CO-OPERATIVE Financial Services saw pre-tax profit rise 5.5 per cent last year to £53.3m, with the bank attributing a steep drop in costs to synergies after its 2009 merger with Britannia.
But earnings were dented by a sharp rise in claims due to weather-related chaos early last year, with the bank estimating a claims cost of £7m as a result.
Overall operating costs fell 36.8 per cent to £338m and the company said that it is on track to meet its target of reducing costs following its acquisitions.
Impairments fell dramatically by 41.1 per cent to a cost of £42m last year, which the Co-op attributed to “improved arrears collection processes and tightening of credit-risk scorecards”.
The bank reported that its core tier one capital ratio rose to 9.6 per cent – above the Basel III minimum requirements of seven per cent.
The insurance business was hit by snow-related claims “following the exceptionally cold conditions in the early months of 2010, increasing the cost of claims by 9.7 per cent on 2009.
Overall, however, insurance sales grew, with general insurance seeing net earned premiums rise 7.1 per cent.
The vast majority of the bank’s earnings came from its corporate and markets business line, where operating profits soared by 116.4 per cent to £80.7m.
The bank reported that its newly founded asset management business, set up to invest money in its pensions and insurance funds “is in a break-even position”.
The annual results released yesterday follow the revelation in Monday’s City A.M. that the Co-op has been chosen by the government to head up the administration of the Reclaim Fund, an asset manager for dormant bank accounts that will fund the Big Society Bank.