Building society future remains uncertain
MANCHESTER Building Society has posted a full year loss as uncertainty over its future remains.
It has announced pre-tax losses of £600,000 (2014: £4.3m profit), while operating profit before impairment stood at £2.9m (2014: £4.7m) for the year to the end of December 2015.
Last month Manchester Building Society’s directors warned that its accounts would refer to a material uncertainty surrounding the mutual’s long-term future, given the continuing decline in the scale of operations.
The mutual, based on Portland Street in Manchester city centre, said the decline in operating profit reflected the planned reduction in the size of the loan book and a £1m increase in the charge for potential regulatory non-compliance in two second charge portfolios, although this was partially offset by a £700,000 profit from the sale of a minority stake in a trade investment.
Impairment losses of £3.2m for the year comprised a £2.5m write down in the value of its head office building and a £700,000 charge for loan book impairment.
The society has not been active in the lending market since 2013 and said it has has no plans to re-enter the mortgage market in the immediate future – mortgage assets have reduced by approximately 40% over the last three years.
It said there are ongoing discussions with the Prudential Regulation Authority (“PRA”) and other stakeholders regarding the development of a plan to secure the future of the society and its strategic direction.
David Harding, chairman said: “Although there is uncertainty regarding the long-term future of the society, we continue to put the best interests of our members first. The board is developing a number of options which individually or in combination are reasonably expected to secure the future of the Society, to enable it to continue to meet capital requirements and to improve the quality of its regulatory capital.”
Reserves fell by £5.4m (2014: £3.9m increase) but d irectors added the society’s liquidity position remains strong and they will be giving further consideration to future strategy over the coming months.
