WITH shares in the CYBG business that includes Clydesdale and Yorkshire banks closing up 10.25p at 247p yesterday investors seem pleased with the progress the firm has made since regaining its independence.
The increase left shares in Glasgow-based CYBG trading around a third above the 180p price at which the firm completed a stock market flotation in February after it was demerged from National Australia Bank.
It may reflect confidence in chief executive David Duffy’s claim that the Glasgow-based company has generated strong momentum as an independent.
Mr Duffy said good growth in mortgages and favoured kinds of small and medium sized enterprise lending would underpin growth in profitability.
While interim underlying profits fell by £4m to £107m CYBG pinned the blame on the costs of being a standalone business.
Analysts at Macquarie said CYBG had delivered a robust set of results with profits nine per cent ahead of the investment bank’s £98m forecast.
Macquarie noted revenue growth had been slower than it expected but the new management team was finding considerable scope for cost savings.
This may be good news for CYBG shareholders.
But it is worth remembering that the vast bulk of these are people and institutions who were shareholders in National Australia Bank when it demerged CYBG in February.
What the planned cost cutting will mean for the bank’s thousands of stakeholders in Scotland remains to be seen.
The group plans to close nine branches in Scotland, and 26 across the UK.
It should also be remembered that some sector watchers questioned the wisdom of NAB offloading Clydesdale and Yorkshire amid a period of great volatility in global markets.
The group completed an initial public offering of 25 per cent of the shares in CYBG at 180p. This valued the lender at £1.6bn compared with a book value of £2.7bn at 30 September.
The increase in CYBG’s share price since then will reinforce the impression that National Australia Bank was so desperate to quit the UK market that it offloaded the business for a song.
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