Rising interest rates boost Co-operative Bank profits
Manchester’s Co-operative Bank has reported a strong set of financial figures this morning as it prepares to take the next step in taking over Sainsbury’s Bank loan book.
The bank’s profits soared largely due to growth in new mortgage business volumes and remains heavily reliant on interest income from its mortgage portfolio.
Total income, which includes net interest income and other operating income, increased by 38% in comparison to the twelve months ended 31 December 2021 to £499.4m (FY 21: £361.5m).
Net interest income has increased by 41% to £458.3m (FY 21: £323.9m), reflecting improving deposit margins following increases in the base rate to 3.5%.
Chief executive Nick Slape said: “I am extremely proud of what we have achieved during our 150th year. The Bank has not only delivered a significant improvement in profitability to £132.6m (FY 21: £31.1m), but has also achieved several notable milestones, such as the successful issuance of £250m of senior unsecured debt in March 2022, full compliance with its capital requirements including all buffers one year ahead of plan and the de-risking of the Pace defined benefit pension scheme.”
He said an IT simplification programme is “progressing well” and will launch two new savings products, and will move mortgage servicing inhouse this year.
In a comprehensive risk analysis of future prospects the bank also re-iterated its commitment to co-operative values and ESG issues, despite no longer sharing ownership with the Co-operative group. But there was no assessment of the prospects of acquiring the Sainsbury’s Bank loan book, in line with a ‘no comment’ position recently.
Co-operative was named the UK’s best ESG-rated high street bank with a market-leading score of 8.3 from Sustainalytics, an independent provider of ESG and corporate governance ratings. MSCI also rated the bank highly with am upgraded AAA score. Co-operative Bank was also awarded the Most Ethical Bank – UK 2022 by CFI.