CFS profits up by 6.3%

April 04 2008

CO-OPERATIVE Financial Services has reported a 6.3 per cent increase in profits for the year ending January 12th.

Total shareholder profit before tax, investment fluctuations, significant items and membership dividends was £155.4m compared to £146.2m the previous year.

CFS say the general insurance business delivered an outstanding business performance despite the considerable claims costs (£37.9m) incurred from exceptional weather events during the first half of the year.

Major on-going and one-off improvements in claims handling and underwriting performance led to profits increasing by 81 per cent. Despite the severe weather events, the general insurance claims ratio was 64.3 per cent improvement of 9.3 per cent on the previous year.

The banking business saw balance sheet growth in both lending and deposit balances particularly in the corporate sector which continues to build an excellent reputation for service and product innovation for a growing number of corporate customers.

Banking profit, before investment write downs, improved by £5.9m from £76.3m to £82.2m (7.7 per cent) and reflected higher net interest income, lower costs and bad debts, offset by lower non-interest income. However, operating profit before tax and significant items of £50.4m compared to £76.3m in 2006 due to £31.8m of investment write downs through the Bank's relatively small exposure to structured investment vehicles.

Gross earned insurance premiums for life and pensions business in 2007 was £534.2m compared to £548.4m for the corresponding period last year. The fall in gross premium income is due to a reduction in regular premium from endowments as they reach maturity, partly offset by an increase in single premium accumulating with-profits business.

CFS say the transformation over recent years to support growth and improved business performance is now producing results. There have been significant product and service developments, particularly in the mortgage and motor sectors, new technology developed to support CFS financial advisers and four new corporate banking centres opened to support planned growth within the business to business market.

David Anderson, Chief Executive of CFS, told the news.coop: "This is a very satisfactory trading performance and highlights the fundamental strength of our business, the quality and professionalism of our staff and a clear business strategy which is enabling us to invest in the right business areas.

"The increase in profit which was achieved in very challenging market conditions did not impact on our ability to excel in other key areas. Throughout 2007 we continued to demonstrate leadership in areas of customer service and corporate social responsibility, which co-operative members and customers rightly expect of us.

"This is a very exciting time for our business and the opportunities presented by a revitalised membership scheme and the new Co-operative brand."