Co-operative Bank takes £12m hit from coronavirus as losses continue
The Co-operative Bank booked a loss in the first quarter as it took a £12m hit from coronavirus, it has said in a trading update.
The challenger bank said today that it made an underlying loss of £14.2m in the first three months of the year. This was down from a loss of £5.1m in the first quarter of 2019.
However, on the statutory loss before tax measure (which includes one-off costs or gains), the Co-op Bank lost £27m. This was an improvement on the £28.6m pre-tax statutory loss in the first quarter of last year.
The lender said it estimated that the coronavirus had cost the bank around £12m. Banks have been pummelled as the economy has crashed, with loan losses expected to rise dramatically.
Nonetheless, Co-op Bank said its underlying performance “is in line with expectations”.
Chief executive Andrew Bester said: “We have examined the potential impact of the crisis on the Bank and are satisfied we are in a position of resilience.”
The Co-op Bank’s trading update said it has a “high-quality, low-risk loan book” which is “expected to be resilient in a challenging and uncertain environment”.
Bester said: “As we look forward, clearly the year ahead will be challenging and, like others, we will need to reprioritise investment spend, given expected pressure on income in a low base rate environment.”
In the first quarter, the bank’s operating income fell 20 per cent year on year to £75.8m. This was mostly due to a fall in net interest income in its dominant retail arm.
Its net interest income dropped 26 per cent to £64.8m. UK lenders are set to feel the squeeze this year after the Bank of England slashed interest rates to try to spur the economy amid coronavirus.
Like many of its peers, the Co-op Bank is participating in coronavirus business loan schemes and dealing with demands from customers for help during the crisis.
It said it had received almost 15,000 mortgage payment holiday requests by 30 April. It also received almost 2,000 holiday requests for credit cards and loans.