The Co-operative Bank has issued a trading update in which it reveals that profit for the second half of 2008 has continued to rise, despite difficult market conditions.
Compared with the same period of 2007, income has increased while costs and bad debt charges have declined.
The bank makes mention of investment writedowns at its wholesale business but says full-year results are expected to be favourable, reflecting the Co-op’s policy of funding customer lending from deposits and its cautious approach to lending.
During 2008, customer deposits and customer lending from the bank’s principal retail and corporate businesses rose by 20% and 16% respectively.
Meanwhile, parent company Co-operative Financial Services has strengthened the bank’s capital position with a £120 million injection of cash.
Exposure to unsecured lending has also been reduced to further strengthen the its balance sheet.
The Co-op Bank is expecting to be stung by an additional £10.5 million on its levy to the Financial Services Compensation Scheme in the years ahead and says this will be recognised in its financial statements for the year ended 10 January 2009.
Finally, the lender has published proposed board changes in relation to the completion of its merger with Britannia Building Society.
When finalised, the merger will create one of the largest financial services groups in the UK, with over nine million customers, 12,000 employees, 300 branches and 20 corporate banking centres.
Full-year results for Co-operative bank will be available on 2nd April.