UK banking group CYBG has posted a £76m statutory loss after tax in its interim financial report 2018, but gave no update on its bid for Virgin Money.
Underlying profit before tax was up 28 percent year-on-year to £158m but was pushed into a statutory loss after tax of £76m due to payment protection insurance (PPI) “legacy” costs.
The loss came as a result of a previously-announced £350m increase in provisions for “legacy PPI costs” as a result of mis-selling. Chief executive David Duffy said the loss was “disappointing”.
“While the economic outlook remains uncertain, CYBG is well positioned to continue executing our existing strategy and to capture future growth opportunities across both our Retail and SME businesses in the year ahead,” he said in a statement accompanying the results.
CYBG reported the PPI hit in March, after the Financial Conduct Authority (FCA) launched a campaign to encourage claims by customers against banks if they were mis-sold the products.
CYBG last week proposed an offer to acquire the entire share capital of Virgin Money in a deal worth £1.6bn. Should the deal go through, it would create one of the UK’s largest lenders. CYBG gave no update on the progress of the bid.
Analysts expect CYBG will draw on its capital to partially fund its bid for Virgin Money.
The bank had a total of 3,502 retail mortgage loans and advances in forbearance, with a gross value of £400m, equating to 1.66 percent of the total portfolio. The bank’s impairment allowance stood at £7.4m at March 31, 2018.
On unsecured consumer credit, CYBG said it had assessed the total loan balances subject to forbearance on other types of retail lending to be £11m at March 31, 2018, representing 1.01 percent of the unsecured retail portfolio. Impairment provisions on forborne balances totalled £3.6m at March 31, 2018.