Co-op Bank seeks to restore its ‘ethical’ brand

Manchester-based Co-operative Bank plc on Tuesday announced an update on its trading performance so far in 2018 as the self-styled “ethical bank” continues to recover from a number of scandals that resulted in a rescue by a group of hedge funds.

In June, former CEO Liam Coleman decided to step down after less than 18 months during which he oversaw the bank’s rescue and recapitalisation.

In July, Co-operative Bank announced the appointment of former Lloyds Banking Group executive Andrew Bester as its new CEO.

In its trading update, Co-operative Bank  said: “The bank has made progress and is reporting a modest operating profit of £14.3m, which is a £39.6m improvement on the same period in 2017.

“This improvement has been enabled by a 14% reduction in operating expenditure, driven by the continued focus on cost efficiency, and an improvement in Net Interest Margin (NIM) following the restructuring and recapitalisation in September 2017.

“The bank is reporting a loss before tax of £87.0m at the end of Q3, a £20.7m improvement compared to a 2017 Q3 loss before tax excluding the impact of the restructuring and recapitalisation of £107.7m.

“The bank remains well capitalised with a Common Equity Tier 1 ratio (CET1 ratio) of 22.7% at the end of Q3.

“The bank has maintained its strong mortgage originations in 2018 and has reported its highest quarter of completions for 5 years and is on course to exceed the £3.2bn reported in 2017 …”

CEO Andrew Bester said: “We will focus our energy on a multi-year transformation to fully restore our leading position as an ethical bank.

“Key to our future will be investing in digital capabilities for our customers.

“This is the first time the bank has published a quarterly update since Q3 2016 following the recapitalisation in September 2017.

“The bank has had a positive third quarter, and despite continued competition in the market, our mortgage originations have remained strong with the highest quarter of completions in five years.

“We have launched new propositions to better support first time buyers, including help to buy.

“Margins are stable with NIM improving year on year, and we achieved a small operating profit supported by strong cost discipline.

“Our branch and contact centre teams continue to provide strong service that we know is valued by our customers and we will seek to preserve this as we also develop the digital services that support their everyday banking needs.

“Re-energising our ethical brand will be a priority as we move into 2019 …”