Midland made a pre-tax profit for the year to 31 December of pounds 178m against pounds 36m in 1991. Bad debt charges fell to pounds 676m from pounds 903m, helped by an pounds 89m release of problem-country debt provisions made some years ago.
Brian Pearse, the chief executive, said: 'We're just beginning to see a glimmer of light . . . It may be that economically we are seeing a slight lifting of the gloom.' Sharply lower interest rates and favourable exchange rates might be having an effect, he said.
But he warned that capital-starved companies surviving the recession would find it difficult to rebuild business, as banks have lost millions on lending to companies and want to avoid new risky loans.
Midland's results included a pounds 122m exceptional charge for restructuring after the HSBC takeover in July.
The bank reorganised its businesses after the merger. Commercial banking, which now encompasses UK banking plus overseas businesses, made a pounds 138m profit after a pounds 50m loss in 1991.
Firstdirect, Midland's 3 1/2-year-old telephone bank, had 350,000 customer accounts by the end of 1992 and applications are pouring in this year.
The branchless bank did not make a profit last year, but could if it stopped advertising, Mr Pearse said. 'It's the bank's attitude that it's the best vehicle we've got for acquiring new customers.' He predicted Firstdirect would be in profit by the end of the year.
Commercial banking bad debts stayed high at pounds 557m, after pounds 808m in 1991, amid UK recession and lower European growth.
UK property and construction accounted for nearly half of the bad debt charge, and service industries suffered. Personal sector bad debts fell to pounds 148m from pounds 179m. The bank made losses in Italy, France and Scandinavia.
Midland made a pounds 30m pre-tax profit on Thomas Cook, the travel agency, before it was sold in September at a pounds 66m profit.
The merchant banking division made a pre-tax loss of pounds 33m, after a 1991 profit of pounds 34m, due to a few big business failures, which caused provisions of pounds 77m. Venture capital investments caused pounds 62m of provisions.
But foreign exchange income rose by pounds 67m in the second half of 1992, the period that included Black Wednesday and after Midland and HSBC treasury activities merged.
Forward Trust, Midland's asset finance house, made a profit of pounds 43m, the same as in 1991, despite reduced new business. Bank costs were held steady. Staff numbers fell by 1,164 excluding Thomas Cook, but Firstdirect and Midland Life took on new employees.Reuse content