Mutual delivers record profits in another year of growth

Leeds Building Society has delivered a record set of results in a “a pretty turbulent and uncertain year” as its growing membership pushed its profits to a fourth-successive annual high.

The mutual, which was set up in 1875, increased pre-tax profits by 7% to £116.6m as it continued to deliver on its key aims.

Chief executive Peter Hill said the Society had “helped more people than ever save and have the home they want”.

“The Society has more savers and borrowers than ever before, achieved record profits and our total assets now exceed £15.9bn,” he said.

“In 2016, we increased savings market share and grew deposits by over £1bn for the first time. Our success in attracting funds meant we could keep growing our lending and we increased mortgage market share for the sixth consecutive year.”

Its net mortgage lending increased by more than one-third to £1.9bn in the year, taking its total mortgage balances to £13.2bn.

Overall its gross lending increased by 28% to £4bn, in line with its lending over the last five years, which has averaged an increase of 26% per year compared with a market average of 11%.

Hill said: “The way we have developed our business model over the last few years has been about finding sections of the mortgage market where we feel we can add value and using the performance we have generated to deliver growth for our savings customers.”

The higher savings rate Leeds Building Society offered – its average savings rate of 1.66% was 0.69 percentage points above the market average – “translates to £69m that we have put into our savers’ pockets”, he said.

The Society has continued to invest, adding 120 people to its workforce which is now 1,400-strong and refurbishing 24 branches as part of an ongoing modernisation programme.

Hill said: “The fact that we have refurbished 24 of our branches – which is nearly half of our network – and it is our intention to complete our network in 2017 shows that we think branches are important.”

The economic and political environment creates a note of caution, with competition expected to remain strong which will maintain “downward pressure on our net interest margin”, and the low interest rates and uncertainty created by Brexit also “likely to prove testing this year”.
 
“Despite this, our successful sustainable business model means we’re well-placed to withstand the challenges that may arise in 2017 and beyond,” he added.