Co-op Bank narrows loss to £38.5m, cautions on future

Manchester-based Co-operative Bank plc said on Thursday it narrowed its statutory loss for the six months to June 30 to £38.5 million from a £39.5 million loss for the same period of 2018.

The self-styled “ethical bank” continues to recover from a number of scandals that resulted in a rescue by a group of hedge funds.

Underlying H1 loss was £2.8 million, compared to an £11.2 million profit in the first half of last year.

Core income grew 1% year on year with a reduction in customer net interest margin to 1.83% “due to reductions in mortgage margins as new business pricing remains competitive …”

Co-operative Bank said: “Our priority remains to return the bank to a sustainable profit as soon as possible.”

However, Co-operative Bank cautioned: “We expect to see continued growth in core customer assets and liabilities, but to a lesser extent than previously thought as we look to balance the trade-off between volume of new business and margin in today’s competitive environment.”

Co-operative Bank CEO Andrew Bester said: “We’ve delivered a positive first half financial performance that is ahead of expectations, and although loss-making overall, is near break-even on an underlying basis.

“We have seen margin headwinds this year so far, but our safe lending book provides resilience in what is a challenging retail banking market and an ongoing uncertain political and economic backdrop.

“Overall, our business has proved resilient, and as a result we have upgraded our expectations in relation to our CET1 and cost:income ratios for the remainder of the year.

“We are making good progress against our transformation strategy, including investing in our digital capability, the separation of our IT systems from the Co-operative Group and commencing our mortgage and savings re-platforming.

“The successful issuance of £200m Tier 2 debt in April, with strong support from our investor base was a significant step towards delivering our commitment to achieve MREL compliance within the industry-wide timelines.

“I see our SME banking business as a key area for future growth and we were delighted to win £15m of funding from the Banking Competition Remedies, which will enable us to accelerate improvements in our product and digital propositions for SME customers.

“We were pleased to be recognised with the award for ‘Most Trusted Mainstream Bank’ from readers of Moneywise and we will continue to enhance our customer journeys, digital offer, and build on our award-winning customer experience.

“At a time when consumers are increasingly seeking ethical choices, our brand resonates.

“We plan to further develop ourmulti-media advertising campaign ‘For People With Purpose’ launched in May, reinforcing the co-operative values and ethics that we know are important to our customers.

“During the months ahead, we will build on our achievements, focusing on cost reduction, franchise growth and investing for the future to deliver a sustainable, profitable Co-operative Bank.”

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