Co-Op Bank returns to profit as mortgage lending hits eight-year high

Losses increased slightly to £140.7m from £140.3m in 2017, largely due to ongoing costs relating to the separation of the Bank from the Group.

Total investment spend increased by £39.8m over the year to £112.9m and the bank also lost £31.7m to PPI redress, above the levels previously forecast.

The Bank said £1bn from the Term Funding Scheme in the first quarter of 2018 has supported positive new lending, with the highest year for mortgage completions since 2010.

Completions rose from £3.4bn in 2017 to £4.3bn last year, while net lending increased from £0.1bn to £1.4bn.

98% of the Bank's mortgage business was originated through intermediaries in 2018 after it stopped offering direct business via its branches in February 2018.

Andrew Bester, CEO of The Co-Operative Bank, said: “The backdrop of political uncertainty and intense competition has created an extremely challenging banking environment but, despite this, we have made sizeable progress in the Bank’s transformation this year, reaching a key milestone by recording an operating profit for the first time since 2013.

"While our ongoing investment in transformation means continued losses overall, this is nevertheless an important step towards achieving our goal of sustainable profitability."