Clydesdale Bank confirmed another £450 million in payment protection insurance charges and revealed plans to slash costs further after its recent stock market flotation.
The Glasgow-based lender, which was spun off from former owner National Australia Bank (NAB) in February, has put by the extra payment protection insurance (PPI) charge as it expects a rush ahead of the deadline for complaints in 2018.
But the group said it was taking only £44 million of the PPI bill, which was first disclosed by NAB earlier this month, thanks to £1.7 billion that regulators had required NAB to set aside before the demerger to cover issues such as PPI.
Clydesdale - now officially known as CYBG as it also includes Yorkshire Bank - reported a 4.2% fall in u nderlying earnings to £107 million in the six months to the end of March.
Net interest income rose 2.5% to £400 million in the half-year.
The group, which has 274 retail branches and 7,268 staff, said it had trimmed costs to £353 million in the first half after announcing plans to axe 26 branches nationwide and cut jobs.
It said about 150 senior staff would also leave over the next few months, after launching a voluntary redundancy scheme, while it said it would continue to look at ways to reduce costs further.
It added it was on track to see full-year costs of £730 million - "well below" the £762 million previously expected.
It saw c ustomer lending grow 2.8% over the first half, while deposits were up 4.6%.
Mortgage balances rose by 4.9% as it was boosted by "very strong" buy-to-let borrowing ahead of last month's stamp duty rise.
David Duffy, chief executive of CYBG, said: " I am very pleased to report good progress on all fronts in our first set of results as we execute our strategy as an independent company."
CYBG's shares were worth 180p when it floated in February, but have since risen to around 245p each and were up another 4% after the interim results.