Clydesdale Bank lifts its targets

The former NAB subsidiary has boosted the schedule and scale of a range of goals set at the time of its demerger.

Since listing, Clydesdale’s shares have been well supported.

Clydesdale Bank has increased a handful of targets put in place when the British lender was sold by National Australia Bank earlier this year, despite uncertainty from Brexit.

At an investor update in London, Clydesdale chief David Duffy unveiled improved medium term targets that he said will also be delivered faster than originally flagged when the bank was demerged and floated by NAB in February.

While not bringing forward the time when dividends would start flowing, the bank said that by the end of fiscal 2019 it would deliver a cost to income ratio of 55-58 per cent, better than the less than 60 per cent forecast by 2020 flagged previously.

The bank will also deliver a double digit return on tangible equity by the same time, better than the previous 2020 target, while annual loan growth in the “mid-single” digits was likely.

Many Australian investors own shares in Clydesdale after NAB demerged 75 per cent to shareholders, who received one security in the British “challenger” bank for every four NAB shares. Clydesdale’s primary listing is in London, but it also trades on the ASX via CHESS Depository Interests.

Clydesdale, which was bought by NAB three decades ago, had been weighing on the parent bank’s profitability and was shed by chief Andrew Thorburn along with a number of other underperforming assets.

Since listing, its shares have been well supported. Clydesdale on Monday said it was targeting more than £100 million of further cost reductions by 2019 and regulators would likely approve the use of internal risk weighting modelling by 2020, freeing up capital.