The bank is to be demerged from its parent, the National Australia Bank (Nab), through a flotation on the London Stock Exchange by the end of the year.

Between 20 and 30 per cent of shares will go to new institutional investors via the IPO, while the remaining 70 to 80 per cent will go to existing National Australia Bank shareholders.

Clydesdale’s improving financial position has seen its pre-tax profits increase from £87 million over the same period last year and net interest income rise by 1.7 per cent to £390 million, buoyed by higher income from home lending and deposit costs.

The bank also saw a one-off gain of £39 million in December last year from the repurchase of subordinated debt as part of a capital restructuring.

Acting chief executive Debbie Crosbie said: “Clydesdale Bank’s performance continues to improve and the real customer choice we’re providing in the UK is driving encouraging growth across our target retail and SME markets.

“Profit before tax is up by more than half to £133m, charges to provide for bad and doubtful debts almost halved and mortgage lending is significantly better than overall market growth.”

“Right across the bank, we are focussing on the future with support for customers at the heart of our business. As announced last week, our parent company intends to pursue a demerger and initial public offering (IPO) of our business by the end of this calendar year.

“Exciting opportunities lie ahead as we continue to grow a better bank for our customers.”

Chairman James Pettigrew added: “The journey to re-shape the bank is progressing well. We are successfully growing mortgage lending, improving returns and attracting new customers.

“The board continues to focus its efforts on ensuring the quality of service we provide to our customers is central to our strategy as we build towards a stand-alone future.”