Co-operative Bank records profit but low interest rates hit turnaround plans
The Co-operative Bank swung to profit in the nine months to September, but said low interest rates and uncertainty surrounding Brexit had dragged on its turnaround plans.
The bank said it recorded an operating profit for the nine months to September 30 - compared to an operating loss over the same period last year - but did not release the figures ahead of its full-year report.
Profit was driven by government bond sales and a reduction in the Financial Services Compensation Scheme levy.
However, on a quarterly basis, the core bank recorded a "small" operating loss.
The bank cheered the addition of 11,000 new current accounts since June 30 to total 1.4 million, aided by a competitive £150 account switching offer.
Operating costs were slashed by 10% over the period, with the bank saying that five branch closures announced in August would be completed by the end of November
However, chief executive Niall Booker said the bank's efficiency drive was facing some roadblocks.
"Delivering some elements of the turnaround plan will become more challenging given that interest rates are now likely to be lower for longer and given the uncertainty surrounding the impact of the UK's decision to leave the European Union," Mr Booker said.
Good news came as no further provisions were made to cover compensation claims for mis-selling of payment protection insurance (PPI) in the third quarter.
The Co-operative Bank said that PPI redress was "marginally below forecast" over the past nine months, but stressed that the volume of future complaints is uncertain.
The UK banking industry's PPI bill is already colossal, at more than £30 billion so far.
The bank said it was also making progress towards deleveraging its non-core portfolio, in an effort to reduce financial risks.
Meanwhile, total net customer loans were steady at £15.4 billion, as a jump in mortgage balances was offset by a fall in unsecured balances, such as loans and overdrafts.
New mortgages over the period grew to £2.2 billion versus £1.8 billion last year, while the total number of mortgages reaching maturity fell to £1.3 billion from £1.8 billion a year earlier.
Mr Booker said: "The performance of the Core Bank demonstrates the strength of our franchise, differentiated by our ethical brand and the quality service that we know is important to our customers.
"Our Everyday Rewards current account proposition, supported by renewed brand marketing, has led to a net increase in prime current accounts, and our new improved digital banking service and app, as well as the introduction of Apple Pay, have been rolled out for the benefit of our current account customers. Mortgage originations remain strong."