Rebranding of the Somerfield estate is now in full swing with 29 stores already rebranded as The Co-operative Food. Photograph: Newscast/The Co-op/PR

The Co-operative Group has seen a surge in demand for financial services as consumers desert the larger high street banks following the financial crisis.

Chief executive Peter Marks revealed this morning that applications for new current accounts have soared by 50% in the last six months.

“People have lost trust with banks, understandably so, and we’ve seen a very substantial increase in people opening new accounts and taking out mortgages,” Marks said.

“They want to be part of a company with an ethical approach, especially after the events of the last couple of years.”

Marks was speaking after the Co-op reported a 17% rise in pre-tax profits for the first half of the financial year, to £228.8m. Its Co-operative Financial Services arm grew profits by 11%, which Marks credited to its old-fashioned banking practices such as “taking money in as deposits before lending it out”.

Its grocery stores also enjoyed a strong six months, with like-for-like sales up by 7.3% in the 26 weeks to 25 July. Sales of Fairtrade products grew by 35%, which Marks said was a sign that consumers were sticking with their ethical beliefs despite the recession.

Marks also echoed recent comments from Tesco and Sainsbury’s that the recent sharp rise in food prices is now mostly over.

“We do import a lot of food product, and with the pound-euro exchange rate the way it is we’re importing food inflation to some extent. But food inflation is going to be zero or almost zero for the second half of the year.”

An acquisitions spree saw Co-op take control of the Somerfield supermarket chain and the Britannia Building Society earlier this year. Marks said the company was now focused on consolidating these new assets, but indicated that it will be interested in more opportunities in the future.

“We expect the economy to remain challenging with continued increases in unemployment and no immediate signs of recovery in consumer spending,” Marks warned, adding that it would be “naive” to think that the Co-op was immune from the recession.

The Somerfield takeover gave the Co-op another 650 stores, although it has sold off 200 of them to satisfy competition concerns. Last month, the Observer reported that farmers are concerned that the Co-op is using its greater strength to demand tougher terms.