HALF-YEAR profits of the Co-operative Bank were hit by rising costs as the group increased investment in its mortgage and personal loan division.
The bank, now part of the Co-operative Financial Services group, made £70 million in the six months to July 24, against £75 million last time. Costs rose 5 per cent to nearly £170 million. The bank’s net lending figure for the period was £2 billion — 46 per cent higher than last year.
Mervyn Pedelty, chief executive, said: “I am delighted to have achieved significant growth in lending, without having to compromise on our strategy of being a responsible lender.”
He said that the bank had “deliberately avoided the high loan-to-value sector of the mortgage market” and that the bank’s average loan-to- value ratio was 53 per cent.
The bank reduced its provisions against bad debts despite increasing lending. Provisions for the six-month period were £31.2 million, a fall of 8 per cent on last time.
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The bank said that the increased costs of £8.3 million were caused by hiring more customer service staff.
Introducing Chip and PIN security measures and implementation of the Basel II capital requirements also added to costs. Money also went on integrating CIS and the bank to form Co-operative Financial Services.
The integration of the two parts of the business is expected to lead to cost savings in the longer term.