The Co-operative Group has reported an underlying operating loss of £356m for the first half of 2013, compared to a £140m profit for the first six months of 2012. The Group recorded a statutory pre-tax loss of £559m for the period, compared to £18m profit the year before.
The Banking Group (non-core) sector recorded the heaviest loss, losing £375m over the period compared to a loss of £73m in H1 2012. Core banking activities recorded a loss of £82m, which includes car finance as part of the Group’s unsecured lending business line – personal loans available to its retail banking customers for the purpose of buying a car – compared to £78m profit for the half-year in 2012.
Go deeper with GlobalData
In total Co-op Bank, which does not offer car finance via motor dealerships, made a loss of £709m in H1 2013, including writing off £496m of bad debts.
During the first half of the year, the Co-operative Group completed the sale of the last of its car dealerships and motors business, the Co-operative Motor Group, generating £29m of cash for the Group.
Reduction of non-core assets
The Bank is required by the Prudential Regulatory Authority (PRA) to address its £1.5bn capital shortfall and has begun a Capital Action Plan and strategic review with a four year turnaround, agreed by the PRA, which will also cover anticipated future losses.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataEuan Sutherland, appointed chief executive of the Group in May, said the Group’s priority was instituting a recovery plan for the Bank. Sutherland hoped to bring stability and reduce the cost base at the Bank, which would allow it to "re-focus on its key retail and small business customers".
Niall Booker, chief executive of the Co-operative Banking Group, said the £496m in loan impairments was "principally the result of a fresh review of non-core assets and partly driven by our developing knowledge and the earlier-than-anticipated disposal of some of those assets."
Despite these disposals, writing down its IT assets by £148.4m and setting aside £61m for PPI payments, the Bank has "continued to lend," said Booker.
However, the plan for recapitalisation to be undertaken by the Bank will mean further reduction in its non-core asset portfolio.
richard.brown@timetric.com
