Coventry Building Society profit falls ahead of Co-op Bank takeover

Profits have plunged at Coventry Building Society after it tussled with the lasting effects of an “exceptional operating environment” in 2023.

Pre-tax profits fell to £159 million in the first half of this year, down from £269 million during the same period in 2023.

Mortgage balances grew 2.2% to £51.4 billion and savings balances grew 2.6% to £48.8 billion, but net interest margin rates reduced to 1.05%, down from 1.34% over the same period last year.

It came as the impact of higher borrowing costs begins to wear off for the UK’s high street banks, which had been benefiting from charging more for loans.

Coventry is currently gearing up to buy the Co-operative Bank in a £780 million deal.

The financial institutions will combine to have millions of customers and about £89 billion worth of assets, with the deal set to go through in 2025.

The combined entity will be led by Coventry’s chair David Thorburn and chief executive Steve Hughes.

It means Co-op Bank will return to a mutual structure, meaning it is owned by individual members rather than shareholders and investors like most UK banks.

Co-op Bank was part of the wider Co-op Group more than 10 years ago, before splintering off when it fell into deep financial difficulty.

Co-op Bank has already said its customers will “not see any immediate changes as we continue to operate separately” until the integration is complete.

Mr Hughes said: “I am delighted to report that the society has continued its sustained record of delivery in the first six months of the year.”

He added: “We have grown mortgages and savings in a market where economic uncertainty persists and continued to offer great value products and exceptional service to our members.

“The society has recorded a strong financial performance in the first half of 2024 and further enhanced our capital position. We are making good progress to complete the acquisition of The Co-operative Bank in the first quarter of 2025.”