Co-op Bank at ‘turning point’ as it posts third straight quarter of profits for first time after a decade of losses
- The bank reported pre-tax profit of £28.5m for the nine months to September
- That compares to £68.1m loss in the same period last year
- Bank still on the lookout for acquisitions, despite failure to merge with TSB
The Co-op Bank’s boss hailed 2021 as a ‘turning point’ year after a decade of losses as the lender posted a third consecutive quarter of profits.
Chief executive Nick Slape also suggested that the bank is still on the lookout for acquisitions, a week after it revealed that its approach to merge with high street rival TSB had not led anywhere.
The Co-op reported pre-tax profit of £28.5million for the nine months to September, compared to a £68.1million loss in the same period in 2020 as Britain’s economy rebounds.
Turnaround: The Co-op Bank is set to post its first annual profit after a decade of losses
The reversal of fortunes comes as the bank increased gross mortgage lending by £1.1billion in the third quarter, taking the total for the year to £4.1billion.
Net residential lending stood at £2.2billion, an increase of 13 per cent compared to last year, with the bank saying it had a ‘strong pipeline’ as it approaches the end of the year.
The Co-op did not release any further provisions it had made to cover loans that may not get repaid, but said the level of defaults remained low as the economy recovers from the pandemic.
‘Turning point’: Chief executive Nick Slape
Customers have continued to pay down their credit card balances and put cash aside, with deposits remaining at high levels despite having stabilised in the quarter after the saving frenzy seen during lockdowns.
The Co-op’s rebound comes as it makes further progress with its turnaround strategy, which saw it shut down 18 branches and cut 350 jobs last year, resulting in £10million worth of savings.
The results put the Co-op on track to meet or exceed guidance expectations for 2021, according to Slape.
The bank, which was never actually run as a co-op, is owned by hedge funds, which took control in 2014 after it emerged it had a £1.5billion hole in its finances.
In April this year, two US private equity giants became major shareholders after buying a stake of around 10 per cent from hedge fund Blue Mountain Capital.
The move by JC Flowers and Bain Capital Credit was seen as possibly leading to a consolidation of the UK’s mid-sized banks.
The Co-op did recently expressed interest in buying TSB, but that that did not lead to any discussions, although the bank is still on the lookout for other deals.
‘We have an organic plan that works,’ Slape told the Evening Standard. ‘But we are looking at opportunities.’
It comes as rival Metro Bank revealed yesterday that it was approached by US buyout giant Carlyle, though no formal offer has yet been received.
The 8 per cent surcharge on bank profits is being cut to 3 per cent from 2023 to help level the playing field for the City when corporation tax goes up. The rate of corporation tax will rise from 19 per cent now to 25 per cent from April 2023.