Co-op Bank Q3 loss up 36% to £118m amid PPI charge

Manchester-based Co-operative Bank said on Thursday its third-quarter loss before tax increased 36% to £118.6 million, primarily reflecting a PPI (payment protection insurance) charge of £60 million.

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 2017.

Co-operative Bank said total income was down 2% to £286.8 million “driven by de-risking of the legacy portfolio.”

The bank enjoyed strong core mortgage growth with balances up 3.4% driven by £2.6 billion of new business completions and increased levels of customer retention.

Core income was stable at £285.2 million (3Q 18: £284.2m).

Co-operative Bank CEO Andrew Bester said: “We are continuing to make positive progress and delivering our plan in what is a challenging UK retail banking market, against ongoing economic uncertainty.

“We continue to put the needs of our customers first, making enhancements to our customer journeys, and this is reflected in a further increase in our current account NPS, remaining third in the UK.

“We have achieved ongoing growth in our mortgage book thanks to some agile pricing and strong broker relationships, supported by growth in both our Retail franchise and SME deposits.

“I am pleased with the progress we are making in simplifying and de-risking the Bank. Our capital position remains ahead of guidance, with a strong CET1 ratio.

“I am encouraged by the recent reduction in Total Capital Requirements as we continue the transformation of the Bank. 

“While we have incurred charges in respect of higher than expected PPI complaints in the third quarter our underlying performance is encouraging and many of the issues that are key to our development in future years are being addressed.

“Significant improvements to our digital proposition, progress towards the separation of our IT infrastructure from the Co-op Group, and continued investment in our distinct ethical brand have supported our resilient business performance this quarter.

“A market where consumers are seeking greener and ethical choices presents an opportunity for the Co-operative Bank.

“These actions will provide a platform for the Bank’s development in future years.”