Co-op Bank results improve but 25,000 customers exit

STRUGGLING Co-op Bank saw its losses narrow 24pc to £135m in the first half of the year despite thousands of customers closing their accounts amid fears over its future.

The lender put itself up for sale earlier this year after reporting its fifth consecutive year in the red, only to fall back on a £700m cash injection from its hedge fund owners some months later. Uncertainty surrounding the process spooked some of the bank’s customers, with £400m of instant savings cash pulled and 25,000 customers closing their current accounts in the six months to June 30.

Deposits also fell by £1.5bn, with the group pinning the blame on the “customer reaction to the bank’s announcements of its sale and capital raise processes”, as well as wider influences such as low interest rates.

Despite jitters over its future, Liam Coleman, the chief executive, thanked those who had remained loyal and said he was “extremely grateful” to those that kept their accounts.

But the Manchester-based bank saw its workforce drop by around 900 during the period. Mr Coleman warned more cuts would come, although most of those impacted would be temporary staff or through natural attrition.

Meanwhile, the bank’s net interest margin, a key measure of performance, fell to 1.32pc during the period from 1.42pc a year ago. Its common equity tier one ratio – an important yardstick of the bank’s stability – fell to 9.8pc from 11pc in December, which it said was a result of the first-half loss, while operating costs fell 9.9pc to £200.8m.

Mr Coleman said the bank’s performance had been “resilient”, with its additional fundraising due to be completed by September.

The bank will continue using the Coop name despite the Co-operative Group’s stake dropping from 20pc to 1pc. The name is about “how we operate rather than ownership”, he said.