CYBG Plc (ASX: CYB) has reported its annual result for the 12 months to 30 September 2018 showing 13% growth in underlying profit.

CYBG is one of the challenger banks in the UK, it operates Clydesdale Bank and Yorkshire Bank. It was spun out of National Australia Bank Ltd (ASX: NAB).

CYBG’s FY18 Profit Report

On Tuesday evening, the bank reported 13% growth of its underlying profit before tax to £331 million. This came about from a 6% reduction in operating costs and a 1% rise in net interest income.

However, the bank’s net interest margin (NIM), which is the profit it makes between borrowing money and lending it, reduced from 2.27% to 2.17% during the year.

The bank’s statutory earnings actually showed a loss of £145 million mainly due to £396 million of charges relating to legacy conduct largely from the PPI scandal.

Other than monitoring the Brexit situation, the bank is focused on its merger with Virgin Money to challenge the big UK banks.

CYBG CEO David Duffy said: “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,”

Last year CYBG paid a dividend of 1p per share and this year it will pay a dividend of 3.1p, an increase of 210%.

Over the past six months, the CYBG share price has fallen 16% according to Google Finance.

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