Hefty cost-cutting, including 1,400 job losses, and fewer bad debts helped Clydesdale Bank back into the black during the year to September 30.
But underlying profits plunged by more than 36% to £285million and chief executive David Thorburn told the Press and Journal yesterday there was “still work to do”.
A major overhaul of the combined Clydesdale and Yorkshire Bank businesses – owned by National Australia Bank (NAB) – was achieved a year earlier than planned, he added.
Mr Thorburn was speaking after NAB announced pre-tax cash earnings of £127million from its UK operations in the latest financial year, reversing losses of £183million in the previous 12 months.
The swingeing job cuts were part of an 18-month restructuring programme and have left the two UK banks with about 7,000 full-time workers.
Clydesdale and Yorkshire have shut a string of business and private-banking centres – offering services to local firms and better-off individual investors – and relocated others, including one in Aberdeen, to retail branches.
The banks have also axed a financial advice service which operated through their business and private-banking arm.
In addition, there have been some retail branch closures, affecting sites in Huntly and Aberdeen.
Clydesdale has beefed up its mortgage advice team at a call centre near Glasgow, but at the expense of some roles in its branch network.
Mr Thornburn told the P&J most people preferred to discuss mortgages over the phone and there was no longer enough demand for face-to-face meetings to justify having advisers at some smaller branches.
There is constant speculation that NAB plans to sell the Clydesdale and Yorkshire banks, but Mr Thorburn said there had been no change in strategy at the parent since a review of the UK operations was launched in April 2012.
NAB appeared to rule out a sale of the businesses at the time, saying such a move was unlikely to provide value for shareholders.
Its two UK brands have cut about 17% of their workforce, mainly by pulling out of the south of England and focusing on their heartlands in Scotland and the north of England.
The banks have added another £130million charge to compensate customers mis-sold payment protection insurance, taking its total provision to £152million.
It also booked £36million during the year for interest rate swaps mis-sold to small businesses, plus £13million for credit card insurance sold through disgraced financial services firm CPP Group.
Mr Thorburn said mortgage lending was up by 7.5%, to £15.8billion, but business lending fell by around 9.4% due to a combination of low demand and banking caution in the wake of the financial crisis.