Profit up 70% at Co-operative Bank

by Gill Montia

Story link: Profit up 70% at Co-operative Bank

Co-operative Financial Services (CFS) has reported that its banking division posted a 70% rise in underlying profit in 2008.

Underlying earnings increased to £85.6 million in the year to 10th January, up from £50.4 million in the previous twelve months.

CFS accounted for the impressive result by referring to its “cautious and responsible” approach to business.

This, together with an ethical stance, gave Co-operative Bank and its Internet brand Smile a “safe haven” status during the financial turmoil of last year, resulting in a 17% rise in retail deposits and an increase of almost 25% in mortgage balances.

However, writedowns on investments at the banking division rose by nearly 60% year-on-year, to £50.7 million.

In addition, the balance sheet of the group’s general insurance business had to accommodate a £26 million hit which, together with certain one off insurance claims, dragged overall profit down by 2.8% in 2008, to £148.7 million.

CFS is in the process of a merger with Britannia Building Society and says it plans to increase its mortgage lending this year, cautiously.