The Co-operative Bank saw its annual profit jump more than fourfold to £132.6m, driven by growth in its mortgage pipeline and higher interest charges.
It says the home loans pipeline rose by 42% to around £1.7bn from a year ago, as the group “remains heavily reliant on interest income from its mortgage portfolio”.
Net interest income lifted by 41% to £458.3m, reflecting higher deposit margins, as the Bank of England raised interest rates eight times to 3.5% from 0.25% in the period.
The bank plans to bring its mortgage servicing operations in-house from outsourcing business Capita by the first quarter of this year.
It has signed a deal with Capita to extend its existing mortgage services contract for three months to 28 February.
The lender says: “This extension was to provide comfort that the group has appropriate IT, operational and systems access requirements in place to allow for a safe and sustainable migration.”
Its CET 1 ratio, which measures a firm’s capital against risk-weighted assets, slipped to 19.8% from 20.8% in the period.
Last year, the lender reported an annual £31.1m pre-tax profit, the first time the bank posted a full-year profit in a decade.
Co-operative Bank chief executive Nick Slape says: “We are focussed on delivering both growth and attractive, sustainable returns for our shareholders.
“Our capital position gives us the scope for optimisation as well as continued investment in our group and returns of capital to shareholders.”
Last week, the bank tabled an offer for the £650m loan portfolio being offloaded by Sainsbury’s Bank, according to Sky News.
Also, last year, it made a failed attempt to buy TSB from Spanish lender owner Banco Sabadell, who rejected its £1.1bn bid.
The bank was part of the wider Co-Operative Group, which nearly collapsed in 2013 after a £1.5bn black hole was revealed in the lender’s accounts. The bank severed final links with its former parent in 2017.
