Unexpected rise in profits for CIS

CO-OPERATIVE Financial Services has announced an increase in total profits in its interim results for the 28 weeks ended 23rd July. The Co-operative Bank and Co-operative Insurance Society...

CO-OPERATIVE Financial Services has announced an increase in total profits in its interim results for the 28 weeks ended 23rd July.
The Co-operative Bank and Co-operative Insurance Society (CIS) together made combined operating profits, before significant items, of &#163 85.8 million – an increase of &#163 17.4m (25 per cent) on the combined interim profits for 2004.
At CIS, a statement said general insurance profit was ahead of expectation. On a like for like basis, excluding significant items and short-term investment fluctuations, the profit figure was &#163 25.6m compared with &#163 2.7m in 2004.
Operating profit before significant items was &#163 33.7m compared to a loss of &#163 26.7m in 2004.
Total operating costs were reduced by nine per cent to &#163 229.8m (this excludes one-off costs for the modernisation programme of &#163 34.6m).
General insurance net earned premiums reduced to &#163 318.3m from &#163 356.2m in 2004, reflecting a conscious move to underwrite more profitable motor business in particular.
CIS&#039 life, pensions and unit trust new business was stable at &#163 76.5m, down just three per cent despite significant business change.
At the Co-operative Bank operating profit before bad debts increased by &#163 8.4m to &#163 103.5m, a nine per cent increase on last year.
Operating profit after bad debts was &#163 60.2m, &#163 5.5m lower than 2004 as bad debt charge increased by &#163 13.9m.
The Bank&#039s average retail customer deposits grew by &#163 396m to &#163 6,872m reflecting growth across both personal and corporate sectors.
Average personal sector balances of &#163 4,663m were &#163 237m higher than last year.
While customer retail lending balances increased by &#163 837m (13 per cent) to &#163 7,468m, reflecting growth in both mortgage and Corporate balances. Personal sector average lending also increased by &#163 613m (13 per cent) with the majority delivered through growth in mortgage balances.
David Anderson CFS Chief Executive said: "These results demonstrate that the CIS modernisation programme is starting to have a real impact on results, and that the Co-operative Bank can continue to grow income and operating profits in a tough market. Despite the growth in bad debts, which has affected all unsecured lenders, CFS has improved its return.
"Everything I have seen in my three months as Chief Executive re-inforces my conviction that there are enormous benefits yet to be realised by bringing our two financial services&#039 operations closer together.
"By continuing to emphasise and invest in the values and approach that underpin our co-operative difference, CFS will play an increasingly important and distinctive role within the UK financial services industry."

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