Profits at the Co-Operative Group have plummeted by a third in just six months after PPI claims, fierce retail competition and difficult economic conditions took their toll.
The group's bank made a half year loss before tax of £58.6m, after paying out £40m for payment protection insurance mis-selling and £20m in costs as part of its bid to buy more than 600 branches from Lloyds.
And pressure on the banking arm was made worse by the performance of its supermarkets, which continued to face fierce competition from rivals.
Speaking to The Huffington Post UK, retail analyst Clive Black from Shore Capital said Co-Op suffered from being "a victim of market development".
"The banking PPI scandal was a massive issue for the industry as a whole. The Co-Op was caught up in it to a degree, but it is particularly awkward because they seen themselves as the ethical bank, and this scandal doesn't help its reputation," said Black.
"The retail side is a nice business, but it lacks cutting edge compared to its competitors - it can't compete with the heavy discounters like Lidl, or the 'all-in-one' supermarkets like Asda and Tesco."
Its specialist businesses, such as the funeral service and pharmacy, did better however. Revenue was up 1.5% at £777.1m and underlying operating profit rose by 19.3% to £62.0m.
In the Co-Op's statement, chief executive Peter Marks maintained the banking performance was "satisfactory" and blamed the food results on fierce competition and poor weather.
"None of this was unexpected and we had planned for this outcome, so were well prepared," he said. "We are supported in this by our healthy financial position, with a robust balance sheet and strong cash position.
"Looking ahead, we remain confident and expect an improvement in sales and profit in the second half. The environment is tough and we see no let-up in that. But we believe that the work we have done over the past five years to scale up in our core businesses means we are better placed than ever before to thrive when the economic upturn does come."
The report from Co-Op also talked up its planned £2bn investment over the next three years, and the roll out of in-supermarket bank counters, following successful pilots around the country.
But Shore Capital's Black remained unconvinced, saying he would be "amazed" if in-store banks took off in the long run.