Mortgage completions fell to £1.7bn in the first half, against £2.1bn the previous year, which the bank attributed to a ‘controlled level of growth’ amid margin pressure caused by the expiry of historically higher fixed rates and low numbers of borrowers on standard variable rates (SVR).
Net residential lending fell from £0.5bn to £0.4bn, however customer retention has improved overall, said the provider.
Co-operative Bank was the 12th largest UK lender over 2018, according to UK Finance figures, with £4.3bn of lending lifting it two places in the rankings and placing it just below TSB at 11 with £4.8bn and above Metro Bank at £4.2bn.
In H1, online mortgage product switching has been added for existing direct or intermediary customers and also made available to buy-to-let customers who arrange their mortgages direct.
The bank has also reduced the application to offer time on the Platform website by 16 per cent in six months.
On Co-op’s mortgage lending, 99.7 per cent of the total book is classified as prime or buy-to-let mortgages, with higher risk self-certified, almost prime and non-conforming accounting for 0.3 per cent of the total book.
CEO Andrew Bester said: “We have made a positive start to the year, and while we remain loss-making overall, the reported statutory loss before tax of £38.5m is ahead of expectations with the group being near break-even on an underlying basis, with a £2.8m loss.”
On the IT and digital side, the lender continues to separate its infrastructure from the group which it said will better enable product development and the group migrated 350,000 current account customers to its mobile app.
The turnaround strategy
The group reported a 5.8 per cent lower net interest income in core segments to £159.4m year-on-year.
The report said: “This continues the trend reported at the year end, where compression of retail mortgage margins is being experienced by UK lenders across the market which is only partially offset by reduced funding costs.
It added: “During the same period, operating costs have increased by 4.9 per cent, leading to an increase in the underlying cost:income ratio from 95.7 per cent to 101.0 per cent.
“This reflects the group’s planned investment to reinvigorate and energise its brand and in its people as part of the strategy to build the future of the bank.”