Yesterday Yorkshire and sister bank Clydesdale announced a 17 per cent increase in pre-tax profits to £194m in the six months to March 31.

UK chief executive Lynne Peacock said that in the current turbulent times, Yorkshire Bank is in a strong position.

"The problems have been in the areas we don't operate in," she said. "We have no involvement outside the UK, no 100 per cent mortgages and no exposure to the US sub-prime market."

Yorkshire and Clydesdale, which are owned by National Australia Bank, reported a 28 per cent increase in business lending volumes and a 16 per cent increase in mortgage volumes over the half year.

The group said the retail business performed well in challenging conditions while business banking through its integrated Financial Solutions Centres outperformed the market.

The group has also enjoyed strong growth in its savings business. Savers are keen to avoid a repeat performance of Northern Rock, which suffered the first run on a UK bank in over 100 years last year, so they are opting for safe, well-funded banks that have no risk of going belly-up.

"The market sees us as a safe place for deposits," said Ms Peacock. "We have the strong Yorkshire brand name and our credit rating has been reaffirmed. Customers see Yorkshire Bank as a safe haven, people are looking for brands they can trust,"

Savings rose 17 per cent to £17.5bn over the six months.

At a time when big high street banks such as HBOS and RBS are raising billions of pounds from shareholders through rights issues, Ms Peacock said Yorkshire had one of the strongest capital ratios in UK banking – which means its savers cover much of its borrowing requirements.

Retail deposits and longer-term funding covered 85 per cent of lending in the first half year, up from 83 per cent the previous year.

The charge for bad debts remains stable following a strategic shift away from unsecured personal lending which resulted in a seven per cent decline in credit card and personal loan balances. These areas now represent less than six per cent of total assets. Action taken over the past two years has also improved asset quality.

Following a turbulent three- year period when Yorkshire Bank took a knife to the business, cutting jobs and closing branches, Ms Peacock said the group was now reaping the benefits of its decision to take action.

"The test of a good strategy is how you perform when times are tough, this shows the wisdom of the route we followed," she said. "We were well prepared for the challenging market conditions and we have delivered an excellent trading performance by maintaining a disciplined strategic direction."

Strong cost controls and better efficiencies have resulted in five consecutive half-year periods of flat costs.

The £9m redevelopment of the group's Yorkshire headquarters in Merrion Way in Leeds was completed within time and on budget. The investment has resulted in improved staff and customer facilities, new data and telephony infrastructure and a new glazed entrance.

A three-year salary deal has been negotiated with the trade union Unite which the group said would provide both staff and the business with stability and assurance at a time of economic uncertainty.