Ethics pay dividends for the Co-op

THE Co-operative Bank argued that profits could go hand-in-hand with ethics today, as it reported record first-half profits before tax of £68.3m, up 13%. The bank, which trades heavily on its environmental and ethical stance, was boosted by a flood of new customers to its internet offshoot Smile and its return to residential mortgage lending.

Retail deposits grew 14% and retail lending was up 11%. Smile now boasts more than half a million account holders, three-quarters of them new to the Co-op Bank.

It resumed lending to existing customers in 2000 and last year offered home loans to new customers. It also extended its product range with a loan that tracks Bank of England base rate.

Loan quality remained stable with the provision for bad and doubtful debts lifted 13% to £39.4m - less than 2% of the total loan book. The bank is being merged with sister organisation, Co-operative Insurance Society to form Co-operative Financial Services. Mervyn Pedelty, chief executive of the bank and CFS, said customers would benefit from a wider range of services.