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November 9, 2007

Clydesdales profits surge by 16%

by Richard Kilner

Story link: Clydesdales profits surge by 16%

Defying the credit crunch and the slowing of the economy, Clydesdale Bank’s profits have substantially grown, up 16% in the past year.

Compared with last year, the bank sold 20% more mortgages and saw a 25% increase in its business lending.

This is the latest stage in a turn around since more turbulent times. The bank’s owner, National Australia Bank, launched a revival plan spanning three years, the fruits of which are now clearly visible.

Pre-tax profits have risen to £379m, up 16.3%, in the year to the end of September, and the firm’s overall performance has been better than the market generally.

The chief operating officer of Clydesdale (aka Yorkshire Bank in England), David Thorburn, stated that the bank’s turbulent past was behind it, and it had now become an expanding, successful firm following serious restructuring.

The proportion of income dedicated to costs has fallen from 61.1% to 58.4%, indicating greater efficiency and profitability. Back in September 2005 the firm spent 64.9% on costs.

Business lending has also improved, up 25.7% to £12.4bn.

Lynne Peacock, the chief executive, has expressed her belief that the firm can continue to deliver solid and sustainable growth in the UK market, despite the turbulent market conditions.

National Australia Bank, Clydesdale’s owner, has also been performing well, achieving a record cash profit of £1.9bn in the second half, an increase of almost a fifth.

John Stewart, the chief executive, explained that the firm did not have direct exposure to the volatile subprime loans, but that he expected business and housing credit to be adversely affected due to higher interest rates.

He went on to emphasise that the firm was committed to still further efficiency savings and simplification of processes, adding that the business was in a strong position for the years ahead.

 

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