Progress under way
Co-op making progress as loss widens to £610m
The bank, which almost collapsed in 2013, reported a near-doubling of losses to £610 million (2014: £264m) as it shed assets and saw costs related to mis-selling rise to £193m.
Niall Booker, chief executive, said: “In 2015 we have been successful in improving capital resilience, reducing costs and strengthening the performance of the core bank and the expected widening of our financial loss compared with 2014, due to legacy issues we have known about and highlighted for some time, should not distract from the considerable progress made in turning the Bank around.
“The work done in de-risking and simplifying the bank means the business is much stronger than a year ago and, in particular, the continued strengthening of the performance of our retail franchise is encouraging for the future. Whilst the Bank as a whole will report a loss before tax in 2016 and 2017, we expect a return to operating profitability in the Core Bank before the end of 2017.
“Since the Bank of England’s stress tests in December 2014, we have reduced non-core assets by almost half, raised £250m of Tier 2 capital, and we have met our commitment to the regulator for CET1 ratio and RWAs for 2015.
“These actions have considerably strengthened the Bank’s capital resilience but the impact of prolonged lower interest rates, increased conduct risk charges and market volatility means that the Bank’s plan now incorporates retaining the Optimum portfolio for the life of the plan although we may make earlier disposals, subject to market conditions.
“Accordingly the Bank now forecasts that it will meet regulatory stressed capital requirements in 2020, although this date could get pushed out further if we meet the profile of MREL issuance preferred by the PRA and BoE which is earlier than our current plan.
“As expected, the headline numbers today show the continued impact of legacy issues on our financial performance including losses on asset sales, fair value amortisation, strategic and remediation project expenditure, and the industry wide issue of increased conduct risk provisions.
“As we have said previously, in the latter part of the plan we expect the impact of historic issues to begin to materially reduce. The introduction of more competitive products; a doubling of mortgage completions year on year; clear stability in current account numbers and improved brand performance and customer relationship scores in 2015 provide good reasons to be optimistic about the future and we will be investing further in transforming the retail business in the year ahead.
“There is still considerable work required to fully implement the Updated Plan but we remain positive that we are gradually developing a more resilient bank, distinguished in the market by our values and ethics that can create value for all our stakeholders over time.”