As The Co-operative Bank looks forward to the opportunities and challenges presented by the creation of Co-operative Financial Services (the new grouping comprising the bank and the Co-operative Insurance Society - CIS), it is encouraging to report that it faces the future from a strong and confident position. This set of results represents the ninth consecutive year of record pre-tax profits for the bank. Profit before tax was £122.5 million, higher than 2001 by 14%. Earnings attributable to the Co-operative Group (CWS) Limited, after tax, were £78.2 million, an increase of 14.2%.

These impressive financial results are accompanied by an equally impressive performance in the areas of environmental and social responsibility. This was nowhere more clearly demonstrated than when the bank took the Special Judges' Award in 2002 for Overall Corporate Social Responsibility Performance at the prestigious New York-based Global Corporate Conscience Awards. Never before has a UK company, or, indeed, a financial services organisation worldwide, received this special award.

The Global Corporate Conscience award honours companies that respect the rights and promote the well-being of all stakeholders, and is once again recognition of the importance the bank attaches to measuring its success in other than purely financial terms. The bank's annual Partnership Report is being published alongside these financial statements, and illustrates in detail not only how the bank delivers value to all its partners but also how it maintains its world-class social and environmental performance.

Our internet bank, smile, launched just three years ago, continues to prosper. It has established a distinctive character, and provides an exceptional combination of value, convenience and service. Independent research has shown high levels of satisfaction amongst smile's customers; and more than 80% of smile's customers are new to the The Co-operative Bank group.

The bank's record in innovation has consistently been one of its key strengths, and I am confident that by moving forward with the Co-operative Insurance Society, under the common leadership of Co-operative Financial Services (CFS), it will build further on its successes over the coming years. These exciting developments will allow each of these successful co-operative organisations to benefit from collaborative initiatives, whilst the co-operative family of businesses should also see new opportunities arising from the resulting synergies. At the heart of these developments, however, is the determination to provide - for the customers of both organisations - a wider range of financial products and convenient channels through which to access their products and services.

The scale of the changes required under the new grouping within CFS will demand a great deal from all the people who work in both organisations. However, the commitment and motivation already evident from the bank's own leaders and staff confirms my belief that 2003 should see continued progress.

There have already been a number of changes to the membership of the bank's Board and Executive Team. Mervyn Pedelty continues in his role as the bank's Chief Executive, and Sheila Macdonald has now been appointed to the role of Chief Operating Officer, and I would like to take this opportunity to congratulate her, and also to welcome Bryce Glover, Richard Goddard and Peter Sutcliffe as Executive Directors, and as Non-Executive Directors, Simon Butler and Graham Stow. Mick Firth and Ken Lewis have moved on to new roles within CFS and Bob Head has left smile, and I thank them all for their significant contribution to the bank over many years. I must also pay tribute to Willie Tucker and David Hollas, who both stood down from the Board during 2002 after five year's service as Non-Executive Directors. I am grateful to them both for their contribution to The Co-operative Bank's many achievements.