Co-op Bank returned to the black during the first quarter of its current financial year, new figures have confirmed. It has also been announced that a pair of US investment giants have bought stakes in the bank.
For the three months to March 31, 2021, the bank achieved a pre-tax profit of £7.2m on a statutory basis, up from a loss of £27m during the same period in 2020.
Profits of £2.6m were also achieved on an underlying basis, compared to a loss of £14.3m.
The bank's total income also increased from £75.8m to £81.2m- over the same period.
On the rise in income, the bank said the growth in mortgage balances with improved margins and gilt sales "have more than offset" reduced fee and commission income resulting from lower transaction volumes during the national lockdown.
In a separate announcement, New York-based private equity firm JC Flowers and Bain Capital Credit, which is located in Boston, Massachusetts, have agreed to buy a minority stake from an existing investor.
The two groups are set to buy the 10.01% of the bank's A shares and 12.05% of the B shares currently owned by BlueMountain.
The financial details of the deals have not been disclosed.
Chief executive Nick Slape said: "I am encouraged by the bank’s financial performance in the first quarter, achieving a small underlying profit – an important first step towards sustainable profitability from 2021.
"We have delivered a resilient performance by maintaining our focus on income generation, simplification and by reducing our operating costs.
"Our retail business continues to grow, with net residential lending increasing by 6% in the quarter with a strong pipeline.
"Our SME banking proposition is developing well with the launch of a new mobile app, credit card and same-day onboarding, alongside a strong pipeline of new customers switching to join us.
"As I reflect on the anniversary of the first national lockdown, I have been proud of how colleagues have responded to the challenges we have faced and the way in which they have adjusted to new ways of working whilst continuing to step up for our customers.
"We are working closely with our charity partners in tackling youth homelessness and economic abuse, social issues which have become more acute over the past year.
"I was delighted that we were awarded ‘Best Charity Banking Provider’ by Business Moneyfacts for the sixth consecutive year.
"We are also pleased to have retained our position as the UK’s leading ethical banking brand.
"As announced separately today, we are pleased to welcome JC Flowers and Bain Capital Credit as new investors in the bank, subject to regulatory approval, and look forward to working with them and all our stakeholders as we develop our future thinking.
"At the half-year we will have reached the midpoint of our turnaround strategy and we are ahead of where we expected to be.
"This is a positive start to the year and we have upgraded our guidance in relation to customer assets and CET1 ratio."
