The Co-operative Group has posted a net loss of £559m for the first half of 2013, compared to a net income of £18m for the same period last year, primarily due to poor performance of its banking business.
Credit impairment, intangible asset impairment and high operating costs were the main factors that affected the profitability of the group’s banking arm Co-operative Bank during the period, which led to a loss of £709m compared to £57m for the same period last year.
During the period, the group wrote off £496m of bad loans at its banking arm.
Apart from banking operations, the group operates more than 2,700 local, convenience and medium-sized stores in the UK, and provides funeral and legal services.
The group underlined the need for the £1.5bn capital action plan, which was revealed in June, to cover future losses and stabilise its operations. This plan may include job losses and a major restructuring of operations.
The group generated revenues of £5.77bn (2012: £5.83bn), while net borrowings reached £1.12bn (2012: £1.51bn).
Citing that there are no quick fixes to the group’s poor performance, Euan Sutherland, CEO of The Co-operative Group, said: “This has been a very difficult first half for The Co-operative Group and the results highlight both the well-documented challenges faced by The Co-operative Bank and the significant work to do at group level.”
Niall Booker, CEO of Co-operative Bank and deputy group CEO, said: “We recognise the disappointment all stakeholders must feel about the financial performance we are reporting for the half year. This in turn reflects the deep rooted problems that the bank faces which led to the £1.5bn capital action plan announced in June.”