UK woes push NAB profits lower

Clydesdale owner National Australia Bank (NAB) today said profits dropped 15.5 per cent in the first half as its UK operations fell into the red.

The group, which also owns the Yorkshire Bank brand in the UK, posted a net profit of A$2.1 billion (£1.3bn) for the six months to the end of March, down from A$2.4bn a year earlier.

It UK banking operations recorded a net loss £25 million, compared with a £77m profit a year ago, as it was hit by the economic downturn.

NAB said: “Results were also affected by an increase in the cost of retail and wholesale funding following Clydesdale Bank’s credit rating downgrades and reflecting higher retail deposit costs.”

Bad debts across the group rose 14.5 per cent to A$1.1bn, which it blamed primarily on its UK banking business.

Last month, the group said it was scaling back its operations in southern England with the loss of 1,400 jobs.

It will shut 29 of its 73 “financial solutions centres”, mostly in the south, following a wide-ranging review of its Clydesdale and Yorkshire bank operations that will save £74m a year.

Scotland will be spared the worst in the restructuring, with about 60 jobs being axed and four financial solutions centres, offering business advice, closing.

NAB chief executive Cameron Clyne today said: “These changes are needed to adapt to the changed operating environment in the UK, and to reposition the UK banking business to improve returns for the group over the medium term.”