After being a serial source of disappointment when it was owned by National Australia Bank, Clydesdale Bank has delivered better news for its shareholders, flagging a dividend payment after booking its first profit in five years.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Clydesdale, the United Kingdom bank spun off from NAB early last year, reported on Tuesday full-year statutory earnings of ??182 million ($320 million), and an intention to pay shareholders - most of whom are domiciled in Australia - a dividend of 1 pence a share.
The lender, which has been cutting costs since it was let go by NAB, said its underlying income was up 3 per cent, and it had lowered costs by 7 per cent.
Its underlying cost to income ratio fell 7 percentage points to 67 per cent, but this is still higher than the peer ratio of 50 to 60 per cent.
Clydesdale is positioning itself as a challenger bank to the UK's largest lenders, and its mortgage portfolio grew 8 per cent, while small to medium business loans were up 6 per cent.
"We have delivered a strong performance in 2017 having met all of our targets and recorded our first statutory profit in over five years," chief executive David Duffy said.
"As a result, we are pleased to be recommending an inaugural dividend to shareholders."
Its net interest margin was stable at 2.27 per cent, and the bank said this was likely to narrow to about 2.2 per cent in the year ahead.
When it was owned by NAB, Clydesdale was dogged by a mis-selling scandal, which led to hefty compensation payments to customers, and NAB chief Andrew Thorburn ultimately decided to de-merge the business.
That complicated transaction distributed shares in Clydesdale to NAB investors. Australian institutional investors still own almost 65 per cent of its shares, according to June figures, while domestic retail investors also make up a significant share of the 19.4 per cent of the share register held by retail investors.
Clydesdale is listed on the London Stock Exchange, and its shares are also traded on the ASX. Over the past year, its share price has risen 6.6 per cent, compared with a rise of more than 11 per cent in thw ASX 200 index.
The result comes after Westpac, National Australia Bank and Westpac kept dividends flat in their latest full-year results, as local banks face slowing credit growth in the housing market and sedate business credit.
