Coventry enjoys record results

COVENTRY Building Society has announced record underlying pre-tax profits up by 40% to £46.5m, during a period in which its net mortgage lending was equivalent to 31% of the market as a whole.  

The Coventry , the UK’s third largest building society, said its success owed much to its simple business model, meaning it was well positioned to cope with the turbulent events of the last three years.

In particular, it said it had maintained lending at modest loan to value ratios and to low risk borrowers, while an increase in margins available for new mortgages meant its ability to continue to lend had helped support profitability.
 
“This can be seen in the society’s robust and consistent financial performance.  In the first half of 2010, net interest income increased by a further £16m (25%) to £79.6m, reflecting the benefits of our recent growth,” it said in its interim statement.
 
“We continue to pay close attention to costs.  Coventry remains the UK’s most efficient building society as evidenced by a management expenses ratio of 0.37% of average assets (2009 first half year: 0.39%).  The cost to income ratio for the first half of 2010 reduced to just 40.5%.”
 
It said it also retained a high quality mortgage book, with mortgage arrears significantly below those for the industry as a whole. At June 30, 2010, just 0.79% of mortgage balances were 2.5% or more in arrears. This represents a slight fall from the position at the end of 2009.  

The society said impairment charges were also expected to remain amongst the lowest levels reported by any of the larger UK lenders.

David Stewart, Chief Executive, said: “I am pleased to report that the society continues to perform well. Underlying profit before tax increased by 40% to £46.5m, during a period in which the society’s net mortgage lending was equivalent to 31% of the market as a whole.  

“These excellent results maintain our record  of strong performance since the onset of the credit crisis in 2007.”

Net mortgage lending stood at £751m, equivalent to 31% of all net mortgage lending in the UK, while gross mortgage advances of £1.6bn represented 18% of all mortgage advances by building societies and mutual banks.

The society’s retail savings balances grew by £1.7bn (13%) during the first half of 2010 with net retail receipts equivalent to 8% of net retail receipts of all UK banks and building societies.

The Coventry said it had also achieved a consistent outperformance throughout credit crunch, growing total assets by 50% to £6.5bn and seeing mortgage balances increase by 39% to £4.2bn.

Savings balances rose 76% to £6.4bn, enabling it to easily fund the substantial growth in mortgages.

The society said it would also be donating a further £971,000 to the Poppy Appeal, bringing total donations since October 2008 to more than £3.5m.