Bradford-born Co-op chief Peter Marks says a change in shopping habits by consumers leaving the car at home and using local stores helped boost its profits by 11 per cent in the year to January.

As a result the Co-operative Group’s three million members are to share a £50 million dividend.

The food-to-funerals group posted pre-tax profits of £217.6 million.

Sales at its supermarket business, which includes Somerfield, rose by five per cent on a like-for-like basis and excluding fuel. First quarter comparable sales in the current year rose by 6.5 per cent.

The results compare well with its bigger supermarket rivals, including Bradford-based Morrisons whose like-for-like sales rose by 7.9 per cent last year.

The Co-op said it was benefiting from the trend for cash-conscious consumers to shop locally, with its convenience store format appealing to those not wanting to travel by car to the supermarket.

The mutual is the now the UK’s fifth largest food retailer, the third largest pharmaceuticals chain, the biggest provider of funeral services and the largest independent travel business in the country.

Its £1.56 billion takeover of Somerfield helped strengthen its position behind the “big four” supermarkets.

Morrisons acquired 38 former Somerfield stores from Co-op.

Co-op is also merging its financial services business with Britannia Building Society to create a “super-mutual” with more than 300 branches in a deal which is expected to be completed on August 1. The deal was masterminded by David Anderson, Co-operative Financial Services boss, who used to head the Bradford-based Yorkshire Building Society.

The financial services business has already reported annual profits showing a 2.8 per cent drop to £148.7 million after it took a knock from the general insurance business.

But its banking operation remained resilient in the face of the financial crisis, with a 70 per cent rise in underlying profits.

Peter Marks (pictured), Co-op chief executive, said the group was “coming into its own” amid the recession.

He said: “While the economic outlook clearly remains difficult, we believe that the Co-operative Group is in a strong position. Our focus on financial success combined with social responsibility is more attractive than ever before.”

Co-op said it contributed £11.5 million to the community in 2008, up ten per cent on the previous year.