Debt hit for Yorkshire and Clydesdale banks

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Yorkshire and Clydesdale banks were forced to take a £65m charge against bad debts in the six months to the end of March, a rise of 86 per cent on the same time last year.

Like other high street lenders, both have seen more customers struggle to meet repayments on credit cards and personal loans after steeper mortgage payments and utility bills left many Britons worse off.

National Australia Bank, which owns Yorkshire and Clydesdale banks, said the steep rise in bad debt could also be attributed in part to the expansion of its businesses over here.

Lynne Peacock, who runs NAB's UK operations, said: "We are not immune to what the UK is suffering, but we've done a number of things to address the issue. We contact any of our customers who are showing early signs of stress and have tightened our lending criteria."

Clydesdale and Yorkshire turn down half of all applications for credit cards and expect this part of its business to decline in importance. Instead, NAB wants to grow its UK mortgage lending. Last year, advances were 5.8 per cent higher at £822m.

NAB's chief executive, John Stewart, is two years into a three-year turnaround plan for the scandal-rocked bank and indicated in the past that he would be prepared to sell its British interests should their performance fall short of the mark.

He and Ms Peacock were encouraged by yesterday's second-half results. At £219m, underlying UK profits were up 10.1 per cent on the previous six months. Total income grew 3.1 per cent to £624m. Ms Peacock said: "We've produced a really good result, which demonstrates the business here is doing well."