Assets at Leeds Building Society hit £20bn
Leeds Building Society has hit a total asset value of £20bn for the first time during a “robust” half-year trading period.
This morning, the listed mutual announced its first mid-year results, for the six-month period ended 30 June, under new Chief Executive Richard Fearon.
In the first half of the year the business increased residential mortgage balances by 4.4% – £16.5bn compared to £15.8bn 31 December 2018. New lending totalled £1.9bn (£1.8bn June 2018) and attracted 5.2% more savings balances (£14.6bn, compared to £13.9bn 31 December 2018).
This saw the firm take total assets up 6.9%, from £19.4bn on 31 December 2018 to £20.7bn. It was the first time it achieved the £20bn total.
But its pre-tax profits dipped to £49.4m ; down from £60.1m for the same period in the previous year.
The society – the fifth-largest in the UK – said that “sustained pressure” on mortgage pricing and high levels of refinancing translated into lower mortgage income and, without an equivalent reduction in funding costs, had suppressed net interest income.
The firm added: “The underlying strength of the mortgage book remains high with a low level of arrears and continued high quality security; albeit a worsening view of forecast economic conditions has negatively impacted expectations of credit losses and resulted in increased charges for impairment loss provisions. ”
It also said that its “ambitious investment plans” were progressing well, as so far in 2019 work had begun to fit out the Society’s new Leeds headquarters and the phased upgrading to future-proof lending systems is underway. “Both projects are major commitments to future service improvements which also will boost efficiency and save money,” said the mutual.
Fearon said the building society model of focusing on long term value for the benefit of its membership as a whole continued to be a guiding principle which enables the business to remain secure and stable, even through times of external economic upheaval.
He said: “The Society stays true to the purpose for which it was founded, to help people save and have the home they want, and we continue to lend responsibly and grow in a prudent and carefully-managed way. This is despite the challenging headwinds in the UK economy and the impact of cooling consumer confidence.
“As expected, increased competition and the effects of slowing economic growth have had an impact on our profit levels. Similarly, we knew our ongoing investment in member value and our digital capabilities would affect profits – while these have reduced this year they remain at a healthy level.
“Following planned high levels of growth over several years, the Society has made a conscious choice to moderate increases in mortgage and savings balances to focus on margin.
“We’ll continue to pursue our strategy of supporting borrowers who are not well-served by the wider market – such as through Shared Ownership, Interest Only and Buy to Let – as we keep looking for new ways to respond to the evolving needs of our members.”
The firm’s Chief Operating Officer, Karen Wint, has also advised the Board that she plans to retire next year. Fearon said: “Karen has made an outstanding contribution over many years to assuring the long term success of the Society by leading our people and diversity agenda, making Leeds Building Society an employer of choice, improving our IT and cyber resilience and initiating the move to our new Leeds headquarters. I would like to thank Karen for her tremendous care and passion for the Society.”
