Of Special Interest
- Financial wellness affects half of peoples’ mental or physical health, finds report
- Study finds traditional financial institutions embrace Fintech disruption
- Grass is greener for environmentally friendly businesses, finds Barclays
- Prospective homeowners would consider a 40-year mortgage to escape renting, finds Santander
- Millennials’ needs are changing the face of banking industry, says new report
- FS is putting consumer data at risk by failing to protect mobile apps, says Arxan
- A lack of belief in their ability holds 28% women back in work, says Cambridge & Counties
- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
- Next downturn unlikely to be as bad as 2008, according to S&P
- FCA reveals findings from first cryptoassets consumer research
- US consumers favour single mobile app for banking and payments
- Banks suffering major IT shutdowns every day, ‘Which?’ reveals
- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
26th August 2011
CFS negligible profit UK Co-op bank loss
Co-operative Financial Services net profit was £2.6m (€3.0m $4.3m ¥328m Y27.3m) DOWN from £28.2m in the year ago period. The bank prefers to highlight a measure of profit "before significant items" amounting to £94.3m, up from £44.1m a year ago. The Co-operative Bank made a £11.1m (€12.7m $18.3m ¥1,399m Y116.7m) net attributable LOSS for the year compared with a £16.8m profit in the year ago period.
The largest significant item is £90m set aside for Payment Protection Insurance compensation. The PPI item can be argued is a true exceptional item, leaving aside the issue of the bank's selling methods of the product, the expense was not one of choice. Therefore to make the point of the profit including and excluding the item is not unreasonable - but you have to go to P7 of the report to find the statutory profit which is not so reasonable. Most of the other significant items amounting to £34.7m before tax were the result of a management decisions and according to the company relate to investment and integration in the business. To try and discount these expenses from the bottom line and yet be happy to include the profit as a result of the expenditure in this and later years accounts is a more questionable approach to accounting.
The true profit underlines that the bank is not in a position to build up reserves from profit and therefore remains in a weak position should more 'significant items' occur in the future. It also begs questions as to its bid for Lloyds Bank branches, even accepting that CFS has the power of the wider co-operative movement behind it.