These better-than-expected results to the end of June saw its net interest margin lift by 29 basis points to 151bps, which led the bank to raise its full-year guidance to 155bps.

The lender says the raising of base rates five times in a row since December to 1.25% by the Bank of England has improved its deposit margins.

Its mortgage pipeline is around £1.1bn, “reflecting more normalised, pre-pandemic levels”.

The bank says its average mortgage completion loan-to-value remains low at 55.2%, compared to 56.8% at the end of the last full year. Accounts that are greater than three months in arrears represented 0.14% of total accounts, compared to 0.13% in the same period.

It adds that its mortgage platform simplification is now expected to be completed in 2023, later than initially planned. It says the completion of this programme will mean a reduction in the firm’s operational risk profile and will allow it to diversify its products and improve customer service.

The bank says over the rest of the year it expects to see “intense competition in the mortgage market and tightening of margins” while bank base rate rises support improved deposit margins.

Co-operative Bank chief executive Nick Slape says: “These results are better than anticipated at the start of the year and therefore, looking ahead, we have upgraded our outlook for 2022 whilst increasing the investment to be made available for customer service and simplification initiatives.

“While the economic outlook remains uncertain as we wait to see the full impact of higher inflation and cost of living pressures, we remain committed to helping customers and colleagues during these challenging times and services are available to anyone requiring support.”