LONDON (Reuters) – Britain’s Co-operative Bank narrowed its losses in the first half of 2019, but warned its profitability was under strain due to intense competition in the mortgage market.
The lender posted a statutory pre-tax loss of 38.5 million pounds for the period, compared to a 39.5 million pound loss the previous year.
Co-op Bank warned competition in home loans and interest expenses incurred from issuing debt had squeezed its margins, and that they would fall further in the second half of the year.
The lender’s net interest margin – a key measure of underlying profitability – fell 25 basis points to 1.83%, compared to 2.08% the previous year.
The bank reported a capital ratio of 21.9%, down from 22.3% a year ago but said it would exceed expectations at the full year at around 20.5%. It also said it would deliver a cost to income ratio above its expectations at less than 110%.
Co-op Bank has been working to turnaround its finances since its near-collapse and rescue by a consortium of U.S. hedge funds in 2017.
(Reporting by Iain Withers, editing by Sinead Cruise)