Interim Result Highlights for The Co-operative Financial Services (CFS) for the 28 weeks to 25 July 2009
Following its merger with Britannia Building Society on 1 August 2009, The Co-operative Financial Services (CFS) is one of the largest and most diversified financial mutual businesses operating in both retail and corporate markets. The combination of the financial strength, customer focus and co-operative values, principles and ethics of the new organisation, will offer our members and customers a trusted and ethical alternative to shareholder-owned banks.
CFS is part of The Co-operative Group, which is the UK’s largest mutual retailer with 4.5 million members, over £14 billion turnover, over 5,000 retail trading outlets and core business interests in food, financial services, travel, pharmacy and funeralcare.
Highlights
- Total shareholder profit before tax, FSCS levy, significant items and short-term investment fluctuations was £81.4m (2008: £73.4m) an increase of £8.0m (11%).
- £14.6m profit from General Insurance (2008: £1.5m loss).
- £41.7m profit from Banking activities (2008: £46.2m). Bank wholly funded by customer deposits.
- General Insurance claims ratio reduced to 73.3% (2008: 74.0%).
- Strong balance sheet growth achieved in both lending and deposit balances. 12% growth in customer lending, funded by strong growth in customer deposits (up 21%).
- Strong liquidity and capital ratios with a capital ratio of 12.8% and core tier 1 ratio of 9.2%.
- Merger between The Co-operative Financial Services and Britannia took place on 1 August 2009, resulting in one of the largest and most diversified financial mutual businesses, with over £70 billion in assets.
- Winner of the prestigious 2009 Which? Award for Best Financial Services Provider.
- Strong new business growth including; current accounts sales, which are 68% higher than in 2008, an 18% increase in annualised new premiums for life and savings, and general insurance sales, which increased by 27% over 2008.
(Long-term business in Life and Savings is transacted on a mutual basis with all profits retained for the benefit of policyholders)
General Insurance highlight
The general insurance business achieved a significant improvement in the first half of 2009, delivering profits of £14.6m (2008: loss of £1.5m)
Gross Written Premium has improved by £7.5m to £228.4m which has been predominantly driven by increasing sales volumes through both our online, telephone, broker and aggregator channels, further continuing the growth seen in 2007 and 2008.
Retention rates have remained broadly stable despite the economic climate, which is a reflection of the loyalty of our customer base and success of new retention initiatives. We have also seen an increase in new business income of 27%.
The general insurance claims ratio was 73.3% (2008: 74%) and this has been achieved despite claims for the cold weather experienced earlier in the year and the growing trend for claims to settle on a periodical, rather than lump sum basis, which has become more attractive to claimants in the current interest rate environment. Overall costs remained broadly unchanged, despite increases in overall income, new business volumes and associated commissions.
New business developments included the launch of market leading business insurance products, offering customers the chance to tailor policies to suit their needs. Other new developments included improvements to our web sales proposition and full ‘quote and close’ capabilities for our home insurance product provided in our bank branches.
Customer satisfaction for general insurance also remains high, standing at 75.3% and we have widened the gap over the market average. This year we have won the Corporate Social Responsibility Award at the British Insurance Awards and also a Claims Platinum Award for the quality of our claims handling.
