Co-op’s banking arm holds steady

THE Co-op’s banking arm hailed a “steady” financial performance in 2011, with pre-tax profits after significant items increasing to £54.2m (2010: £48.9m).

The increased profit was made after significant charges of £143.3m, up from £59.8m in 2010 due largely to a one-off charge of £90m set aside to deal with the mis-selling of payment protection insurance. However, impairment levels on loans made by the bank increased by 19.9%.

Co-operative Banking Group’s acting chief executive Barry Tootell said: “2011 has been another successful year for the Bank, despite the challenging market conditions.

“In these times of trouble, the bank has provided a safe haven for our customers, a true relationship bank.”

During the year, the bank was named as preferred bidder by Lloyds Banking Group for the 632 banks it had to dispose of under state aid rules following its merger with the bailed out Bank of Scotland.

The bid is still in transition, though, with the Co-operative reportedly having to improve its own regulatory regime before the deal completes. Despite this, Tootall said that its existing customers effectively had access to 245 new bank branches after the Co-operative introduced new banking services to the Britannia Building Society outlets it gained through a recent merger.

Tootall said it offered “a dramatic extension to our network”.

The size of its loan book to retail customers dropped to £16.2bn (£17.3bn), which it blamed on the economic environment and a greater aversion from customers to unsecured loans.

Its corporate banking arm also posted an operating loss of £36.4m (2010: £2.5m). This is partly due to the fact that impairment losses from existing loans grew to £87.4m (£31.4m).

However, the overall operating result for its corporate and business banking operations was a profit of £14.5m (£54.7m).