British challenger bank CYBG PLC (LON:CYBG) reported an increase in first quarter mortgage lending but warned that growth would ease over the rest of the 2018 fiscal year.
Mortgage lending rose at an annual rate of 7.4% to £23.9bn in the three months to December 31, 2017.
READ: CYBG shares jump as it reveals lower cost estimates and says it will meet 2017 guidance
“We anticipate that mortgage growth will ease over the remainder of FY18, although we continue to expect mid-single digit growth in balances for FY18,” the lender said.
Shares fell 1.6% to 325.6p in morning trading.
Brexit uncertainty
Consumers have been feeling the pinch of stagnant wage growth and rising inflation after the Brexit vote sent the value of the pound lower.
However, CYBG said: "Despite the ongoing uncertainty in relation to the terms of the UK’s withdrawal from the European Union and its potential impact on the outlook for the UK economy, we remain confident in our ability to deliver the group’s FY18 and medium-term guidance.”
SME lending rises, NIM falls
CYBG, which runs the Clydesdale and Yorkshire brands, said lending to small and medium-sized businesses increased 1.4% to £567mln.
The net interest margin fell to 216 basis points from 221 basis points in the fourth quarter.
The common tier 1 equity ratio – a measure of capital strength – was 12.4% at the end of the first quarter. CYBG said this was “comfortably within the group's operating range and consistent with the full year 2017 year-end position”.
Customer deposit balances climbed 14.8% to £28.7bn.
CYBG made its London debut after it was spun off by National Australia Bank and was one of the UK challenger banks to emerge after the financial crisis to plug a gap in small business lending and to exploit the problems at major banks.