Profit Before Tax was £55 million, an increase of 21%. Earnings attributable to the equity shareholder were £30.7 million, 35% ahead of last year.

The profit increase was fuelled by good growth in loans and even greater increases in deposits.

The Balance Sheet remained robust, with healthy capital and liquidity ratios.

The capital base was further strengthened by an additional investment of £5 million, by the bank's sole equity shareholder, CWS. In late 1997, the Board of CWS decided to maximise the bank's retained profits by declining to take its equity dividend.

These decisions, and the issue of £30 million Subordinated Perpetual Notes in January 1998, will underpin further solid growth in customer balances over the coming year.

The bank has also continued to develop its distinctive market position based on its Ethical and Ecological Policies, innovative products and superior customer service. The bank now offers its personal customers as extensive and convenient customer service facilities as any in England and Wales. In addition to the bank's branch network, cash and deposit services are now available at 15,500 Post Offices. We are currently in discussions with Post Office Counters to roll the service out nationwide. Customers are making increasing use of Telephone Banking services and nine million incoming telephone calls were received during the year. The bank's reputation for innovation will be reinforced in 1998 with the availability of the new Internet Banking service.

In October 1997, Terry Thomas retired after 25 years service with the bank, the final nine years as Managing Director. Under Terry's leadership, the bank has been transformed into a highly focused and very profitable business, occupying a unique position in the market place. The bank's progress in recent years is the most eloquent testimony to his leadership, and his elevation to the Peerage richly deserved.

Following Terry's retirement, Mervyn Pedelty was appointed Chief Executive of the bank. He also joined the CWS Executive, with responsibility for Financial Services, and the Board of the Co-operative Insurance Society as a Non-Executive Director. Mervyn has extensive experience of the banking and insurance industries and, immediately prior to his appointment, was a Partner specialising in financial services in an international strategy consultancy.

Despite the highly competitive market and the possibility of some economic slowdown in 1998, the bank is well placed to continue to prosper in the year ahead.