The Co-operative Bank reported increased income and profits in 2022 although bad debts leapt sixfold as the economic picture deteriorated.
Total income, which includes net interest income and other operating income, increased by 38% in the twelve months ended December 31 to £499.4mln from £361.5mln in 2021 while the net interest margin improved by 41 basis points from 125bps to 166bps, reflecting improving deposit margins following increases in the base rate.
Profit before tax of £132.6mln and underlying profit of £136.0mln were up from £101.5mln and £95.0mln in 2021 respectively.
But bad debt charges jumped to £6.4mln from £1.1mln reflecting a deterioration in the macro-economic forecasts along with adjustments for affordability across secured and unsecured portfolios as a result of cost of living pressures. However, it stressed arrears remain low and stable across all portfolios.
Looking ahead and Co-op forecast bank net interest margin of approximately 180bps reflecting additional base rate rises, total statutory costs of approximately £420mln and asset quality ratio of less than 5bps.