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Profits rise fourfold at ‘nimble’ Co-op Bank

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The rising cost of borrowing has boosted earnings at Co-operative Bank, which recorded a fourfold rise in profits last year.

The bank, which is no longer part of the Co-operative Group, said that pre-tax profits surged in 2022 to £132.6 million, up from £31.1 million in 2021.

It is the second consecutive year the bank has turned a profit after it was rescued by a group of hedge funds in 2017. It had been on the brink of collapse after a £1.5 billion shortfall was discovered in its balance sheet.

The bank’s boss said the company had benefited from being more “nimble” than the UK’s five biggest banks as it continued its prolonged turnaround.

Since December 2021, Britain has seen the fastest tightening of interest rates in the 26-year history of the Bank of England’s monetary policy committee, with the cost of borrowing rising from 0.1 per cent to its highest level since the financial crisis at 4 per cent.

The Manchester-based lender passes about 60 per cent of every interest rate rise to its savings customers, according to Nick Slape, the chief executive.

“The big five banks have got huge amounts of liquidity because of their market share,” Slape told the Press Association.

“I am at the whim of the HSBCs and the Lloydses: if they wanted to write mortgages at really tight margins then they could do that. They need to feed their machines.

“It is something we have always had to contend with. But we can actually be a lot more nimble, we can nip and tuck. We can pull certain products if we need to, if it’s not competitive.”

Co-op Bank recorded a 41 per cent rise in its net interest income to £458.3 million last year, up from £323.9 million the year before owing to higher earnings from the average loan.

The lender has set aside a net impairment charge of £6.4 million over the year to cover its forecast credit losses.

Slape, 60, who has led the bank since 2020, said in the company’s statement yesterday that the macroeconomic environment “remains challenging”. He said: “We are focused on delivering both growth and attractive, sustainable returns for our shareholders.”

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