Clydesdale returns to profit for first time in five years

Latest results for the two banks, which together constitute CYBG which demerged from National Australia Bank in February, show the group achieved underlying profits up 39 per cent to £221 million in the year 2016 to September.

The group turned a full year profit before tax of £77 million for the year ended September 2016, compared with a £285 million loss the year before.

However, the CYBG was still loss making once tax was taken into account, with losses after tax of £164 million, compared with a loss of £229 million last year, mainly thanks to changes in accounting treatment of certain assets.

Net interest income also rose to £806 million, up 2.4 per cent on the prior year’s £787 million.

However, the bank’s Common Equity Tier 1 ratio had slipped to 12.6 per cent, down from 13.2 per cent the year before.

The bank also announced a £350 million investment programme to run for the next two years.

David Duffy, chief executive of CYBG, said: “We are investing in our future, with an investment programme in the next two years of over £350 million in part to unlock the potential of CYBG’s digital platform which will drive improvements in our customer experience and distribution capabilities.

“As the only true full service, challenger bank of scale, we are perfectly placed to disrupt the status quo in the UK banking market.”

CYBG, said net interest income rose 2.4 per cent to £806 million and operating income rose 2.6 per cent to £989 million.

Mortgage lending rose 6.5 per cent in the year and small to medium-sized (SME) business lending rose for the first time in four years.

Gross mortgage lending rose to £21,83 billion, with owner-occupied mortgage lending accounting for 60 per cent of new lending and despite “very strong” buy-to-let volumes in the second quarter ahead of Stamp Duty changes.

The SME lending book rose 6.1 per cent to £6.35 billion with new lending up 15 per cent to £2.22 billion.

Last month, Clydesdale said it made an offer to take over Royal Bank of Scotland’s Williams & Glyn business, after Spain’s Banco Santander called off discussions last month.

The bank said that its engagement with RBS is ongoing, though there is no certainty that any transaction will come about.

Jim Pettigrew, chairman of CYBG, said: “2016 has been a landmark year in the long history of our bank, as we became independent for the first time since the 1920’s.

“Our ambition is straightforward: to become the credible alternative to the big UK banks. We intend to achieve this using our scalable infrastructure to support our growth ambitions, and our enhanced digital capability to streamline process and deliver a superior customer experience.”