Market report

CLYDESDALE and Yorkshire Banking Group soared on a wider market buoyant from strong corporate earnings as investor concerns that the ambitious challenger bank’s recovery had been knocked off course subsided.

Improving margins and an accelerating restructuring programme in its third quarter helped the bank record its best day on the FTSE 250 since being spun out of National Australia Bank last year. Shares jumped 24.8p to 292p.

Investors cheered CYBG lowering its full-year cost guidance to below £680m and improving margins on the back of increased investment after years of neglect by its former owner.

The banking group said that results were on track and that it was targeting an inaugural dividend this financial year. Shares in CYBG, which mooted a deal for Co-op Bank and had targeted RBS-division Williams & Glyn for a takeover, dived 5.8pc over two days in May as fears mounted that a drop in deposit balances was a sign of its turnaround blowing off course.

CYBG has been derided by some analysts for its lofty ambitions but today they conceded that the strengthening restructuring programme pointed to an improving picture. Morgan Stanley said that CYBG lowering its cost guidance implied an approximately 5pc upgrade in underlying pre-tax profit.