The Co-operative Bank’s interim report shows the bank has made a £75.8m loss for the first six months ended 30 June, and it lost over 28,000 current accounts.
However, the Bank said it is stronger in terms of capital and liquidity, with a CET1 ratio of 11.5%, following additional capital raising of £400m in May.
The net interest margin, which examines how successful the Bank’s investment decisions were compared to its debt situations, improved from 1.02% in the first half of 2013 to 1.17%, in spite of lower bank balances. The Bank’s core net interest margin, which excludes the impact of acquisitions, also increased from 1.55% for the first half of 2013 to 1.58% for the first half of 2014.
During the period core customer assets reduced by 8.5% from £17.6bn last year to £16.2bn. The core net interest income also fell by 6.6%, from £236.5m for the first half of 2013 to £220.9m.
Commenting on the results, chief executive Niall Booker, said the Bank’s transition to a viable and profitable business, which generates capital in the long-term would require significant change at operational and cultural level.
He said: “Considering the scale of the challenge we faced a year ago we are encouraged by the progress made to ensure the stability of the Bank. By the measures of capital and liquidity the Bank is considerably stronger than it was a year ago. We are ahead of schedule in the disposal of non-core assets and have improved governance, particularly at board level. However, the issues we continue to face in building a sustainable business are deep rooted and there remains much to be done.”
According to Mr Booker, and despite the loss of 28,199 current accounts, more people switched into the Bank than in the second half of 2013. “Although we have also seen an increase in the number of people switching out of the Bank, the net numbers remain small relative to our total number of current account customers whose continuing loyalty is deeply appreciated. Recent trends suggest this net outflow of retail customers has slowed,” he explained.
In June, the Bank launched an Ethical Policy Poll to consult consumers on renewing the Bank’s ethical policy. Over 73,000 customers and staff responded to the poll, the results of which will be published in the autumn.
“Over the second half of 2014, we are also planning to re-invest in the brand and its distinctiveness in the market as we continue to focus on restoring customers’ confidence and trust,” added Mr Booker.
The Bank, of which the Co-operative Group owns a stake just over 20%, aims to continue to invest in digital platform and has also introduced its first banking app in 2014, which has been downloaded by 400,000 customers.
The interim report also reveals the Bank plans to simplify the business and close a further 25 branches in the fourth quarter of 2014, while 46 branches have already been closed this year. Permanent full-time staff numbers have fallen by 21% on last year to 5,860.