The Australian-owned bank reported a statutory loss of £27m in 2013, a vast improvement on the £470m loss in 2012.
But the improved trading performance, helped by a deep cost-cutting programme, has been overshadowed by a series of reputation-damaging “legacy conduct matters”.
These include the attempted cover-up of a mortgage calculation error and the mis-selling of products to households and small and medium-sized businesses.
Yorkshire Bank’s annual report revealed that David Thorburn, the chief executive, received total emoluments of £1.544m, while John Hooper, the chief operating officer, received total emoluments of £1.649m.
The pair benefited from the return of short and long-term incentive schemes, which had been axed in 2012 after National Australia Bank said performance was “not where it needs to be”.
Labour MP Clive Betts, a persistent critic of the bank, described the 2013 bonus payments as “absolutely staggering”.
He said it is difficult to understand why they were being paid, given the mis-selling of products to households and small businesses.
Mr Betts claimed that banks are not supporting jobs growth but instead paying “massive amounts” to senior staff.
The Sheffield South East MP lobbied for Yorkshire Bank executives to appear before a parliamentary committee over the lender’s treatment of SMEs.
A spokesman for the Leeds-based lender said the overall bonuses were cut by 30 per cent in 2013.
He told the Yorkshire Post: “Over the last year our employees have worked hard to reshape our business.
“As a result the business is in considerably better position. This is testament to the hard work and dedication right across the organisation.
“While the bonuses reflect these efforts we have been clear that there is more to do in moving our business forward and addressing customer conduct matters and that’s been reflect in a 130 per cent reduction in bonus levels in the last two years.”
Yorkshire Bank, a trading name of Clydesdale Bank, took a £130m hit for mis-sold payment protection insurance in the last financial year.
The Financial Conduct Authority levied a £8.9m fine on Yorkshire Bank in September for treating customers unfairly after an internal mortgage repayment calculation error in 2009.
The bank is also taking part in review by the City watchdog into the sale of complex interest rate hedging products to SMEs.
Speaking to the Yorkshire Post earlier this month, Mr Thorburn said he had not considered resigning. “What I’m focused on is trying to put this right,” he added.
The bank has axed 1,400 jobs and retrenched from the South to its heartlands in the North of England and Scotland.
Last year it quarantined £5.6bn worth of troublesome commercial property loans and is running down the book, which now stands at £4bn.
Yorkshire Bank has invested heavily in new technology, including mobile banking, and marketing over the last year.
Cameron Clyne, the executive chairman of Clydesdale Bank and chief executive of parent National Australia Bank, said strategic changes at the UK subsidiary have allowed it to benefit from the improving economic conditions in the UK.
He added: “Even though our underlying performance has improved and bad debt levels have fallen... conduct factors have contributed to the loss reported in the results.
“Despite this, we continue our investment in new products and services and the launch of our mobile banking platform this year has been particularly successful.”
Mr Thorburn said the restructuring of the business has been substantially completed ahead of schedule and is beginning to deliver benefits to income, costs and asset quality.
He said the bank has a clearer focus on customers and is resolving legacy conduct issues.
Mr Thorburn added: “A strong focus on conduct issues will remain a feature of our industry and our business as we work to build a better bank.
“The bank’s stability and strength will serve it and its customers well as the economy settles and as we face the challenges of the future as well as resolving the industry issues of the past.”
Yorkshire and Clydesdale banks have 323 branches, 43 business banking centres and 4,478 members of staff.