Shares in UK bank, CYBG, the spin-off from the National Australia Bank were hammered yesterday after producing an unimpressive set of figures for the year to September 30 and nearly £200 million more in losses and provisions to cover the continuing costs of an insurance selling scandal and “other issues”.
A little over one month ago, Citi analysts agreed on taking a broadly neutral view post-CYBG's Q3 report release, despite the fact that management's guidance implied a steep fall for the Net Interest Margin (NIM) in the current quarter.
As part of its capital markets briefing, the company has laid out medium-term targets. Cost targets are in line with expectations and Morgans expects subdued revenue growth over the medium term. No special dividends or buybacks are forecast.
Morgans believes there is a high probability that Virgin Money will recommend the revised takeover proposal. The broker assumes CYBG will target cost synergies equivalent to 15-50% of Virgin Money’s cost base and it could achieve underlying accretion of 9-32%.