Co-op Bank confident, despite current uncertain macroeconomic environment
Income and profits increased at the Manchester-based Co-operative Bank in the first quarter period to March 31, 2023, it revealed today (April 28).
Total income rose from £110.2m in the corresponding period last year, to £131.1m, supported by improving deposit margins following the increases in the base rate to 4.25%, while pre-tax profits of £30.6m were slightly ahead of last year’s £30.5m figure.
Chief executive, Nick Slape, said he was pleased with the 28% improvement in underlying profit to £35.1m.
The bank said it has a surplus liquidity position and low cost funding model, and has made progress on its transformation programme including the insourcing of around 400 Capita staff.
However, operating expenditure increased by 20% to £101.5m, up from £84.7m a year ago, mainly driven by an increase in staff costs following cost of living payments and salary increases during 2022 as well as higher recruitment during 2022.
The bank also announced a tax credit of £14.9m driven by further deferred tax asset recognition in the period, partially offset by the utilisation of tax losses against taxable profits.
It said it has a surplus liquidity position and low cost funding model, which includes an increase in retail secured balances to £19.9bn (FY 22: £19.6bn) with a mortgage pipeline of £1.2bn. Net mortgage lending in the quarter was £272m.
Deposit balances remained stable over the period.
The bank launched a new savings product, Fixed Rate Cash ISA, following the launch of two other savings products in 2022 on the Bank’s mainframe.
Chief executive, Nick Slape, said: “In the first three months of 2023 we have again delivered a strong business performance with a statutory profit before tax of £30.6m and a statutory return on tangible equity of 15.1%. In particular, I am pleased with the 28% improvement in underlying profit in the period to £35.1m.
“I remain confident that the bank is well positioned in the current uncertain macroeconomic environment, with surplus capital and liquidity and a low-risk simple balance sheet.
“In the first quarter, we completed the insourcing of Capita colleagues and are now focused on migrating customers to our new savings platform. Our unique position as the leading ethical bank in the UK, combined with targeted investment to transform and simplify our operations, will enable us to continue to make it easier for our customers to interact with us, whilst delivering sustainable returns for our shareholders.”
