"We have achieved ongoing growth in our mortgage book thanks to some agile pricing and strong broker relationships"
Co-Operative Bank has reported strong mortgage growth in Q3 with balances up 3.4% driven by £2.6bn of new business completions and increased levels of customer retention.
The Bank reported a 'stable' core income of £285.2m over the quarter but saw losses before tax rise 36% to £118.6m after a further PPI charge of £60m.
In September the Bank announced that it expected a further PPI provision of £55m-£75m to be required in light of substantially greater volumes of complaints and enquiries than expected in the final month prior to the complaint deadline.
Co-op estimates that it received approximately 15% of its total volume of complaints in the week leading up to the deadline and says the high volume means processing is still ongoing and it will not know the final cost of PPI remediation until the first half of 2020.
Chief executive, Andrew Bester, said: “We are continuing to make positive progress and delivering our plan in what is a challenging UK retail banking market, against ongoing economic uncertainty. We continue to put the needs of our customers first, making enhancements to our customer journeys, and this is reflected in a further increase in our current account NPS, remaining third in the UK. We have achieved ongoing growth in our mortgage book thanks to some agile pricing and strong broker relationships, supported by growth in both our Retail franchise and SME deposits. I am pleased with the progress we are making in simplifying and de-risking the Bank. Our capital position remains ahead of guidance, with a strong CET1 ratio. I am encouraged by the recent reduction in Total Capital Requirements as we continue the transformation of the Bank.
“While we have incurred charges in respect of higher than expected PPI complaints in the third quarter our underlying performance is encouraging and many of the issues that are key to our development in future years are being addressed. Significant improvements to our digital proposition, progress towards the separation of our IT infrastructure from the Co-op Group, and continued investment in our distinct ethical brand have supported our resilient business performance this quarter. A market where consumers are seeking greener and ethical choices presents an opportunity for the Co-operative Bank. These actions will provide a platform for the Bank’s development in future years.”