West Bromwich Building Society stems losses

LOSSES at the West Bromwich Building Society have fallen sharply in the past year, the mutual has announced.

Post-tax losses from continuing operations have been reduced by more than two-thirds, from £39.3m to £11.2m for the year to March 31, 2010.

The 161-year-old society has also revealed that it has agreed, in principle, to sell its mortgage broking franchise Mortgage Force to the management for a nominal consideration whilst retaining a small minority interest.

Mortgage Force is a wholly owned subsidiary of West Bromwich Building Society.

Other highlights from its annual report are:

• Underlying costs, excluding one-off items such as restructuring costs and a pension cessation windfall, reduced by 26%.

• Savings members benefited from an increased average rate of 1.1% relative to Bank Rate.

• An influx of 72,500 new customers, contributing to retail balance inflows of £2.9bn and residential mortgages are now covered 1.29 times by retail balances.

• The wholesale funding ratio reduced from 19.3% to just 11%.

• Prudential Liquidity strengthened from 20.3% to 25.5%.

Chief executive Robert Sharpe said: “The improvement on last year’s results clearly indicates that we are starting to see the benefits of the West Brom’s ‘Back to Basics’ strategy with its renewed focus upon our traditional strengths as a regionally-based building society and concentrating on our core activities of savings and residential mortgages.

“This means that we have split the group between the traditional building society operations and those that are now in run-off, such as commercial lending, and we are applying the right management focus and skills to each.

“As with the rest of the financial services world, the society has encountered some of the most difficult economic and market conditions in generations as evidenced by the fact that the Bank of England Bank Rate has remained at its lowest ever point throughout the whole of our financial year.

“The economic outlook is likely to stay unsettled for some time but the West Brom’s ‘Back to Basics’ strategy, about which we expect to make further announcements in the near future, allows us to look forward with genuine confidence as market conditions gradually recover.”