Co-operative Bank narrows losses

The Co-operative Bank narrowed its losses in the first half, but warned that profitability is under pressure in the competitive mortgage market.

The group posted a statutory loss before tax of £38.5 million for the six months to June 30, an improvement on the £39.5 million loss a year ago.

It also reported an underlying loss of £2.8 million, compared with a £11.2 million profit for the same period last year.

The bank said the losses were “favourable to expectations” and its priority was to return to profit as soon as possible.

Customer net interest margin was lower at 1.83%, compared with 2.08% this time last year, due to reductions in mortgage margins amid the competitive market.

Chief executive Andrew Bester said: “We’ve delivered a positive first-half financial performance that is ahead of expectations and, although loss-making overall, is near break-even on an underlying basis.

“We have seen margin headwinds this year so far, but our safe lending book provides resilience in what is a challenging retail banking market and an ongoing uncertain political and economic backdrop.”

The bank also updated some of its expectations for the year, saying customer net interest margin will reduce further in 2019 to about 1.7%, compared with previous guidance of up to 1.8%.

Reductions in operating expenditure will be ahead of previous expectations, while efficiencies in the investment portfolio mean total cash spend will be lower than anticipated at between £140 million and £150 million.