TIDM93RD TIDMTTM
RNS Number : 7078S
Co-Operative Bank Holdings Ltd(The)
08 November 2023
Nick Slape (CEO) and Louise Britnell (CFO) will host an audio conference on 8 November 2023
at 9am (UK time) to present the third quarter trading update for the nine months ended 30
September 2023 followed by a Q&A session.
To access the call please visit https://www.co-operativebank.co.uk/about-us/investor-relations
/
Additional materials are also available at this address.
BASIS OF PRESENTATION
The Co-operative Bank Holdings Limited is the immediate parent company of The Co-operative
Bank Finance p.l.c. and the ultimate parent company of The Co-operative Bank p.l.c. In the
following pages the term 'Group' refers to The Co-operative Bank Holdings Limited and its
subsidiaries. The term 'Finance Group' refers to The Co-operative Bank Finance p.l.c. and
its subsidiaries. The term 'Bank' refers to The Co-operative Bank p.l.c. and its subsidiaries
which are consolidated within the Finance Group and then ultimately the Group. Unless otherwise
stated, information presented for the Group equally applies to the Bank and the Finance Group.
Underlying basis: The statutory results are adjusted to remove certain items that do not
promote an understanding of historical or future trends of earnings or cash flows, which therefore
allows a more meaningful comparison of the Group's underlying performance.
Alternative performance measures: The Group uses a number of alternative performance measures,
including underlying profit or loss, in the discussion of its business performance and financial
position.
Third Quarter Trading Update 2023
8 November 2023
The Co-operative Bank ('the Bank') is pleased to provide an
update on its performance in the nine months ended 30 September
2023.
-- Profit before tax of GBP81.1m and underlying profit of GBP97.9m; NIM stable at 182bps
-- Strong liquidity position; Pillar 1 LCR spot position 196.1%,
12 month rolling average LCR 222.4%
-- Robust customer credit quality; Accounts greater than 3 months in arrears remain low
-- Strong capital position; Surplus of GBP290m to CET1 minimum requirements
-- Significant progress on our transformation plan
Nick Slape, Chief Executive Officer, said:
" I am pleased to announce our profit before tax of GBP81.1m,
with an underlying profit of GBP97.9m and statutory return on
tangible equity of 12.3%, as we continue to manage credit quality
effectively, with a stable NIM and strong deposit franchise.
In the quarter, we acquired Sainsbury's mortgage portfolio
comprised of approximately 3,500 customers and c.GBP0.5bn of
balances. This is our first portfolio acquisition in more than a
decade, and highlights the Bank's turnaround and focus on both
organic and inorganic opportunities.
Our mortgage and savings transformation programme continues at
pace with mortgage originations now live on a new re-branded
platform, "The Co-operative Bank for intermediaries", as we start
to see the benefits of our accelerated investment.
We are committed to our customers' financial well-being in this
uncertain economic environment and, as a recent signatory to the
Government's Mortgage Charter, we offer support and advice when
needed including via a dedicated platform on our website.
We have strong levels of capital and liquidity, with full year
guidance unchanged across all key indicators."
FINANCIAL PERFORMANCE UPDATE
INCOME STATEMENT (GBPm)
Nine months ended 30 September
--------------------------------
2023 2022
Net interest income 363.4 329.1
Other operating income 31.8 33.7
==================================== =============== ===============
Total income 395.2 362.8
Operating expenditure (316.2) (270.5)
Impairment credit / (charge) 0.6 (1.3)
Non-operating income 1.5 11.8
==================================== =============== ===============
Profit before tax 81.1 102.8
Taxation credit / (charge) 48.1 (34.6)
==================================== =============== ===============
Profit after tax 129.2 68.2
==================================== =============== ===============
Adjustments
Exceptional project expenditure 16.4 12.5
Other exceptional losses / (gains) 0.4 (12.2)
------------------------------------ --------------- ---------------
Underlying profit before tax 97.9 103.1
==================================== =============== ===============
Key ratios:
Net interest margin (bps) (1) 182 159
RoTE (%) (2) 12.3 6.0
Cost:income ratio (%) (3) 79.7 72.2
Asset quality ratio (bps) (4) (0.4) 0.8
------------------------------------ --------------- ---------------
1. Annualised net interest income over average interest earning
assets
2. Annualised profit after tax over average equity less
intangibles, assuming no further DTA benefit in 2023
3. Total statutory expenditure over total statutory income
(excludes impairment)
4. Annualised impairment (credit) / charge over average customer
assets
PERFORMANCE HIGHLIGHTS
Profit before tax of GBP81.1m and underlying profit of
GBP97.9m
Total income of GBP395.2m; includes net interest income and
other operating income and increased by 9% in comparison to the
nine months ended 30 September 2022 (3Q 22: GBP362.8m).
Net interest income increased by 10% to GBP363.4m (3Q 22:
GBP329.1m) and net interest margin (NIM) has risen by 23 basis
points (bps) from 159bps to 182bps, with both benefitting from
increases in the base rate.
Operating expenditure increased by 17% to GBP316.2m (3Q 22:
GBP270.5m); driven mainly by strategic investment in our mortgage
and savings transformation programme and completion of key projects
such as Capita mortgage insourcing which saw c.400 colleagues join
the Bank in the first half of the year. Non-staff costs rose by 4%
to GBP163.2m following inflationary pressures and project costs
increased to GBP43.4m (3Q 22: GBP27.7m), driven by accelerated
continuous improvement projects, alongside strategic investment.
The GBP43.4m includes GBP11.0m relating to our transformation
programme as well as increased advisory costs as the Bank explores
potential strategic opportunities. As a result, our statutory
cost:income ratio increased in the period to 79.7% from 72.2%.
Net impairment credit of GBP0.6m (3Q 22: GBP1.3m charge);
following re-structuring of a specific legacy connection and
associated provision release, partially offset by a decline in
forward looking Commercial Real Estate property values.
We have reported a GBP1.5m non-operating exceptional gain (3Q
22: GBP11.8m), predominantly relating to Visa shareholdings. 2022
includes the sale of a small loan portfolio and partial sale of our
Visa shareholding.
Income tax credit of GBP48.1m
The income statement tax credit of GBP48.1m is mainly driven by
deferred tax asset recognition of historical tax losses earlier in
the year, partially offset by the tax charge on profits in the
period.
Strong liquidity position
Total assets reduced by 5% compared with 31 December 2022 with
legacy assets reducing by 6% to GBP0.6bn. Retail secured balances
have seen a slight increase to GBP19.7bn (FY 22: GBP19.6bn) which
includes the acquisition of a c.GBP0.5bn mortgage portfolio
comprising approximately 3,500 customers.
Total liabilities reduced by 6% to GBP25.3bn over the period (FY
22: GBP26.8bn). SME deposit balances have remained broadly stable
at GBP3.3bn (FY 22: GBP3.4bn) whilst retail deposit balances
decreased by 5% to GBP15.8bn (FY 22: GBP16.6bn) driven by a
reduction in retail current account balances to GBP5.2bn (FY 22:
GBP5.8bn), following a decrease in customer average balances,
primarily attributed to the cost of living crisis. 80.9% of our
core customer deposits are insured through FSCS, and have remained
stable throughout the year. The Bank maintains a very strong 12
month average LCR position of 222.4%. Total blended cost of funds
has increased, due to base rate rises, to 229bps but still remains
cost efficient (FY 22: 73bps). During the year we have repaid
c.GBP790m of TFSME with a remaining balance of GBP4.5bn.
Robust customer credit quality
The asset quality ratio (AQR) in total across retail, SME and
legacy customer lending remains strong, reflecting the Bank's
low-risk lending profile. AQR as at 30 September 2023 is a release
of 0.4bps (3Q 22: charge of 0.8bps). The average core mortgage book
loan-to-value (LTV) has increased slightly this year, but remains
low at 55.2% (FY 22: 53.5%). Secured accounts over three months in
arrears represented only 0.17% of total accounts as at 30 September
2023 (FY 22: 0.13%).
Strong capital position
CET1 ratio has increased from 19.8% to 20.1% (including
unaudited 3Q profits) and remains well above the regulatory minimum
of 14.3%, including CRD IV buffers. The increase is attributed to
an increase in retained earnings partially offset by an increase in
risk-weighted assets (RWAs). RWAs totalled GBP4.9bn (FY 22:
GBP4.8bn) increasing by GBP0.1bn primarily due to the mortgage book
acquisition. The underlying CET1 ratio (including unaudited 3Q
profits) has increased 1.3% on a proforma basis, excluding the
impact of the acquisition and one off adjustment for operational
risk RWAs.
Following the Bank's GBP200m Green MREL Senior transaction in
May, plus profits in the period, total MREL-qualifying resources
have grown by GBP264.0m. We have GBP355.8m surplus MREL resources
compared with a requirement of GBP1,507.5m (30.6%) including CRD IV
buffers of 4.5%.
Delivering for our customers
We are pleased to be rated as the UK's best Environmental,
Social and Governance (ESG) high street bank by Morningstar
Sustainalytics for the third consecutive year, with a score of 8.5
as of 9 October 2023 - the lower the score, the better the rating.
This quarter, we have also maintained our ratings across other ESG
risk rating agencies, receiving an AAA rating from MSCI, and a
Prime Rating of C with ISS, reinforcing us as a leader in ESG.
The Bank has achieved its target of doubling colleague
volunteering hours this year, two months ahead of schedule. As part
of our continued commitment to social responsibility, this quarter
the Bank launched OnHand for all colleagues. OnHand is an app which
provides colleagues with hundreds of opportunities to engage in
meaningful volunteer work, fostering a culture of giving back to
the communities we serve.
This year we have started to track our customer perception on
Trustpilot and have seen our score climb to 4.1 (Excellent) at the
end of September which is a significant improvement compared with
this time last year. We have seen month on month improvement
throughout 2023 as a result of strong service recovery and enhanced
customer journeys.
Earlier this year we became signatories of the Mortgage Charter
set out by the Chancellor in June 2023. This means that customers
have the ability to temporarily switch their mortgage from
repayment to interest only, or extend the terms of their mortgage.
We will continue to support customers through the current economic
and cost of living uncertainties.
Delivering on our plan
During the quarter, we have begun to migrate customers on to our
new mortgage platform. This has enabled the development of a new
broker application system allowing brokers access to our products
and services more efficiently. Alongside this, we have rebranded
the mortgage platform to 'The Co-operative Bank for Intermediaries'
reinforcing our brand and identity in the market. Our savings
programme remains on track, with migrations of active customers
expected to complete by the end of the year with over 60% of active
customer migrations already successfully completed.
Earlier this quarter, we announced our acquisition of the
Sainsbury's Bank mortgage portfolio representing approximately
3,500 customers with balances of c.GBP0.5bn. Following the Bank's
strong recovery and growth in the past three years, the Bank is
exploring potential strategic opportunities, the assessment of
which is currently at a preliminary stage. There is no guarantee
that such discussions will result in any eventual transaction. In
the meantime, the Bank remains committed to its strategy to
continue to drive significant positive outcomes for all of our
stakeholders.
Outlook
Full year guidance remains unchanged:
-- Net interest margin of approximately 180bps; reflecting a
prudent approach to interest rate risk management through an
effective structural hedging strategy, offset by mortgage margin
and deposit mix/margin pressures.
-- Total statutory costs of approximately GBP420m; further
investment in our brand and systems alongside inflationary
pressures.
-- Asset quality ratio of less than 5bps; arrears remain low and stable across all portfolios.
-- Customer assets of GBP20-21bn; actively managing mortgage
volumes for the remainder of the year.
-- Return on tangible equity of over 10%; profitability and
improved performance drives shareholder value.
-- Our new capital management framework including dividend
policy will enable a more efficient level of capital resources and
allow us to make the required investment in our business to grow
and provide capital returns to our shareholders over the long
term.
SEGMENTAL PROFIT / (LOSS) (GBPm)
Core Legacy & unallocated Group
Nine months ended 30 September 2023 Retail SME Total
Net interest income 290.6 71.2 361.8 1.6 363.4
Other operating income 19.4 12.2 31.6 0.2 31.8
====================================== ======= ====== ======= ==================== =======
Operating income 310.0 83.4 393.4 1.8 395.2
Operating expenses (243.3) (50.4) (293.7) (22.5) (316.2)
Net credit impairment gains/(losses) (0.2) (0.6) (0.8) 1.4 0.6
Non-operating income - - - 1.5 1.5
====================================== ======= ====== ======= ==================== =======
Profit before tax 66.5 32.4 98.9 (17.8) 81.1
====================================== ======= ====== ======= ==================== =======
Nine months ended 30 September 2022 Core Legacy & unallocated Group
Retail SME Total
Net interest income 287.6 46.9 334.5 (5.4) 329.1
Other operating income 19.3 13.9 33.2 0.5 33.7
====================================== ======= ====== ======= ==================== =======
Operating income/(expense) 306.9 60.8 367.7 (4.9) 362.8
Operating expenses (209.2) (45.8) (255.0) (15.5) (270.5)
Net credit impairment gains/(losses) (0.2) (1.7) (1.9) 0.6 (1.3)
Non-operating income - - - 11.8 11.8
====================================== ======= ====== ======= ==================== =======
Profit before tax 97.5 13.3 110.8 (8.0) 102.8
====================================== ======= ====== ======= ==================== =======
SEGMENTAL BALANCE SHEET (GBPm)
30 September 2023 Core Legacy & unallocated Group
Retail SME Total
Segment assets 19,882.4 392.1 20,274.5 6,425.5 26,700.0
Segment liabilities 15,760.5 3,287.3 19,047.8 6,225.5 25,273.3
--------------------- -------- ------- -------- -------------------- --------
31 December 2022 Core Legacy & unallocated Group
Retail SME Total
Segment assets 19,841.3 388.2 20,229.5 7,903.3 28,132.8
Segment liabilities 16,607.8 3,396.8 20,004.6 6,829.2 26,833.8
===================== ======== ======= ======== ==================== ========
SELECTED KEY PERFORMANCE INDICATORS
% (unless otherwise stated) 3Q 23 (1) 2022 Change
CET1 ratio 20.1 19.8 0.3
Total capital ratio 24.3 23.8 0.5
Risk-weighted assets (GBPm) 4,931 4,816 115
Leverage ratio (PRA) (2) 4.2 4.0 0.2
Liquidity coverage ratio (spot) 196.1 242.9 (46.8)
Liquidity coverage ratio (12 month rolling average) (3) 222.4 265.3 (42.9)
Loan to deposit ratio 109.3 104.1 5.2
Average core mortgage LTV 55.2 53.5 1.7
Core mortgage accounts > 3 months in arrears (volume) 0.17 0.13 0.04
NPL as a % of total exposures 0.4 0.4 0.0
========================================================= ========= ===== ======
1. Capital metrics include unaudited 3Q profits
2. Calculated as per PRA definition, excluding Bank of England reserves
3. Calculated in line with Pillar 3 requirements
Investor enquiries:
investorrelations@co-operativebank.co.uk
Angela Catlin, Head of Investor Relations, PR and Rating
Agencies: +44 (0) 7548 965 042
Media enquiries:
Sam Cartwright, H/Advisors Maitland: +44 (0) 7827 254 561
Dan Chadwick, Communications: +44 (0) 7724 701319
The person responsible for arranging the release of this
announcement on behalf of The Co-operative Bank Finance p.l.c and
The Co-operative Bank p.l.c. is Catherine Green, Company
Secretary.
About The Co-operative Bank
The Co-operative Bank p.l.c. provides a range of banking
products and services to about 2.5m retail customers and c.94k
small and medium sized enterprises ('SME'). The Bank is committed
to values and ethics in line with the principles of the
co-operative movement. The Co-operative Bank is the only high
street bank with a customer-led ethical policy, which gives
customers a say in how their money is used. Launched in 1992, the
policy has been updated on six occasions, with new commitments
added in June 2022 to cover what we do for our planet, people and
the community.
The Co-operative Bank p.l.c. is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority. The Co-operative
Bank p.l.c. eligible customers are protected by the Financial
Services Compensation Scheme in the UK, in accordance with its
terms.
Note: all figures contained in this announcement are unaudited.
This announcement contains inside information.
The Co-operative Bank p.l.c. LEI: 213800TLZ6PCLYPSR448
The Co-operative Bank Finance p.l.c. LEI:
213800KNE8ER4N9BLF11
The Co-operative Bank Holdings Limited LEI:
213800MY2BSP459O8A22
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements with
respect to the business, strategy and plans of the Group and its
current targets, goals and expectations relating to its future
financial condition and performance, developments and/or prospects.
Forward-looking statements sometimes can be identified by the use
of words such as 'may', 'will', 'seek', 'continue', 'aim',
'anticipate', 'target', 'projected', 'expect', 'estimate',
'intend', 'plan', 'goal', 'believe', 'achieve', 'predict', 'should'
or in each case, by their negative or other variations or
comparable terminology, or by discussion of strategy, plans,
objectives, goals, future events or intentions.
Examples of such forward-looking statements include, without
limitation, statements regarding the future financial position of
the Group and its commitment to its plan and other statements that
are not historical facts, including statements about the Group or
its Directors' and/or management's beliefs and expectations. Any
such forward-looking statements are not a reliable indicator of
future performance, as they may involve significant stated or
implied assumptions and subjective judgements, which may or may not
prove to be correct. There can be no assurance that any of the
matters set out in forward-looking statements are attainable, will
actually occur, will be realised, or are complete or accurate. Past
performance is not necessarily indicative of future results.
Differences between past performance and actual results may be
material and adverse.
For these reasons, recipients should not place reliance on, and
are cautioned about relying on, forward-looking statements as
actual achievements, financial condition, results or performance
measures could differ materially from those contained in the
forward-looking statement. By their nature, forward-looking
statements involve known and unknown risks, uncertainties and
contingencies because they are based on current plans, estimates,
targets, projections, views and assumptions and are subject to
inherent risks, uncertainties and other factors both external and
internal relating to the Group's plan, strategy or operations, many
of which are beyond the control of the Group, which may result in
it not being able to achieve the current targets, predictions,
expectations and other anticipated outcomes expressed or implied by
these forward-looking statements. In addition, certain of these
disclosures are dependent on choices relying on key model
characteristics and assumptions and are subject to various
limitations, including assumptions and estimates made by
management. No representations or warranties, expressed or implied,
are given by or on behalf of the Group as to the achievement or
reasonableness of any projections, estimates, forecasts, targets,
prospects or returns contained herein. Accordingly, undue reliance
should not be placed on forward-looking statements.
Any forward-looking statements made in this document speak only
as of the date of this document and it should not be assumed that
these statements have been or will be revised or updated in the
light of new information or future events and circumstances arising
after today. The Group expressly disclaims any obligation or
undertaking to provide or release publicly any updates or revisions
to any forward-looking statements contained in this document as a
result of new information or to reflect any change in the
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based,
except as required under applicable law or regulation.
- END -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTFFFVILILDIIV
(END) Dow Jones Newswires
November 08, 2023 02:00 ET (07:00 GMT)
Co-op Bk Hld 29 (LSE:93RD)
Historical Stock Chart
From Jan 2025 to Feb 2025
Co-op Bk Hld 29 (LSE:93RD)
Historical Stock Chart
From Feb 2024 to Feb 2025
