Earlier this month, Yorkshire Bank announced that it planned to close 39 branches in 2017, including 18 in Yorkshire.
In a first quarter trading update, CYBG said its restructuring activity and costs were in line with expectations.
The statement added: “We have made significant progress on network optimisation and branch automation, with the continued rollout of smart ATMs (machines that take deposits and dispense cash) and the start of the next stage of our branch transformation programme announced earlier this month.”
CYBG said its first-quarter net interest margin was unchanged from a year earlier, in line with its expectations, as asset yields came under pressure. The lender said net interest margin in the three months ended December 31 was flat at 222 basis points, and that its trading in the period was in line with its expectations.
“As expected, asset yields came under pressure from the start of the period following the August 2016 base rate reduction, along with increased competition in retail lending markets,” CYBG said.
“We saw the benefits of deposit repricing begin to offset these pressures towards the end of the period, alongside other measures to reduce funding costs, including a modest drawdown on the Bank of England Term Funding Scheme in December.”
The challenger bank said its overall deposit balances amounted to £27.3bn as of December 31, up 4.7 per cent on an annualised basis compared with September 30, driven by both business and personal accounts.
The mortgage book increased to £22.1bn at December 31, an annualised growth of 4.4 per cent, which is ahead of the market, CYBG said. CYBG also said it had “maintained momentum” in new SME (small and medium-sized enterprise) lending, with £574m in new loans and facilities.
The statement added: “We are focused on tight operating cost control and are on track to deliver our target of £690m to £700m in underlying costs for this year.”
David Duffy, the chief executive of CYBG, said: “We have made a solid start to the financial year and are on track to achieve our financial targets as planned. We have also made good progress in delivering on our strategic priorities. Despite a competitive market, we continue to grow assets prudently while focusing on sustainable margins and portfolio management. While there is some uncertainty created by Brexit, economic indicators in the UK have proved resilient since the referendum vote. To date we have not seen any negative impact on asset quality, but we continue to monitor market conditions closely.
“Our cost delivery remains on track as we implement structural change as part of our transformation programme and associated headcount reductions, in line with expectations. We remain focused on executing our strategy to deliver improved returns for shareholders through sustainable growth, efficiency and capital optimisation, while focusing on customer experience.”
The Clydesdale and Yorkshire banking group - CYBG- started life as a standalone business last year, after spinning off from National Australia Bank.
Nicholas Hyett, an equity analyst, at Hargreaves Lansdown, said: “Shares in CYBG are down 2.4 per cent this morning after the bank revealed declines in its book of SME and unsecured personal loans and a slightly lower net interest margin compared to the full year.”
However, Mr Hyett said were was still plenty to like about CYBG, such as the cost savings it was targeting this year.