CYBG had warned in January that growth in the mortgage market would ease over the remainder of the financial year 2018. The company reported a 3.8 percent rise in mortgage balances to 24.2 billion pounds as of June 30 from the year-earlier quarter from a year ago.

The Clydesdale Bank and Yorkshire Bank owner said its net interest margin (NIM) was maintained at 218 basis points in the nine months to June, as margins improved on lending to small- and medium-sized businesses (SME) and liquidity costs fell.

The company, one of Britain's challenger banks that emerged after the global financial crisis to fill a gap in small business lending, stuck to its NIM target of 220 basis points for the year.

The company said new business lending to small- and medium-sized businesses rose 4.7 percent to 7.1 billion pounds in the three months ended June 30.

Britain's housing market has cooled since the 2016 Brexit vote, which led to a rise in overall inflation and increased uncertainty among investors.

British house prices remained flat in June and the market was likely to stay sluggish in the coming months despite more properties being put up for sale, the Royal Institution of Chartered Surveyors said earlier this month.

(Reporting by Noor Zainab Hussain and Muvija M in Bengaluru; Editing by Amrutha Gayathri)