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Co-op Bank updates business plan as FY'15 loss widens YOY


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Co-op Bank updates business plan as FY'15 loss widens YOY

Co-operativeBank Plc on April 1 reported a full-year 2015 loss attributable toequity holders of £623.3 million, compared to the year-ago restated loss of£226.6 million.

The loss per share for the year was 138.05 pence, comparedto the year-ago 61.48 pence.

Despite the loss, CEO Niall Booker insisted that the bank'score operations were stronger than a year earlier. Booker said the bank expectsto report a pretax loss in 2016 and 2017, but expects a return to operatingprofitability in the core bank before 2017-end. The operating result at thecore bank narrowed to a loss of £14.9 million in 2015 from £78.6 million in2014.

Net interest income declined to £299.2 million in 2015 from£358.0 million in 2014; net fee and commission income fell to £71.8 millionfrom £122.4 million.

Remediation and strategic project costs came in at £224.2million in 2015, compared to £206.1 million a year earlier, as the bank said itcontinues to deliver the transformation required to "address the historicunderinvestment in systems and processes."

The bank booked conduct and legal risk charges of £193.7million in 2015, up from £101.2 million in 2014. The increase is attributableto additional provisions relating to payment protection insurance, of £71.8million, and breaches of the consumer credit act resulted in unenforceableinterest of £58.3 million and £40.4 million relating to the overall cost CCAredress, the bank said.

The bank noted that its compliance with regulatory capitalrequirements will take a year longer than previously anticipated because of theimpact of the legacy conduct charges and a number of headwinds crated by aprojected extension of low interest rates. The bank now expects to meet thesustainable individual capital guidance standard in 2019 and the PRA buffer in2020.

At 2015-end, Co-op Bank's common equity Tier 1 ratio was15.5%, compared to14.9% at the end of June 2015 and 13.0% at the end of 2014.

Co-op Bank said it updated its business plan for 2016 to2020 in light of market conditions and recent developments, and will now makeMREL-qualifying issuance from 2018 and stop further deleveraging in the noncoreOptimum portfolio. The lender said that following measures undertaken in 2015,the portfolio now poses less of a risk than in 2014.

Risk-weighted assets amounted to £7.4 billion at the end of2015, compared to £12.6 billion a year ago.

The updated plan has been accepted by the U.K. PrudentialRegulation Authority, the bank added.