CYBG PLC (LON:CYBG) said it expects to complete its acquisition of Virgin Money Holdings PLC (LON:VM. by year-end as the lender reported third-quarter trading that met its expectations.
The owner of Yorkshire Bank and Clydesdale Bank posted a 4.7% increase in lending to small and medium-sized businesses to £7.1bn in the three months ended June 30.
Mortgage balances rose 3.8% to £24.2bn in the nine months to the end of June.
However, CYBG warned that the mortgage market remains “extremely competitive” and that Brexit and its potential impact on the economy remains "highly uncertain".
READ: CYBG swings to first-half loss hit by PPI claims
CYGB to meet full-year guidance
As previously indicated, it said it expects mortgage growth to be at the lower end of its guidance range.
Despite the competitive pressures in mortgages, CYBG maintained its net interest margin (NIM) at 218 basis points (bps) in the third quarter and expects the NIM to meet its forecast of 220bps for the year.
“We have delivered another solid performance this quarter, achieving sustainable lending and deposit growth in a highly competitive market while maintaining a stable net interest margin and delivering further cost and process efficiencies in the business,” said chief executive David Duffy.
“We remain on track to deliver our guidance for fiscal year 2018.”
The group ended the period with a common equity tier 1 ratio – a measure of capital strength – of 11.5% and CET1 capital generation of 15 basis points.
CYBG takeover of Virgin Money to be completed in fourth quarter
CYBG agreed to buy Virgin Money for £1.7bn in June and expects to complete the acquisition in the fourth quarter, subject to shareholder and regulatory approvals.
The company said the all-share offer "continues to progress in line with expectations".
READ: Virgin Money profits beat forecasts but tough competition in mortgages hurts margins
Last week Virgin Money reported a 10% increase in underlying pre-tax profit to £141.6mln in the first half but margins were squeezed by tough competition in mortgage lending.