Balance sheet tops £3billion for first time as Cumberland Building Society sees profits rise
The Cumberland Building Society made profits of £26.6m due to rising interest rates and swaps on fluctuating interest rates, but operating profit ran at £12.3m for the year.
Mortgage lending increased from £2.2bn to £2.37bn as the Society’s balance sheet topped £3bn for the first time. Deposit balances also grew, from £2.44bn to £2.61bn.
The Carlisle-based mutual raised interest rates for savers as the Bank of England’s base rate increased repeatedly during 2022-23.
Chief Executive Des Moore said that higher interest rates presented an opportunity for the Society to live up to its slogan of ‘kinder banking’.
He added: “To reassure borrowers, we’ve pledged to give those coming to the end of fixed-rate terms preferential deals on new products and we’re on hand with specialist advisers if any of our borrowers experience financial difficulty.”
Writing in the annual report for the year to March 2023, Chair John Hooper said the Society had performed “exceptionally well”, despite being a volatile year for financial markets and the wider UK economy.
Mortgage lending increased from £2.2bn to £2.37bn as the Society’s balance sheet topped £3bn for the first time. Deposit balances also grew, from £2.44bn to £2.61bn, while profit before tax rose to £26.6m.
He said: “Looking ahead, we face multiple challenges that are likely to squeeze profits over the next two or three years.
“Higher inflation, at levels we haven’t seen since the 1970s, is impacting everyone and like everyone our costs are increasing.
“There are also signs that the housing market is slowing, which will inevitably affect the level of mortgage lending.”
The Cumberland is a specialist lender to the hospitality sector. Lending here increased too, driven by businesses switching loans from other lenders to benefit from The Cumberland’s relationship banking model.
Borderway Finance, the Society’s specialist vehicle finance subsidiary, contributed almost £1m to pre-tax profits.
The Cumberland is committed to its branch network at a time when many banks are shutting branches. The year saw the refurbishment of the Maryport branch while plans are back on track for the revamp of the flagship branch in English Street, Carlisle, delayed by the Covid pandemic.