The Co-operative Bank has thanked a cost-cutting drive for helping narrow its losses in its first set of annual results since striking a rescue deal with hedge funds last year.
The lender reported an adjusted pre-tax loss of £140.3 million for the year to December 31, marking a £336.8 million improvement compared with 2016, when it booked a loss of £477.1 million.
It said the results were “supported” by continued spending cuts, including a £35.1 million drop in staff costs, though that was offset by a drop in income – which fell by £77.2 million to £317.6 million on a net interest basis.
Job cuts drove the fall in employee spending, having shrunk its average annual headcount by about 800 staff to 3,965 workers.
Non-staff costs fell by £20.6 million.
It is the Co-op Bank’s first set of full-year results since completing a £700 million deal that saved the troubled lender from a potential collapse last year.
The refinancing and restructuring package, agreed to by the Co-op Bank’s hedge fund investors in the summer, saw the bank effectively sever its historic relationship with the Co-operative Group and separate itself from the wider mutual’s pension scheme.
The rescue package gives Co-op Bank the ability to meet regulations on long-term capital requirements, avoid it being wound down and allow it to continue as a stand-alone lender.
Chief executive Liam Coleman said: “We concluded 2017 demonstrating a resilient business performance in our priority markets of mortgages and savings, despite the uncertainties earlier in the year.
“The completion of the recapitalisation in September has transformed our capital position and provides a solid platform to deliver our future plans.”
The bank already closed 10 branches last year and was now planning to shutter a further 27 sites across England and Wales by June 1, which it said was due to the rise in digital banking.
The closures would bring the group’s network down to 68 branches in total.
Mr Coleman said it was now the bank’s “foremost priority” to continue reducing its losses and “achieve profitability” despite a challenging market that included increasing competition in mortgages.
“Our distinctive ethical brand, which we know is greatly valued by customers, continues to represent a clear point of difference for us and our access of the Bank of England’s Term Funding Scheme (TFS) ahead of its closure together with our recent securitisation of the Optimum book means we have a strong funding position.
“We must focus on using that in the most effective way to support future growth as we implement our plan to build a successful, sustainable Co-operative Bank,” he said.
Mr Coleman received no increase in his pay packet for the year, which totalled £1.46 million and was made up of a £900,000 base salary, a £450,00 role-based allowance, £80,000 pension cash allowance and a further £27,000 in benefits.
The report comes a week after the Co-op Bank’s former boss Paul Flowers was banned from the financial services industry by the Financial Conduct Authority, which said he had a “lack of fitness and propriety” required to work in the sector.
Mr Flowers was chairman of the bank between 2010 and 2013, overseeing its near collapse after revealing a £1.5 billion black hole in its accounts, but was forced to step down amid allegations he bought and used illegal drugs, as well as claimed inappropriate expenses.