The Co-Operative Bank has warned the decision to leave the European Union could delay its recovery plans as market conditions are “challenging” for retail banks.
After revealing a narrowed half-year loss of £177 million before tax, down from £204.2 million the previous year, the bank said all high-street lenders faced a difficult time to generate profits after the referendum.
Co-Op Bank said that the Brexit vote could also affect the property market along with mortgage loan growth and expects to continue making losses until the end of 2017.
Niall Booker, the bank’s chief executive, said: "Today's market conditions are challenging for all retail-focused banks and the macroeconomic uncertainty following the result of the EU referendum, including the likelihood of lower-for-longer interest rates, may restrict our ability to grow revenue in the short term.”
Earlier this month, the Bank of England announced the decision to lower the interest rates to a record low of 0.25% in an effort to restore the UK economy after the vote to leave the EU.
Responding to this decision, the bank commented: “Customers with fixed rate mortgage and fixed rate savings products will not be affected by this reduction in Base Rate for the duration of their fixed deal.
“However, customers with tracker mortgages will see their rate fall in line with Base Rate, unless their product has a floored rate, in which case the rate will not drop below the rate stated in the product terms and conditions”.
The UK lender nearly collapsed in 2013, after a number of bad property loans saw a £1.5 billion gap in its finances.
It was announced on Thursday that Mr. Brooker would step down as chief executive at the end of the year, to be succeeded by deputy chief executive, Liam Coleman.