In spite of strong mortgage growth, the Co-operative Bank has seen loses increase for the three months to 30 September. The bank posted pre-tax loss of £118.6m, compared to an £87m loss the previous year. The results were impacted by the costs of separating its IT infrastructure from that of the Co-op Group and higher than expected PPI complaints during this period.
Despite no longer being owned by a co-operative, the Bank was allowed to retain its name after agreeing with apex body Co-operatives UK to continue to support the movement and reflect its ethical values. The Co-operative Bank is investing more than £1.3m in The Hive, which has now helped over 642 co-operative businesses across the UK.
The bank witnessed strong core mortgage growth with balances up 3.4% driven by £2.6bn of new business completions and increased levels of customer retention. Its core income stayed stable at £285.2m while its total income was down 2% to £286.8m, which it attributed to de-risking of its legacy portfolio.
A surge in complaints related to payment protection insurance mis-selling claims determined the bank to allocate £55m-£75m to deal with the greater volume of complaints and enquiries than expected in the final month prior to the complaint deadline.
The management worked to reduce costs but continued to invest in brand marketing, which meant that the bank’s operating expenditure stayed flat at £281.3m, from £280.2m in the previous year.
Chief executive Andrew Bester said the bank continued to make positive progress against on-going economic uncertainty.
“We continue to put the needs of our customers first, making enhancements to our customer journeys, and this is reflected in a further increase in our current account NPS, remaining third in the UK. We have achieved on-going growth in our mortgage book thanks to some agile pricing and strong broker relationships, supported by growth in both our Retail franchise and SME deposits. I am pleased with the progress we are making in simplifying and de-risking the bank. Our capital position remains ahead of guidance, with a strong CET1 ratio. I am encouraged by the recent reduction in Total Capital Requirements as we continue the transformation of the bank.
“While we have incurred charges in respect of higher than expected PPI complaints in the third quarter our underlying performance is encouraging and many of the issues that are key to our development in future years are being addressed. Significant improvements to our digital proposition, progress towards the separation of our IT infrastructure from the Co-op Group, and continued investment in our distinct ethical brand have supported our resilient business performance this quarter. A market where consumers are seeking greener and ethical choices presents an opportunity for the Co-operative Bank. These actions will provide a platform for the Bank’s development in future years.”