Macquarie believes, with an economy beset by uncertainty, the bank offers positive momentum, supported by cost savings from the Virgin Money merger.
Macquarie resumes coverage following the removal of research restrictions with an Outperform rating and $6.30 target.
The broker incorporates the Virgin Money merger synergies and believes, with the acquisition, interest-rate sensitivity has diminished as the combined funding position has weakened.
As the investment thesis is less reliant on the outlook for interest rates the broker envisages greater probability of CYBG achieving 12-13% returns over the medium term.
Target price is $6.30.Current Price is $4.91. Difference: $1.39 – (brackets indicate current price is over target). If CYB meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).