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 £ 85.8 million – an increase of £ 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 £ 25.6m compared with £ 2.7m in 2004.
Operating profit before significant items was £ 33.7m compared to a loss of £ 26.7m in 2004.
Total operating costs were reduced by nine per cent to £ 229.8m (this excludes one-off costs for the modernisation programme of £ 34.6m).
General insurance net earned premiums reduced to £ 318.3m from £ 356.2m in 2004, reflecting a conscious move to underwrite more profitable motor business in particular.
CIS' life, pensions and unit trust new business was stable at £ 76.5m, down just three per cent despite significant business change.
At the Co-operative Bank operating profit before bad debts increased by £ 8.4m to £ 103.5m, a nine per cent increase on last year.
Operating profit after bad debts was £ 60.2m, £ 5.5m lower than 2004 as bad debt charge increased by £ 13.9m.
The Bank's average retail customer deposits grew by £ 396m to £ 6,872m reflecting growth across both personal and corporate sectors.
Average personal sector balances of £ 4,663m were £ 237m higher than last year.
While customer retail lending balances increased by £ 837m (13 per cent) to £ 7,468m, reflecting growth in both mortgage and Corporate balances. Personal sector average lending also increased by £ 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' 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."