Building Society grows mortgage lending and savings accounts

John Hooper

The Cumberland Building Society has reported healthy financial results as it delivered on its commitment to offer a banking experience that is “kinder to people and the planet”.

The Carlisle-based mutual, Cumbria’s largest financial institution, saw mortgage lending grow from £2.37bn to £2.59bn in the year to March, while savings balances rose from £2.61bn to £2.81bn.

Profit before tax fell from £26.6m to £9.6m, largely due to the unwinding of the interest-rate swaps that protected the Society when rates surged in 2022. But operating profit, which it said is a more realistic measure of performance, jumped 29% to £27.4m while the balance sheet reached a record high of £3.2bn.

Writing in the annual report, chair John Hooper said: “It has been another year of steady progress despite repeated increases in the Bank of England’s base rates to a level not seen since early 2008.

“That spike in rates brought relief for savers but pain for borrowers and it dampened demand in the housing market.”

As a building society owned by its members, the savers and borrowers, the Cumberland prides itself on doing the right thing.

The Society was quick to raise savings rates when interest rates increased but was deliberately slower to pass on increases to borrowers this year choosing not to pass on the last one per cent of base rate increases to its variable rate owner occupier mortgage borrowers. It recently cut rates on fixed-rate mortgages in anticipation that interest rates will fall.

The Cumberland’s vehicle leasing subsidiary, Borderway Finance, performed well while commercial lending to the hospitality sector saw modest growth despite difficult trading conditions for many hospitality customers.

Des Moore, Cumberland Building Society

Chief executive, Des Moore, stressed technology would not replace human interaction, and remained committed to the branch network at a time when many banks are closing branches. He wrote: “We are the last financial institution standing in 16 locations throughout our region. We’ve retained our branches because a significant number of customers prefer face-to-face contact.”

The Cumberland is pressing ahead with the refurbishment of its flagship branch in English Street, Carlisle, which is due to reopen this year.

John Hooper will step down at the AGM after five years as chair and nearly nine years as a non-executive director. He will be succeeded as chair by Jackie Arnold who has served on the board since 2018. Jackie brings more than 40 years’ experience in business and financial management. She has been a part of the Cumberland team as a non-executive director since 2018 and the people, remuneration and culture committee chair since 2019.

Eric Gunn, non-executive director, chair of board risk and senior independent director, also retires at the AGM after eight years’ service while Cameron Marr, who has significant international banking experience, has joined the board as a non-executive director and as chair of board risk committee.