The NAB spin-off, the Clydesdale and Yorkshire Banking Group (CYB) has revealed a series of cost-cutting measures to accelerate its financial targets, which it said last night take into account “revised expectations” for the UK economy following the Brexit vote on June 23.
The so-called UK “challenger” bank told an investor day overnight in the UK that it will invest more than 350 million pounds over the next two years to simplify the business, reduce costs, boost technology platforms and support the roll out of new branches and digital services.
The bank is targeting more than 100 million pounds of cost cuts over the next three and a bit years to the end of 2019.
It says these cuts will be on top of the cost savings already delivered in 2016, after incurring pre-tax restructuring costs of 200 million.
Management told investors these measures will help the bank deliver performance targets in a shorter time than originally planned when the bank listed on the stock market in February after the spin off from the NAB.
The group is now targeting by the end of 2019 mid-single digital annual loan growth, and a cost to income ratio as low as 55%, down from its previous aim for less than 60% by the end of 2020. (Its former parent has a cost to income ratio close to 40%, so its former subsidiary still has a fair way to go).
CYBG says is aiming for a double digit return on equity by the end of 2019, a year earlier than originally planned.
CEO David Duffy said in a statement
"We have refreshed our strategic plan, taking into account revised expectations for the UK economy. Our strategy is unchanged. We will continue to support our customers, invest in our business, and remain focused on delivering enhanced returns for shareholders.
“We firmly believe that our size and scale, strong funding base and balance of assets across retail and business lending give us a solid foundation – enabling us to simplify and grow our business, reduce costs and increase capital efficiency, notwithstanding more complex market conditions."
CYBG shares lost 2.5% in Australia yesterday to close at $4.63, well above their post Brexit low of $3.69 in early July, but will well under the all time high of $5.81 in late May. The shares were down nearly 4% in London overnight.
