Clydesdale Bank & Yorkshire Bank announce annual results

28th October 2009

TWO-YEAR £10 BILLION LENDING PLEDGE

London, 28 October 2009 : National Australia Bank Group, owner of the Clydesdale and Yorkshire Banks, today released full year results for its UK Region’s* operations for the 12 months to 30 September 2009. Unless otherwise stated, figures are comparisons with the 12 months to 30 September 2008. Highlights are :

Financial Performance

• Underlying profit up 2% to £529 million
• £108 million pre-tax profit (down from £343m)
• Retail deposits and longer term funding cover 101% of lending
• Strong liquidity with liquid assets of £8.7 billion – three-fold increase in two years

Customer Support

• £10 billion of new business and mortgage lending pledged over next two years
• £4.1 billion of new business and mortgage lending in the past 12 months
• Average gross loans and acceptances increase 7% to £33.5 billion
• Average retail deposit volumes up  14% to £20.8 billion: almost four times industry average

Business Performance

• Provisions coverage ratio strengthens to 1.36%
• Mortgage balances three months in arrears less than a third of UK industry average
• Cost income ratio improves to 54.2% in the second half (from 57.7% at March 2009)
• Costs reduce by £48 million (7%)

Lynne Peacock, Chief Executive, said:

"We’ve kept our business safe, secure and in the best possible shape by maintaining a strong capital position and supporting our customers in these challenging times. We’re now moving up a gear.

"Today we are pledging £10 billion of new lending to support business and mortgage customers over the next two years. In achieving this, we will maintain our prudent credit and asset quality controls, just as we have in over £4 billion of new lending in the past year. Our pledge of additional funding is a considerable commitment for a business of our size. It will help to ensure customers continue to have real choice in a consolidating market and are supported when they need it most.

"We will continue to avoid the excesses of the sector and will maintain our careful strategic approach. Independent of Government capital support, we remain profitable, well capitalised and with clear underlying strength. The fundamentals of our business are strong and we are well positioned to capitalise on future growth opportunities.”

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