National Australia Bank’s (NAB) UK operations have seen bad debts rise according to a market update.
The firm’s Clydesdale and Yorkshire Bank operations saw debts that are more than 90 days overdue rise from 2.98 per cent of gross lending in the first quarter to 3.36 per cent.
This is in contrast to generally improving bad debt ratios across the majority of UK banks.
The results are still an improvement on bad debt figures for 2009, however.
The update said: “Trading conditions remain challenging for businesses, and this is reflected in asset quality measures.”
NAB says it is cautious about the state of the UK economy but believes it is on track to hit its target of £10bn of new lending by October 2011.
It also said it has seen evidence that businesses are feeling more bullish and showing a greater appetite for borrowing.
The bank reported earnings of $1.1bn (£700m) for the three months to June.
However, group revenue was slightly below the average for the first half, with NAB citing “ accounting volatility arising from increased credit spreads”.