Subdued mortgage market dents MBS’ profits

MANCHESTER Building Society has reported a slip in first half profits.

Pre-tax profits fell 18% to £862,000 (2011: £1.05m) in the six months to June 30. Income was marginally up at £12.8m (2011: £12.6m)

This was partly down to what it described as a “subdued” mortgage market, although this was in line with the society’s forecasts.

“A cautious approach has continued to be taken to the underwriting of new mortgage applications, with product criteria reflecting the society’s conservatism,” it said.

But the number of mortgage accounts two months or more in arrears was down, falling to 195 at the end June from 240 at the same point last year.

Retail deposits were down £45m at £648m while cash balances were £138.3m at the end of June.

The society, led by chief executive David Cowie, said: “Uncertainty within both the UK and global economies continues to be a major factor and for the building society sector as a whole, competition for retail deposits continues to be fierce; it is the board’s view that this will continue for the foreseeable future.

“The future direction of the housing market remains uncertain, with continued sentiment indicating the probability of further reductions in house prices.  The society’s approach will remain one of caution, with its lending levels forecast to remain subdued throughout 2012.
 
“The board’s focus remains on the strengthening of its regulatory capital ratios.”