YBS puts in ‘good’ start to year despite competitive pressure on margins
The chief executive of Bradford-headquartered Yorkshire Building Society has said the mutual has had a “good start” to 2018, as it implemented cost reductions which offset reduced interest income.
Reporting on the six months to June 30, YBS stated that its statutory pre-tax profits dropped to £88.6m from £92.3m in the same period last year. The listed building society saw a £2m growth in core profitability, which it said was as a result of cost reductions more than offsetting reduced interest income as “competitive pressure on margins” continued.
Mike Regnier, chief executive of the firm, said the results supported its aim to make a level of profit “to allow our business to grow at a sensible and healthy rate.”
He added: “I am pleased to report on a good start to 2018 for Yorkshire Building Society.”
Overall mortgage balances for the period stood at £35.4bn (31 December 2017: £35.1bn) and gross lending was £4bn (30 June 2017: £3.4bn). Its retail savings balances were reported as £28.8bn (31 December 2017: £28.9bn).
YBS said it was continuing to deliver the brand, product and distribution changes announced last year. In particular, the firm has now closed the current account and over the weekend of 7/8 July rebranded the remaining Norwich & Peterborough branches to YBS and migrated over 280,000 savings customers to YBS accounts.
The mutual said that it driving to implement “more effective structures and increase automation throughout the business.” It is also investing in the development of digital capabilities and preparing for Open Banking.
The YBS added: “Despite the UK interest rates rising for the first time in ten years in November 2017 and further increases expected to be seen in 2018/19, sustained historically low interest rates continue to constrain margins and the issue of affordability is fundamentally changing the housing market. Pressure upon disposable incomes is reflected in falling savings rates. As a result, growth opportunities may prove difficult within the Group’s core markets and the Group’s business model may potentially be impacted.”
