Clydesdale Bank

National Australia Bank Group, owner of the Clydesdale and Yorkshire Bank, has released full year results for its UK banking operations for the 12 months to 30 September 2010. Unless otherwise stated, figures are comparisons with the 12 months to 30 September 2009.

Financial Performance

Clydesdale and Yorkshire Bank achieved a substantial recovery in profitability in the year, with pre-tax cash earnings growth of 53% to £164 million (from £107m).

This significant improvement in profitability was achieved while balancing profit with increased security. The Bank has continued to strengthen and reshape its balance sheet in preparation for the UK economy returning to more stable conditions.

Liquidity levels further strengthened and, as at 30 September 2010, Clydesdale Bank held a substantial portfolio of liquid assets totalling £10.1 billion (from £8.7bn in September 2009) – a four-fold increase in three years.

Double-digit deposit growth continued despite intense market competition. Average retail customer deposits grew by 11% or £2.3 billion to £23.1 billion – more than double the UK industry average growth rate. Deposit growth across iFS ( Integrated Financial Services – Clydesdale /Yorkshire Bank’s business banking division) was 13% with the retail network delivering 8%. This growth has helped to further strengthen the Banks’ funding position with longer term wholesale funding, retail deposits and longer term funding now covering 105% of lending.

Capital ratios were further improved during the period. An additional £310 million of ordinary share capital was injected into Clydesdale Bank, further strengthening an already robust capital base. At 30 September 2010, the Tier 1 capital ratio was 9.0% (up from 8.2% at September 2009).

Supporting Customers

Supporting customers in the early stages of the economic recovery remains a key business priority. Clydesdale and Yorkshire Bank has an unwavering commitment to providing funding when business and personal customers need it most as well as ensuring that help is provided to any customers facing financial difficulties.

Despite subdued market demand for credit, new lending of £4.7 billion was advanced in the year including £2.7 billion of business lending and £1.7 billion of mortgage advances. As a result of portfolio rebalancing, commercial property lending fell (down 14%) whilst the momentum of lending to trading businesses was maintained and mortgage lending increased.

Average gross loans and acceptances were broadly flat at £32.9 billion (from £33.3bn), as a result of consciously reducing commercial property (down 11.3%) and unsecured personal lending exposures (down 12.5%). Lending for mortgages and trading businesses grew by 4% and 3% respectively.

The business remains firmly on track to deliver against its October 2009 pledge to make £10 billion of new lending available to support business and personal customers by October 2011. With a strong appetite to further grow its mortgage book and pipeline of trading and mid corporate businesses the Bank is sending a clear message to new and existing customers that they continue to have real choice and support in the market.

In response to growing business customer confidence, iFS business banking launched a new support initiative in May to help UK trading businesses ‘Invest for Growth.’ Offering a dedicated planning service designed to help businesses take advantage of quality growth opportunities by providing investment finance, increasing cash flow and easing debt commitments.

Performance Measures

Asset quality measures continue to reflect the current operating environment in the UK. The charge to provide for bad and doubtful debts decreased by £74 million (18%) compared with the prior year. This reflects the general improvement in the economic environment and commercial property prices. It remains an area under close management scrutiny.

Showing continued prudence in the early stages of the economic recovery, the total provision to gross loans and acceptance ratio was strengthened to 1.46% (from 1.37% at September 2009). Mortgage balances 90 days past due as a percentage of total mortgages are significantly lower than the industry (0.76% at September 2010).

Significant investment in the business continued within the year with a £3 million increase in cash spend to £90 million. An additional £28 million in higher defined benefit pension costs due to lower expected returns from the fund’s assets primarily contributed to an operating expense increase of £43 million (6%). The cost to income ratio increased to 58.2% (from 55.9%). Excluding the defined benefit pension cost increase and the reduction in Other Operating Income from PPI the cost to income ratio improved by 80 basis points.

Interest earning asset volumes increased by £2.0 billion (up 5%) to £41.1 billion. Net interest income increased £81 million (up 9%) as a result of widening lending margins and reduced basis risk costs. The net interest margin increased to 2.34% (from 2.25%) as a result of improved lending margins and a reduction in basis risk, partially offset by deposit margins and lower earnings on capital.

The inherent balance sheet strength and capital position of Clydesdale and Yorkshire Banks provides a strong platform from which to take advantage of future growth opportunities.

Lynne Peacock, Chief Executive, National Australia Group Europe, said: “Our clear focus on supporting customers and maintaining a prudent approach to credit has proved to be very effective. We are attracting growing numbers of small and mid-corporate trading businesses and expanding our mortgage book which is greatly encouraging. Although the economy is in the early stages of recovery, we advanced £4.7 billion of new lending in the year and remain firmly on track to deliver the two-year new lending commitment of £10 billion we made last October.

“As a result of this strategic focus, a significant step forward has been taken towards restoring profitability with a 53% increase in pre-tax cash earnings. This was achieved whilst we further strengthened and re-shaped our balance sheet, maintained a strong capital position and supported our customers through challenging times.

“While national economic recovery will provide further challenges, Clydesdale and Yorkshire Bank is in a strong position and continues to send a clear message to new and existing customers that they have real choice and support in the market.”

Discussing the annual results from an Ayrshire perspective, managing partner of the Clydesdale Bank Financial Solutions Centre in Ayr Willie Mackie (pictured above) said: “In line with our national results, we have continued to increase our lending to businesses across Ayrshire and Arran during the last 12 months.

“We will continue to support our customers through difficult economic conditions, and I am pleased to say that we will shortly be announcing a further expansion of our Corporate and Commercial team based in Ayrshire.”


Clydesdale Bank
Financial Solutions Centre
43 Alloway Street
Ayr KA7 1SP
Ayrshire, Scotland

Contact: Willie Mackie, Managing Partner
Tel: 01292 272072
Fax: 01292 280202

The Clydesdale Bank Financial Solutions Centre in Ayr is a founder member of the Elite Ayrshire Business Circle.


The Elite Ayrshire Business Circle is an association founded in 2007 by some of the top companies in Ayrshire.

Its purpose is to publicise its members, and to celebrate and promote the wealth and rich diversity of entrepreneurial talent and business excellence that abounds here within the county boundaries of Ayrshire.

Members include the Clydesdale Bank, Ayr Racecourse, Western House Hotel and South Ayrshire Council, and member company activities include broadcasting, building and construction, architectural practice, estate agency and land management, chartered accountancy, insurance broking, legal services, golf club management, marketing services and brand creation, web design and public relations consultancy.

Frazer Coogans Commercial Solicitors senior partner Norman Geddes is executive chairman of the Elite Ayrshire Business Circle, and managing director is public relations consultancy Fame Publicity Services proprietor Murdoch MacDonald.

Founder members of the Elite Ayrshire Business Circle:

South Ayrshire Council 
Clydesdale Bank       
Turnberry Hotel and Golf Resort 
Ayr Racecourse       
Western House Hotel       
CKD Galbraith Property Consultants       
Frazer Coogans Solicitors  
Accident & Injury Claims Centre       
MacKay Corporate Insurance Brokers       
Donald Ross Estate Agents:       
Westgale Ltd Building Contractors        
Sinclair Scott Chartered Accountants       
Paligap Creative Agency       
ARP Lorimer & Associates Architects      
JB Management – Training Providers
Brunston Castle Golf Club       
Fouters Restaurant     
Christie Financial Planning Ltd 
Allison Lightbody Waddell Chartered Surveyors 
Kestrel Press  
Fame Publicity Services Public Relations Consultancy
West Sound Radio        
Easton Property
Easton Kitchens & Bathrooms

For further information about The Elite Ayrshire Business Circle and to apply for membership, e-mail

Contact: Murdoch MacDonald
Phone: 01292 281498