The UK's leading ethical bank, the Co-operative Bank, is exploring strategic opportunities including a potential sale. The move follows a significant recovery since its hedge fund rescue in 2017 under the leadership of CEO Nick Slape. Currently, the bank is engaging in ongoing discussions with potential bidders such as Shawbrook and Paragon Banking Group. However, Aldermore (LON:ALD) has withdrawn from these talks.
In recent developments, the bank expanded its customer base by acquiring Sainsbury's Bank's mortgage portfolio for £464 million. This acquisition incorporated approximately 3,500 customers with around £479 million in balances. Today, the bank boasts 2.5 million retail customers.
Despite a fourfold profit increase in 2022, the bank reported a 21% drop in quarterly pre-tax profits to £81.1 million for Q1-Q3 2023. Nevertheless, due to higher interest rates, the group's net interest income rose by 10% to £395.2 million.
Earlier this week, the Cooperative Bank announced that strategic investments such as Capita mortgage insourcing, which added 400 employees, contributed to a 17% rise in operating expenses. A 23-basis point rise in net interest margin to 1.82% led to a 10.4% increase in net interest income to £363.4m.
Despite the decrease in pre-tax profits from £102.8m in 2022 to £81.1m in Q1-Q3 2023, CEO Nick Slape highlighted the acquisition of Sainsbury’s mortgage portfolio, stable NIM, and robust deposit franchise as positive signs for the bank's future growth.
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