THE OWNER of Clydesdale Bank has said it is comfortable that it has set aside enough cash to deal with a continuing influx of payment protection insurance claims (PPI) despite being on the receiving end of 1,800 new complaints every week in the three months to the end of December.

CYBG, which also owns Yorkshire Bank, said in its first-quarter trading update that as “PPI complaint variables are all tracking as expected” it “remains comfortable” with its current level of PPI provisioning.

In November the banking group added a further £150 million to its PPI misselling fund, taking the total amount it has either spent or set aside to deal with claims to £2.6 billion. At that point it was expecting to receive a further 83,000 claims before the government-imposed filing deadline of August 29 this year.

READ MORE: Investors rebel against executive pay at Glasgow bank

The trading update also showed that overall lending at the group was up by 1.4 per cent to £71.9bn during the period, representing a rise of £1bn since the group’s financial year-end on September 30, 2018.

At £60bn, the vast majority of the lending figure came from mortgages, with growth in that segment coming in at 1.5%. Lending to small and medium sized enterprises (SMEs) accounted for £7.6bn of the total, with the figure rising by 1.2% between September and December, while the total unsecured lending figure remained unchanged at £4.3bn.

CYBG chief executive David Duffy hailed the group’s “ahead-of-market lending growth”, noting that the figures had been achieved in “a highly competitive environment”.

“I am particularly encouraged by our performance in SME,” he said, adding that the bank expected to benefit from the £350m incentivised switching scheme that rival RBS was forced to set up after failing to sell its Williams & Glyn business unit.

RBS was supposed to offload the unit as a condition of receiving a £45.5bn state bailout at the height of the 2008 financial crisis, but after failing to do so was ordered to set up a scheme to facilitate the transfer of over 100,000 SME customers to other banks.

READ MORE: Clydesdale berated for ‘browbeating’ small business client

RBS was also required to set up a £425m Capability and Innovation Fund to help rivals develop the services they offer to business customers

“We are well prepared for the start of the RBS Incentivised Switching Scheme and we hope to attract a large proportion of the 120,000 SME customers that RBS are required to switch,” Mr Duffy said. “We have also recently submitted our application for a grant from the RBS Capability and Innovation Fund, where we believe we offer the strongest case for delivering a genuine boost to competition in the SME market.”

Mr Duffy also revealed that the cost savings that CYBG expects to make as a result of its takeover of Virgin Money are going to be significantly higher than had at first been thought. The deal, which went live last October, was expected to generate annual savings of £120m a year by 2020/21, but Mr Duffy said that figure had been raised to £150m.

“The group has made a good start to the year and we are making encouraging progress on the initial stages of the three-year Virgin Money integration programme,” he said.

READ MORE: Duffy pay fell at Clydesdale in year PPI charges led to loss

Despite this, the group expects to pay out around £100m in integration costs in the rest of this year, having already incurred expenses of £161m in the first quarter. Of that, £48m covered transaction costs incurred by Virgin Money; £8m went on stamp duty; £77m was spent winding up Virgin Money’s digital arm VMDB; and £17m was used to fund the initial phase of integration.

Shares in CYBG, which spun out of National Australia Bank in February 2016, reacted positively to the update, rising by 15% in early morning trading before ending the day 14% up at 203.8p. The group’s shares are still considerably lower than they were a year ago, having traded at 311.4p on February 7 2018 and reaching a high of 364.2p in August.