Co-operative Bank profits boosted by rising interest rates

The Co-operative Bank has recorded pre-tax profits of £81.1m in its third quarter results posted to the stock market this morning.

The group’s total income for the period was £395.2m which includes income from net interest, an increase of 9% to the same nine month period last year (to 30 September).

Net interest income increased by 10% to £363.4m (3Q 22: £329.1m) and net interest margin (NIM) has risen by 23 basis points (bps) from 159bps to 182bps, with both benefitting from increases in the base rate.

It has been previously reported on TheBusinessDesk.com that the Co-operative Bank is up for sale, with suitors including private equity backed Shawbrook Bank and Spanish owned TSB both linked with a possible merger or outright bid for the Manchester headquartered financial services business.

Acknowledging the speculation the statement this morning said: “Following the Bank’s strong recovery and growth in the past three years, the Bank is exploring potential strategic opportunities, the assessment of which is currently at a preliminary stage. There is no guarantee that such discussions will result in any eventual transaction. In the meantime, the Bank remains committed to its strategy to continue to drive significant positive outcomes for all of our stakeholders.”

Co-operative Bank chief executive Nick Slape

Nick Slape, chief executive officer, said: “I am pleased to announce our profit before tax of £81.1m, with an underlying profit of £97.9m and statutory return on tangible equity of 12.3%, as we continue to manage credit quality effectively, with a stable NIM and strong deposit franchise.

“In the quarter, we acquired Sainsbury’s mortgage portfolio comprised of approximately 3,500 customers and c.£0.5bn of balances. This is our first portfolio acquisition in more than a decade, and highlights the Bank’s turnaround and focus on both organic and inorganic opportunities.

“Our mortgage and savings transformation programme continues at pace with mortgage originations now live on a new re-branded platform, “The Co-operative Bank for intermediaries”, as we start to see the benefits of our accelerated investment.”

“We have strong levels of capital and liquidity, with full year guidance unchanged across all key indicators.”