The bank’s profit dropped to GBP44.7 million in the first six months of 2006 from GBP60.2 million for the same period last year. The drop in profits correlates closely to the bank’s rise in provision against bad debts, which was GBP58.2 million in 2006, compared with GBP43 million in 2005.
The Co-op is the latest bank to announce a drop in profits due to bad debt, as rising household bills have undermined the ability of consumers to repay debts. Household utilities bills have been forced up by climbing wholesale energy prices, driven by a number of factors such as dwindling supplies from the North Sea gas fields, inadequate storage capacity, and political maneuverings endangering gas supplies from in eastern Europe.
