Profits at the Co-op’s banking and financial services business have more than halved after the floods that devastated parts of England this summer left the group with its biggest weather-related insurance bill for 60 years.

The Co-op revealed today that claims from the damage caused in June and July totalled £55 million, sending its general insurance business £32.3 million into the red in the first half of the year.

Profits across Co-Operative Financial Services (CFS) in the six months to July 28 fell 54.6 per cent to £22 million despite strong lending growth at the Co-op Bank, which runs the Smile online bank. It refunded £6.3 million of overdraft charges.

David Anderson, chief executive at CFS, said that more than 5,000 policyholders with home insurance submitted claims after the flooding. The group covers nearly one million homeowners.

However, he said that, despite the bill, the group had no plans to follow Norwich Union and introduce a uniform increase in premiums.

He told Times Online: “There’s unquestionably a change in the climate that will affect claims in the future but it does not mean we should suffer a kneejerk reaction and increase premiums.”

On an underlying basis, pre-tax profits across CFS rose 16 per cent to £92.9 million.

Mr Anderson said the “encouraging” performance meant that the group was well placed in its transformation programme.

The group is investing £250 million to improve the “accessibility and quality” of its product distribution and cutting costs by £100 million.

It announced plans two months ago to cut 1,000 jobs in a move labelled as “brutal” by banking unions.

Amicus, part of the merged union Unite, demanded a full and open consultation with the bank, which is the biggest employer in Manchester.

Mr Anderson insisted today that no redundancies would be made in customer-facing roles and that none of its customer-facing operations would be sent offshore.

Pre-tax profits at the Co-op Bank were £800,000 higher at £45.5 million, with bad debts down by £5 million to £53.2 million.

This summer the bank tightened credit and lending criteria, including a reduction in credit card limits on high-risk accounts.

Customer deposits rose by 9 per cent to £8.2 billion.

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