Clydesdale and Yorkshire Banks report rise in earnings

Clydesdale Bank The bank said legacy issues "continued to negatively impact on performance"

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Clydesdale and Yorkshire Banks have reported a doubling of pre-tax cash earnings, despite continuing to face legacy issues such as payment protection insurance payouts.

Profits for the six months to the end of March 2014 came in at £89m, up from £44m for the same period last year.

Underlying profit was up by 6.7% to £144m.

Glasgow-based Clydesdale and the Yorkshire brand make up National Australia Bank's UK operations.

NAB has been restructuring its struggling British operations, shedding jobs and shrinking its commercial lending activities in a bid to build "a better bank".

In the latest half-year, it reduced charges to provide for bad and doubtful debts by almost 40% to £55m. It also cut operating expenses by 3.9% to £14m.

However, the banking group acknowledged that "the impact of legacy conduct related matters continued to negatively impact on performance", with additional provisions of £13m raised in the half.

Payment Protection Insurance (PPI) provision balances stood at £126m at 31 March 2014, down from £152m at the end of the previous quarter.

'Good progress'

David Thorburn, chief executive of Clydesdale Bank and Yorkshire Bank, said the business had "continued to make good progress".

He added: "We're also making a significant investment in customer service improvements and there's a great deal of positive change underway.

"We're committed to building a better bank for our customers. I recognise there's a great deal more to do but I firmly believe we're on the right track."

In March, it was announced that Clydesdale and Yorkshire Banks would close 28 "unsustainable" branches and invest £45m in customer improvements under plans to reshape their retail banking operations.

The banking group expects to save £5m by the branch closures.

It is also spending more than £20m on improved mobile and internet banking services as part of the programme to "replace, renew, relocate and reinvest" across the retail branch network.

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