Clydesdale Bank owner swings to loss after setting aside extra £150m for PPI claims

Although claims volumes have been falling over recent months, CYBG said it was ‘prudent’ to set aside more money for PPI issues

Clydesdale took over Virgin Money earlier this year

Clydesdale Bank owner CYBG swung to a loss last year after booking an extra £150m charge for PPI misselling claims.

The company reported a £164m pre-tax loss for the year to 30 September, down from a profit of £268m in 2017, while net income rose 1 per cent to £851m.

The group was hit by £396m in legacy conduct costs, most of which are linked to PPI, and while CYBG said weekly claims numbers have been falling since the end of July, the bank “considers it prudent” to increase provisions for PPI by £150m.

The bank, which earlier this year bought rival Virgin Money for £1.7bn, also warned that Brexit uncertainty made planning for the future more difficult.

Chief executive David Duffy said: “Clearly Brexit negotiations mean the external political and macroeconomic environment remains inherently uncertain.

“We have planned for a period of uncertainty but it is impossible to ignore the lower levels of business confidence, especially for SMEs, while the final specific outcome of negotiations remains unclear.”

Mr Duffy added: “It has been a landmark year for CYBG, continuing to deliver ahead of market growth and meeting our underlying financial targets in a highly competitive market, while also completing the transformational Virgin Money acquisition in October 2018 following overwhelming shareholder support.

“In a competitive market we have delivered an increase in underlying profits, returns and capital generation – all of which means we are delighted to recommend an increase to last year’s inaugural CYBG dividend, payable to all shareholders.”