TIDM93RD TIDMTTM
RNS Number : 7836X
Co-Operative Bank Finance PLC (The)
28 April 2023
Nick Slape (CEO) and Louise Britnell (CFO) will host a video conference on 28 April 2023 at
9am (UK time) to present the first quarter trading update 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.
First Quarter Trading Update 2023
28 April 2023
The Co-operative Bank ('the Bank') is pleased to provide an
update on its performance in the three months ended 31 March
2023.
-- Profit of GBP30.6m and underlying profit of GBP35.1m; an
increase of GBP0.1m and GBP7.6m vs 1Q 22 with RoTE of 15.1%
-- Surplus liquidity position and low cost funding model; Pillar
1 LCR spot position 209.3%, 12 month rolling average LCR 254.8%
-- Significant headroom to MREL plus CRD IV buffers; CET1 ratio
of 19.7% including unaudited profits
-- Progress made on our transformation programme ; completed insourcing of Capita colleagues
Nick Slape, Chief Executive Officer, said:
"In the first three months of 2023 we have again delivered a
strong business performance with a statutory profit before tax of
GBP30.6m and a statutory return on tangible equity of 15.1%. In
particular, I am pleased with the 28% improvement in underlying
profit in the period to GBP35.1m.
I remain confident that the Bank is well-positioned in the
current uncertain macroeconomic environment, with surplus capital
and liquidity and a low-risk simple balance sheet.
In the first quarter, we completed the insourcing of Capita
colleagues and are now focussed on migrating customers to our new
savings platform. Our unique position as the leading ethical Bank
in the UK, combined with targeted investment to transform and
simplify our operations, will enable us to continue to make it
easier for our customers to interact with us, whilst delivering
sustainable returns for our shareholders."
INCOME STATEMENT (GBPm)
3 months ended 31 March
-------------------------
2023 2022
Net interest income 120.1 99.9
Other operating income 11.0 10.3
==================================== ============= ==========
Total income 131.1 110.2
Operating expenditure (101.5) (84.7)
Impairment credit / (charge) 0.5 (0.5)
Non-operating income 0.5 5.5
==================================== ============= ==========
Profit before tax 30.6 30.5
Taxation credit / (charge) 14.9 (37.5)
==================================== ============= ==========
Profit / (loss) after tax 45.5 (7.0)
==================================== ============= ==========
Adjustments
Exceptional project expenditure 4.5 1.7
Other exceptional losses / (gains) 0.0 (4.7)
------------------------------------ ------------- ----------
Underlying profit before tax 35.1 27.5
==================================== ============= ==========
Key ratios:
Net interest margin (bps) (1) 181 146
RoTE (%) (2) 15.1 (1.7)
Cost:income ratio (%) (3) 77.1 73.2
Asset quality ratio (bps) (4) (1.0) 0.9
------------------------------------ ------------- ----------
1. Annualised net interest income over average interest earning
assets
2. Profit after tax over average equity less intangibles
3. Total statutory expenditure over total statutory income
4. Annualised impairment (credit) / charge over average customer
assets
PERFORMANCE HIGHLIGHTS
Profit before tax of GBP30.6m and underlying profit of
GBP35.1m
-- Total income of GBP131.1m; includes net interest income and
other operating income, and has increased by 19% in comparison to
the three months ended 31 March 2022
-- Net interest income has increased by 20% to GBP120.1m (1Q 22:
99.9m); supported by improving deposit margins following the
increases in the base rate to 4.25%
-- Net interest margin of 1.81% (1Q 22: 1.46%)
-- Operating expenditure increased by 20% to GBP101.5m (1Q 22:
GBP84.7m); mainly driven by an increase in staff costs following
cost of living payments and salary increases during 2022 as well as
higher recruitment during 2022
-- Cost:income ratio of 77.1% (1Q 22: 73.2%)
-- Impairment credit of GBP0.5m (1Q 22: GBP0.5m charge);
reflecting releases for affordability across the secured portfolio
alongside support now available to leaseholders surrounding
cladding issues
-- Non-operating income of GBP0.5m (1Q 22: GBP5.5m); 2022
includes the sale of a small loan portfolio
Income tax credit of GBP14.9m
-- Tax credit of GBP14.9m driven by further deferred tax asset
recognition in the period partially offset by the utilisation of
tax losses against taxable profits
Surplus liquidity position and low cost funding model
-- Increase in retail secured balances to GBP19.9bn (FY 22:
GBP19.6bn) with a mortgage pipeline of GBP1.2bn
-- Net mortgage lending of GBP272m in the quarter
-- Deposit balances remain stable over the period with a Pillar
1 spot position LCR of 209.3% (12 month rolling average 254.8%)
-- Total blended cost of funds of 192bps (4Q 22: 132bps)
-- Asset quality ratio (AQR) remains low with a release of 1bp
(1Q 22: charge of 0.9bps; FY 22: charge of 3.1bps)
Significant headroom to MREL plus CRD IV buffers
-- CET1 ratio of 19.7% including unaudited profits (FY 22:
19.8%) remains well above the regulatory minimum of 13.3%
-- RWAs at GBP4.9bn (FY 22: GBP4.8bn) due to a stable balance
sheet, impacted by annual update of Operational Risk RWAs
-- Total capital ratio of 23.8% (FY 22: 23.8%)
Progress made on our transformation programme
-- Launched new savings product, Fixed Rate Cash ISA, following
the launch of two other savings products in 2022 on the Bank's
mainframe
-- Completed the TUPE of remaining c.400 operations colleagues from Capita on 1(st) March
-- Commenced the migration of savings customers onto new platform
SEGMENTAL PROFIT / (LOSS) (GBPm)
Core Legacy & unallocated Group
1Q 23 Retail SME Total
Net interest income 97.8 21.1 118.9 1.2 120.1
Other operating income 6.7 4.3 11.0 0.0 11.0
====================================== ====== ====== ====== ==================== =======
Operating income/(expense) 104.5 25.4 129.9 1.2 131.1
Operating expenses (78.8) (16.5) (95.3) (6.2) (101.5)
Net credit impairment gains/(losses) 0.8 0.0 0.8 (0.3) 0.5
Non-operating income 0.0 0.0 0.0 0.5 0.5
====================================== ====== ====== ====== ==================== =======
Profit before tax 26.5 8.9 35.4 (4.8) 30.6
====================================== ====== ====== ====== ==================== =======
1Q 22 Core Legacy & unallocated Group
Retail SME Total
Net interest income 88.5 13.4 101.9 (2.0) 99.9
Other operating income 5.9 4.3 10.2 0.1 10.3
====================================== ====== ====== ====== ==================== ======
Operating income/(expense) 94.4 17.7 112.1 (1.9) 110.2
Operating expenses (66.6) (14.7) (81.3) (3.4) (84.7)
Net credit impairment gains/(losses) (1.0) (0.2) (1.2) 0.7 (0.5)
Non-operating income 0.0 0.0 0.0 5.5 5.5
====================================== ====== ====== ====== ==================== ======
Profit before tax 26.8 2.8 29.6 0.9 30.5
====================================== ====== ====== ====== ==================== ======
SEGMENTAL ASSETS AND LIABILITIES (GBPm)
1Q 23 Core Legacy & unallocated Group
Retail SME Total
Segment assets 20,102.0 401.5 20,503.5 7,203.2 27,706.7
Segment liabilities 16,265.2 3,294.2 19,559.4 6,802.7 26,362.1
--------------------- -------- ------- -------- -------------------- --------
FY 22 Core Legacy & unallocated Group
Retail SME Total
Assets 19,841.3 388.2 20,229.5 7,903.3 28,132.8
Liabilities 16,607.8 3,396.8 20,004.6 6,829.2 26,833.8
============= ======== ======= ======== ==================== ========
SELECTED KEY PERFORMANCE INDICATORS
% (unless otherwise stated) 1Q 23(1) 2022 Change
CET1 ratio 19.7 19.8 (0.1)
Total capital ratio 23.8 23.8 0.0
Risk-weighted assets (GBPm) 4,934 4,816 118
Leverage ratio (PRA) (2) 4.1 4.0 0.1
Liquidity coverage ratio (spot) 209.3 242.9 (33.6)
Liquidity coverage ratio (12 month rolling average) (3) 254.8 265.3 (10.5)
Loan to deposit ratio 107.7 104.1 3.6
Average core mortgage LTV 55.0 53.5 1.5
Core mortgage accounts > 3 months in arrears (volume) 0.14 0.13 0.01
NPL as a % of total exposures 0.4 0.4 0.0
========================================================= ======== ===== ======
1. Capital metrics include unaudited 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
Gary McDermott, Corporate & Strategic Development Director:
+44 (0) 7811 599495
Media enquiries:
Sam Cartwright, Maitland/AMO: +44 (0) 7827 254 561
Dan Chadwick, Communications: +44 (0) 7724 701319
Nicki Parry, Communications: +44 (0) 7734 002983
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
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements with
respect to the business, strategy and plans of The Co-operative
Bank Holdings Limited and its subsidiaries ("the Group"),
(including its updated long-term forecast) 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.
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END
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