The Co-operative Bank has reported widening losses during the third quarter of this year, as it became the latest in a long line of lenders to take a financial hit from the payment protection insurance (PPI) scandal.
The British bank reported losses before tax of £118.6m during the nine months to 30 September, deepening from £87m in the same period last year.
Net interest margin – a key measure of underlying profitability – also tumbled seven basis points to 1.76 per cent.
Half of the losses were due to a £60m charge from customer claims over the mis-selling of PPI.
A late surge in PPI claims before the deadline closed in August has inflicted huge charges on many of Britain’s largest banks.
In recent weeks, RBS, Llloyds Banking Group, Santander and a number of other major lenders reported significant PPI costs that have heavily impacted on their quarterly results.
The City’s watchdog, the Financial Conduct Authority (FCA), has reported that roughly £36bn in compensation has been paid out so far, with the typical payout amounting to £2,000.
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However, think tank New City Agenda has predicted that the total PPI bill could cost as much as £53bn.
The Co-op has also faced pressure from an increasingly competitive mortgage market, where a price war has eaten into profits in the banking sector.