NAB takes brunt of £450m PPI hit as “good progress” sees Clydesdale shares rise

Bottom line profits of £58million for the latest period also came in more than 60 per cent lower than a year earlier.

However, shares in the recently demerged CYBG rose on the results after the lender reported good strategic progress and only having to foot £44 million of an additional £450 million PPI compensation bill that was otherwise covered by former parent company, National Australia Bank (NAB).

GYBG was spun off from NAB in February, and the Australian firm was ordered by regulators to set aside significant funds before the demerger to cover legacy issues as the deadline for complaints in 2018 approaches.

Clydesdale, which has 274 retail branches and 7,268 staff, also reported a 2.5 per cent rise in net interest income to £400m for the six months ended March 31, and customer lending grew 2.8 per cent over the first half, while deposits were up 4.6 per cent.

Mortgage balances rose 4.9 per cent as it was boosted by “very strong” buy-to-let borrowing ahead of last month’s stamp duty rise.

Dundonian chairman Jim Pettigrew said the business, which has also trimmed costs to £353m after announcing plans to axe 26 branches nationwide and cut a number of jobs, was growing stronger day by day.

Nine Clydesdale sites and a further 17 under the Yorkshire Bank brand – announced in April are among measures aimed at reducing full-year costs to £730million.

“We’re focused on building a high performing, customer-centric organisation with strong productivity and efficiency,” Mr Pettigrew said.

“Becoming an independent PLC has been a catalyst for our ongoing cultural transformation.

“In the first half we have demonstrated good progress in delivering on our strategy.

“Going forward we believe sustainable growth, lower costs and capital efficiency will drive improved performance and enhanced returns for shareholders.”

CYBG also said it would continue to look at ways to reduce costs further and around 150 senior staff would also leave over the next few months after it brought forward a voluntary redundancy scheme.

CYBG chief executive David Duffy said: “I am very pleased to report good progress on all fronts in our first set of results as we execute our strategy as an independent company.

“We have a strong momentum in our business, continuing to grow ahead of the market in mortgages, and over £1 billion of SME loans and facilities were made available in the first half.

“We have also seen encouraging growth in current accounts.” CYBG shares rose 10.25p at 247p.

Employee numbers in Scotland have remained steady at around 4,000 since February’s decoupling although the CYBG has set up its registered office in England.

But Mr Mr Duffy was at pains to reaffirm the business’s commitment to Scotland and dismissed any idea of the market south of the border being favoured.

He said: “I think it’s a huge misrepresentation. Glasgow is the head office, that fact can’t be disputed.”

He also explained that CYBG had decided to have its registered office in England to ensure that it would be able to access Bank of England funding if necessary, under the arrangements to help firms deal with shocks.

“We had to protect that funding,” said Mr Duffy. “I don’t care about politics.”

The Irish executive said he has been living in Glasgow since last year and the bank’s other executives commute between the three centres of Glasgow, Yorkshire and London but the entire leadership team meets in Glasgow every week.