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Post Office profits rise as it benefits from bank branch closures

Profits are up at the Post Office (PA) Photo: PA Archive/PA Images

The Post Office has notched up its second consecutive year of profits as it continues to benefit from bank branch closures.

Trading profits at the network more than doubled from £13 million to £35 million in 2017/18, while turnover nudged up from £957 million to £961 million.

The performance was driven by its financial services, telecoms and insurance arms.

Its high street banking arm processed over 125 million withdrawals from UK bank accounts in the period and customer cash deposits grew 28%.

An influx of small business customers and individuals using the service while the likes of RBS and Lloyds shut hundreds of branches was behind the growth, the Post Office said.

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Boss Paula Vennells added: “Millions of people and businesses rely on our services, especially as more and more banking customers are turning to our branches to undertake everyday banking services.  We have made good progress in our transformation and there is more to do.

“We have set ourselves a target of £100 million trading profit within the next three years. We need to be able to invest in the future and respond effectively to the challenges which remain.”

However, the Post Office’s retail arm had a difficult time, with mail, lottery, government services and payment services recording negative or flat growth.

It blamed increasing competition in the letters market and a decline in stamp sales for the lacklustre performance in its mail division.

It also saw foreign exchange turnover decline by £3 million as currency fluctuations resulted in lower volumes and fewer workers sending money home following “uncertainty over Brexit”.

Last year the Post Office secured £370 million of Government funding to help protect village branches and modernise others.

The firm said on Thursday that more than 7,500 branches have been transformed, offering customers 200,000 extra opening hours and 4,000 branches open on Sundays.

Ms Vennells added: “We need to speed up how we do business, and reduce our costs further, so we can work more efficiently to meet the demands of every single one of our customers – whether they require physical or digital services.”