Good progress at Yorkshire and Clydesdale banks, but when will they float?

NATIONAL AUSTRALIA Bank said its UK banking operations are well positioned for future growth, but disappointed investors by failing to provide a timetable for the sale of Yorkshire and Clydesdale banks.

The UK business yesterday reported pre-tax cash earnings of £203m in the 12 months to September, an increase of 90 per cent on the previous year.

This was due to continued underlying performance management improvement and a strengthened economy, said David Thorburn, chief executive of Yorkshire and Clydesdale.

He told The Yorkshire Post that the banks made “good progress” in the past year by improving products, customer service and operational efficiency.

He said both brands are strong - Yorkshire is the more consistent performer in surveys - and the business is “ramping up” investment in retail and SME banking.

But he would not elaborate on NAB’s plans for an exit, which were announced on Wednesday night.

Andrew Thorburn, the group CEO and no relation, said NAB needs “greater urgency” in dealing with its remaining low-returning assets and is now examining a broader range of options, including those provided by public markets.

NAB’s cash earnings for the year slid nearly 10 per cent $5.18bn, largely due to UK conduct provisions.

The group has set aside more than £1.23bn to date for the mis-selling of useless or toxic products to households and small and medium-sized businesses.

David Thorburn said “time will tell” what happens to that figure in the future, but added that the business is “well provided at this point in time”.

He said: “As NAB explores public market options that will be high up the list of issues that need to be considered and dealt with.

“It is been such a huge issue for our industry, not just ourselves.”

A spokesman added that the banks have a robust process in place to deal with all complaints and are committed to fair outcomes for customers.

David Ellis, an analyst at Morningstar, said: “Operationally the banks are improving with solid revenue growth and lower bad debts.

“Estimated book value is $5.5bn (£3.02bn), but uncertainty surrounding the future liabilities... overshadows the better operational performance.”

Mr Ellis said an IPO would be the logical outcome of NAB’s review of options.

He added: “Disappointingly, no firm timetable was announced, but it will be a welcome step forward after many years of disappointing performance from the UK business.”

Mr Ellis said the general response to NAB’s full-year announcement was “reasonably positive” with shares rising 0.76 per cent.

NAB has already started to sell off its US subsidiary Great Western Bank.

NAB pumped nearly £1.5bn into Yorkshire and Clydesdale to support them during the downturn.