Co-op Bank profits shrink as it hails 'landmark' 2024 ahead of Coventry merger
The Co-operative Bank has reported a drop in profits for the first half of the year, but said it was a "landmark" period as it prepares to return to mutual ownership.
The Co-operative Bank has reported a decrease in profits but has labelled 2024 as a "landmark" year as it plans to return to mutual ownership through its merger with Coventry Building Society. The bank revealed that it had lower income and higher costs, which negatively impacted its half-year earnings.
It announced a pre-tax profit of £24.2 million for the first six months of the year, less than half of the £61.8 million profit made during the same period last year. This comes as the effect of higher borrowing costs begins to fade for UK's high street banks, which had previously benefited from charging more for loans.
The Co-op Bank also noted that its business expenses rose by 6% compared to the previous year, partly due to staff wage increases and higher levels of customer fraud remediation, which doubled to £12.5 million. The bank highlighted a slight increase in the number of borrowers falling behind on repayments due to higher living costs and interest rates, but emphasised that the level remained low.
Meanwhile, the lender stated that 2024 would be a "landmark year" as it celebrated the completion of its transformation plan which has taken several years. The turnaround began in 2019 and involved significant cost-cutting measures, including staff reductions, a £100 million IT simplification programme, and a return to profitability.
The bank anticipates completing a £780 million deal to be acquired by rival lender Coventry Building Society in early 2025.
However, the amalgamation of the two banking entities could take several years as part of a significant operation that will establish a group with millions of customers and approximately £89 billion in assets.
This implies that Co-op Bank will revert to a mutual structure, signifying it is owned by individual members rather than shareholders and investors like most UK banks.
Co-op Bank assured its customers that they will "not see any immediate changes as we continue to operate separately" until the integration is finalised.
"The combined business will be a significantly larger organisation and joining the bank and the society together brings more products, services and value to both existing and new customers," it stated.
