A pre-tax loss of £183 million has been announced by Clydesdale bank, with the lender’s levels of bad debt rising by nearly 90 per cent.
Through the year until September, the Glasgow-based bank actually reported an underlying profit, before bad debts were included. However, this £448 million profit was also down 16 per cent on previous results.
The bad debts have largely been attributed to a fall in the value of property. However, business lending balances are also down significantly; something which is true of the whole banking sector.
This is because of many reasons but, significantly, businesses in Scotland and throughout the UK are simply not seeking higher levels of lending. They are, instead, looking at alternative commercial finance. In Scotland, for example, businesses are looking to invoice factoring.
Despite the loss, the underlying profit is seen as a very positive thing for the bank, which is presently being restructured by its parent company, National Australia Bank. This has come at a price though, with 468 jobs cut in the past year; amounting to a 4 per cent cut in costs. The firm’s chief executive, David Thorburn said:
“The past year’s performance demonstrates the need for the difficult steps we are taking.”
Thorburn went on to say that the difficult period will continue, with 1,400 jobs likely to go within the next two years.
The action is being taken as the UK business is affecting the Melbourne based parent significantly. With the Scottish bank excluded from its results, NAB posted profits up by 9 per cent.