NAB in the pink as UK profits rise to £454m

Published on Friday 3 November 2006 12:13

NATIONAL Australia Bank, said today its UK operations, which comprise Clydesdale and Yorkshire, saw its underlying profit rise by 16.7 per cent to £454 million over the year to September 30.

Revenues also increased strongly over the year, rising 8.7 per cent to 1.19 billion.

Clydesdale's robust performance was revealed as NAB, which is headed by Scotsman John Stewart, posted its annual results, which showed a record profit of 1.78bn - up ten per cent on the previous year.

David Thorburn, Clydesdale's chief operating officer, said: "These are strong results which clearly demonstrate the continued recovery in our UK business."

The division also saw its cost-to-income ratio, a key measure of profitability, improve from 63.4 per cent to 61.1 per cent over the year. Today's results are the first since Clydesdale closed its branches in Morningside and Corstorphine - part of a restructuring of the group's branch network that has left it with just six outlets in the Capital, plus its Financial Solutions Centre, geared towards business banking, on Lothian Road.

Mr Thorburn said: "The strategic agenda outlined last year continues on track and is delivering sustained growth.

"Our network of integrated Financial Solutions Centres are really starting to deliver, with lending and deposit balances both up almost 30 per cent over the year."

He added that mortgage balances had increased by a third "due to strong performances in all channels, but particularly through our mortgage intermediary business, which has introduced over 16,000 new customers to the bank".

Retail deposit balances also grew by 14.2 per cent to 12.9bn and gross loans and acceptances increased 25.6 per cent to 20.6bn.

Parent group NAB is just over two years into a three-year restructuring programme which kicked in when Hearts-supporting John Stewart took the helm in 2004. To date, NAB, which is Australia's biggest bank, has cut about 2300 jobs globally, including a couple of hundred in Scotland.

As part of that restructuring, it had been widely speculated that Clydesdale - which has just announced an 8m sponsorship deal for the Scottish Premier League - would be sold off.

But in September, Mr Stewart insisted the bank was not for sale, and that it would remain headquartered in Scotland, adding he was "very optimistic about what the Clydesdale can do".

NAB's robust performance was proof the bank had turned the corner almost three years after a rogue trading scandal sparked boardroom chaos and disappointing results, Mr Stewart said.

"From where we were, this is a great result," he added.

Four of the bank's currency traders were jailed earlier this year after a 145m scandal, in which they sought to hide massive losses, tarnished the bank's reputation and led chief executive Frank Cicutto and chairman Charles Allen to resign.

"We have faced the issues that confronted the National Australia Bank in 2004 and are fundamentally changing our culture and the way we run the business so that we can consistently grow shareholder value," Mr Stewart added.