CLYDESDALE Bank and its sister group Yorkshire Bank yesterday shrugged off the credit crunch in financial markets to post a 19 per cent jump in halftime profits.
But Lynne Peacock, group chief executive of the UK subsidiaries of Nab of Australia, warned that the economic climate made it harder to underpin organic progress with acquisitive growth.
Unveiling a profit of £194 million in the six months to end-
March, Peacock said: "This market has taught people that unless an acquisition fits with your strategy, and is not something you already have, the fact that it might be cheaper than it was is neither here nor there."
However, she said that the latest strong results from Clydesdale, with 153 branches, and Yorkshire, with 190 branches, showed the operations had proved their resilience in tougher trading conditions.
Peacock said this was partly due to a more traditional banking model, with no direct exposure to subprime lending or complex indirect loan vehicles like collateralised debt obligations or structured investment vehicles.
"The real test is how you perform in difficult times. Without sounding arrogant, we believe we have done well," Peacock added.
Nab'S UK mortgage volumes rose 16 per cent, with the average loan-to-value for acceptances flat at 62 per cent against 63 per cent in the same period last year.
Peacock declined to add her voice to LLoyds TSB chief, Eric Daniels, who said last week that house prices were likely to fall by a total of 10 per cent over 2008-9.
"It's hard to predict," she said. "Clearly things are slowing down. But it's not uniform. Scotland has not seen any reduction in house prices so far."
She added that, after the housing boom of the past ten years, it was "inevitable" that there would be some sort of correction.
Business lending volumes at Clydesdale and Yorkshire rose 28 per cent. The 76 Financial Solutions Centres, which combine small and medium-size business lending with private wealth management, continued to be a revenue driver. Revenues at the operation, which includes 16 FSCs in Scotland, rose to £612m from £586m.
David Thorburn, chief operating officer, said the iFS business, as it is known, was now chipping in 37 per cent of overall UK revenues compared with below 25 per cent in 2005.
He said business confidence was holding up pretty well amid the credit crunch, with manufacturers "holding their own" and exporters benefiting from weak sterling.
However, Thorburn said construction and housebuilding were "in the eye of the storm".
He said Clydesdale was not retiring from the sector, but was "stress-testing" cost assumptions on development projects more. "Things you might have (backed] a year ago you might not necessarily do today," he said.
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The full article contains 462 words and appears in The Scotsman newspaper.
