THE Co-operative Bank has vindicated its ethical stance by posting a tenth consecutive year of record profits.

The group said new products linked to ethical and ecological good causes had helped pre-tax profits to rise 6.2 per cent to £130.1m in the 12 months to January 10.

These products included carbon dioxide-conscious car loans and mortgages that involve the bank making donations to global warming opponent Climate Care.

Staff are in line to receive bonuses worth about ten per cent of their salaries, an average of nearly £2,000 each - similar to last year's payout.

The Co-op, which also owns Internet bank smile, said total customer deposits averaged £6.16bn across the year, 12 per cent more than last year.

mortgage balances reached £2bn by December - only four years after the bank re-entered the market.

This growth drove a 25 per cent rise in lending, with balances averaging £4.95bn last year.

The acquisition of the credit card balances of Northern Rock in June was expected to make an important contribution to future growth.

The Co-op employs more than 4,200 people at 100 branches in the UK and has two million customers.

The bank has a strategy of investing in companies involved in fair trade or social enterprise and avoiding groups such as tobacco firms, companies which damage the environment and those which supply arms to oppressive regimes.

Optimism about future growth was fuelled by findings that showed the total value of ethical banking increasing last year by 16 per cent to £3.9bn.