Clydesdale profits up despite compensation costs

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CLYDESDALE Bank has been hit with a higher bill for customer compensation, but a reduction in bad debts has helped its Australian parent company deliver a rise in third-quarter profits.

Profits at the Glasgow-based lender, which owns Yorkshire Bank, were “broadly stable” during the three months to 30 June, National Australia Bank (NAB) said, thanks to higher income and lower bad debt charges.

However, the group, led by chief executive Cameron Clyne, said that those benefits “were offset by an increase in expenses largely related to further provisions for conduct and redress”.

In May, Clydesdale announced it had taken a further £15 million hit related to the sale of interest rate swap products during the first half of the year, although provisions for mis-sold payment protection insurance fell to £51m from £169m.

Clydesdale returned to the black in the first half with a pre-tax profit of £54m for the six months to 31 March, compared with a £38m loss a year ago.

The firm’s third-quarter profits were not revealed, but Clyne said NAB’s earnings grew 2 per cent to A$1.5 billion (£868.4m) for the three months to 30 June as overall bad debt charges fell 10 per cent to A$489m. Clyne added: “Progress on simplification of our UK banking business has been pleasing, with efficiency benefits ahead of plan.”

Clydesdale boss David Thorburn is overseeing a shake-up that will see 1,400 roles axed by September 2015, and the lender has closed 29 business banking centres.

The turnaround in the bank’s fortunes has also been driven by the transfer of a commercial property loan book to NAB for run-off. Since October, the book has shrunk by £1.2bn to £4.4bn.

NAB is due to publish its annual results on 31 October.

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