Co-op Bank eyes acquisitions as profit triples to £103m

Manchester-based Co-operative Bank announced that its underlying profit before tax more than tripled to £103.1 million in the nine months ended September 30, 2022.

And the Co-op Bank’s CEO Nick Slape told the Financial Times newspaper the Manchester lender is now eyeing up potential acquisitions and was “already in the space where we can go and acquire a prime mortgage book.”

The bank said its total income, which includes net interest income and other operating income, increased 40% to £362.8 million over the nine months.

Net interest income increased 41% to £329.1 million and net interest margin (NIM) increased by 35 basis points (bps) from 124bps to 159bps “reflecting improving deposit margins following increases in the base rate to 2.25%.”

Co-op Bank said: “As a result, we have further increased our expectations of full year to c.165bps.”

Operating expenditure increased 9% to £270.5 million “reflecting higher staff costs following actions taken by the bank to support colleagues with the rising cost of living, a decision taken on performance related pay made earlier than prior year and the impact of recruitment within our call centres.”

CEO Slape said: “I am pleased we have reached two very noteworthy milestones this quarter.

“Firstly, our statutory profit has already exceeded £100m for the first nine months of the year and secondly, but most significantly, we are now fully capital compliant including all buffers for the first time since 2013.

“Our turnaround progress is ahead of schedule, which reflects the strong financial performance and sustained focus on risk management over many years.

“The third quarter and subsequent period has been notable for the turbulence in financial markets, with high inflation and volatility in UK interest rates.

“This has increased the cost of living for our customers and we are working hard to ensure that they feel supported and can access the advice and services they need through our personal banking and SME dedicated financial support teams.

“For our colleagues, we have provided a one-off payment and annual salary increase which was announced earlier in the year.

“We have a low risk balance sheet with limited exposure to unsecured and corporate lending, and whilst we are conscious that customers will be maturing onto higher rates, we are currently seeing no signs of stress across our portfolio.

“We have delivered significant business momentum, and in light of this performance, have taken the decision to increase our investment in the business.

“This will centre on improving customer experience, upgrading our branch network, and increased funding of our external campaign, giving the bank a louder voice on matters that mean the most to our customers.

“I am proud of what we achieved so far in our 150th year and I would like to take the opportunity again to thank our colleagues and customers for their support.”