The mutual won damages of £13.4m in the Supreme Court, in the case it brought against former auditors Grant Thornton.
Its half-year report said profits included £21m in relation to the award, and associated costs and interest.
The mutual made no new advances during H1 and mortgage assets reduced by seven per cent to £166m.
Manchester BS has not been active in the mortgage market since 2013 and said it had no current plan to return to lending, with the strategy for long-term run-off.
However, the report said: “No change in strategy has been agreed as a result of the improvement of the capital position following the Supreme Court’s judgement in the society’s legal case with Grant Thornton, though the board keep this under review and is working with advisers and the regulators to establish what the Supreme Court judgement will mean for Manchester’s ongoing strategy.”
The lender sued the auditor over advice given in the period from 2006 to 2012.
Analysis of the case by law firm Brodies explained that the mutual had used interest rate swaps to offset its fixed-rate lifetime mortgages. This had resulted in balance sheet volatility and having to hold increased reserves.
Grant Thornton advised that it could use hedge accounting, but this turned out to be wrong. The society suffered a loss of £32m.