Strong CFS defies banking gloom

THE Co-op’s financial arm has continued to defy market trends recording a leap in banking profits, a cut in bad debt and increased mortgage lending.

Co-operative Financial Services (CFS), which handles banking, insurance and mortgages, said it had also seen a “dramatic increase” in levels of new business across its operation, “during the dislocation of markets created by the credit crunch”.

During the year to January 10 corporate deposits grew by 27%, mortgage balances increased by 24% and home insurance sales jumped 29%.

But the group’s pre-tax shareholder profit – which takes into account figures across the divisions – dropped 5% to £147m, dented by a poorer performance in insurance linked to investment write-downs of £26m.

Banking profits jumped 70% to £85.6m, with a strong performance in both retail and corporate, and bad debts fell 5% to £96.8m.

Chief executive David Anderson said the business had flourished because it measures success in a “much broader and deeper way than those competitors whose primary goal is to maximise profit for their shareholders”.

Mr Anderson told TheBusinessDesk: “I think people have tended to use us because we’ve been seen as a solid business that hasn’t needed government support and that has traditional values that are more important in a recession.”

He added that CFS had more flexibility than its competitors because it could draw on healthy deposits, rather than rely on the international money markets which have seized up.

Later this month the CFS is recommending shareholders approve a planned merger with Britannia Building Society. Mr Anderson is due to step down following the merger.

He said: “There can only be one chief executive. I’m fully supportive of the merger, I’ve been heavily involved in making that possible but both Neville [Richardson] and I can’t do the job. That’s fine. I’ll support them as long as they want me to be around.”

CFS has 5.5 million customers and employs 8,000 staff. It has £38bn of assets under management across its retail and corporate business areas.