Clydesdale Bank has posted a statutory loss after tax of £558m due to conduct charges and tax reforms.
The loss for the year to September increased on that of the previous year which was £249m.
Despite this the bank posted an increased operating income of £990m compared with £961m for the previous year.
In its report and accounts, published this morning (22 November), Clydesdale said: “The 2016 loss was primarily due to the additional conduct charges for the year and the write-off of deferred tax assets as a result of the enactment of Finance Bill 2016, reflecting the inherent uncertainty in the UK’s approach to the taxation of banking groups.
“The 2016 result also included a charge of £45m for restructuring and £45m for impairment of intangible assets.”
The government recently introduced a new 8 per cent surcharge on taxable profits from 1 January 2016, which Clydesdale said compounded the adverse impact of 2015 changes that made charges for compensation payments largely non-deductible for tax.
Last April the company was fined £20m for failings related to its its handling of complaints about mis-selling of payment protection insurance.
Meanwhile since 1 April only 25 per cent of a bank’s taxable profit can be relieved by brought forward losses.
Mortgages, which make up the company’s largest asset portfolio, saw gross origination grow to £4.9bn.
But the growth slowed during the second half of the year as the stamp duty changes, including a levy on buy-to-let properties, came into effect.
Clydesdale said: “The growth in the year reflected the strong performance in and our commitment to the intermediary market, alongside continued investment in the branch network.”
It added: “Regulatory and taxation changes such as limits to the income tax relief on mortgage interest expense and additional stamp duty may result in lower yields on buy-to-let property investments and may negatively affect mortgage supply and demand.
“The group has a balanced portfolio with growth through a number of channels and products.
“The lending portfolio is subject to regular monitoring and stress testing.”
Clydesdale Bank’s underlying profit before tax of £225m increased from £146m, primarily due to the increase in operating income.
Clydesdale Bank's parent company, CYBG, made a statutory loss after tax of £164m over the year to September, down from the previous year when it made a loss of £229m.
Earlier this year CYBG was floated on the London Stock Exchange as its owner, National Australia Bank, pursued a demerger of 75 per cent of the company to its shareholders and a divestment of the remaining 25 per cent to institutional investors by its IPO.