Yorkshire Bank profits rise as bad debts fall

Speculation has linked National Australia Bank with potential offers for the so-called "good" part of Northern Rock, as well as branches to be sold off by Royal Bank of Scotland and Lloyds Banking Group to appease European competition authorities.

Including charges for bad and doubtful debts, profits grew to 81m for the six months to March 31. Underlying pre-tax profits were up 11 per cent to 264m.

NAB's figures appear to suggest impairments have peaked - while bad and doubtful debts increased by nine per cent or 15m on a year earlier to 183m, this was down 28 per cent on the previous half-year.

UK chief executive Lynne Peacock said there were signs of stabilisation in the bank's key trading measures.

However, she added: "While there are now consistent signs of economic recovery, our cautious approach will remain until longer term trends are evident. Our clear focus remains on maintaining our strong capital position and supporting customers."

The bank added that it remained committed to last year's pledge to deliver 10bn of new business and mortgage lending by October 2011.

National Australia has around 2.7 million UK customers through Glasgow-based Clydesdale Bank, which incorporates the Yorkshire Bank brand. The business has a total of 340 branches, consisting of 188 Yorkshire Bank and 152 Clydesdale sites.

It employs more than 8,200 full time workers in the UK, with 2,400 in its Glasgow and Clydebank operations and 1,900 in Yorkshire.

Group chief executive Cameron Clyne said today: "NAB's well managed business in the UK is in a good position to grow organically and well placed to consider other ways to improve shareholder value.

"The market opportunities available to NAB in the UK range from direct participation via acquisition to entering into joint arrangements with other parties. NAB is under no pressure to participate in the consolidation and will only do so if it creates shareholder value."