m for conduct charges, including another provision for PPI as claims ramped up ahead of the August deadline.
Mr Duffy said: “The good news is that people were probably expecting some elements of weakness and we surprised them with positives. We’ve got strong revenues, good cost management and strong comparatives.
“The group has delivered a resilient underlying financial performance during the first half of the year and our three-year integration programme is making good progress.
“Despite sustained competition in the mortgage market and a continued uncertain economic backdrop, we have delivered solid growth in our mortgage book and we have seen signs that mortgage pricing has started to stabilise.”
Gross mortgage lending rose to £60.5bn from £59.1bn a year earlier, but the bank cautioned mortgage lending growth would slow in its second half as it looks to overcome some of the pressure on pricing.
The lender recently upped its cost savings target after the Virgin Money deal and is now expecting annual savings of at least £150m by the end of 2020-21, against the £120m previously announced.