Prudent approach allows lending rise at Co-op

THE Co-operative Bank said its prudent approach had secured a strong set of half-year figures and allowed it to increase customer lending by 12%.

The bank, which is now merged with the Britannia Building Society, said it had continued to take a “prudent and disciplined approach” to liquidity and funding.

It stressed it has a “very strong” retail deposit base with customer deposits higher than customer lending. It said this situation meant it had not been required to enter the markets at “disadvantageous terms”.

Pre-tax profit, which increased by £5.1m to £24.9m, was stated after inclusion of levies paid to the Financial Services Compensation Scheme (FSCS) of £2.2m. The figure also reflected restructuring costs of £12.5m and costs associated with the Britannia merger of £2.1m. 

The bank said its strong balance sheet position reflected its policy of funding lending from customer deposits. It said the recession had only had an impact on a “small number of counterparties in its corporate portfolio”.
 
Average customer deposits grew by 21% to £11.2bn across the retail and corporate customer base. Average customer lending balances in the same businesses grew by 12% £9.9bn reflecting growth in corporate and mortgage balances. 

In a statement the bank said: “The merger of Co-operative Financial Services, including the Co-operative Bank, with Britannia Building Society presents us with a truly exciting opportunity to change the face of financial services in the UK at a time when customers have lost confidence in shareholder and government owned banks.

“While others are scaling back, we are looking confidently to the future and exploring new opportunities, creating a unique member-owned, customer-led and ethically-guided business that can become a powerful and trusted force in financial services.”