Yorkshire Bank moves back into profit
YORKSHIRE and Clydesdale Banks moved back into the black over the last year thanks to the combined benefits of a more stable economy and completing a restructuring plan ahead of schedule.
The two banks, owned by parent National Australia Bank, recorded pre-tax cash earnings of £127m in the 12 months to September 30, compared to a loss of £183m last year.
Underlying profits were £285m and with bad debt provisions falling £473m to £158m and the previous year numbers including its commercial property lending operation which has since been transferred to the parent group, the banks delivered the positive earnings figure.
Chief executive David Thorburn, said: “The restructuring of our business over the past 18 months has been substantially completed a year ahead of schedule. This, along with the more stable economic environment, helped in recording pre-tax cash earnings of £127m in the year. Lower charges to provide for bad and doubtful debts were instrumental in this falling by £473m to £158m in the year. This was driven by lower business lending losses, reflecting improved asset quality, and the successful transfer of the commercial real estate portfolio to NAB at the beginning of the period.
“The positive impact of our strategy is clear to see in the underlying business performance. However, conduct related matters have impacted our performance and I fully recognise that our recovery won’t be complete until we’ve concluded them. We have learned lessons from this. We’re building a different bank today with a clear customer focus. While the reshaping is largely done, there’s more work to do as we build a sustainable future for our business.”
Mr Thorburn’s reference to “conduct related matters” includes last month’s £8.9m fine from the Financial Conduct Authority (FCA) for miscalculating 42,500 mortgages. The city watchdog found a number of the two bank’s mortgage customers were required to increase their monthly repayments to make up the shortfall resulting from miscalculations and the cost of the fine and the compensation will total around £42m. The restructuring plan has seen the banks shed 1,400 staff over the last 18 months.
Yorkshire and Clydesdale banks saw mortgage growth of 7.5% in the last year, well ahead of UK mortgage market growth of 1.1%, but average gross loans and acceptances decreased by £6.5bn to £27.1bn mainly due to the £5.6bn commercial property asset transfer.
