Incoming CEO hails ‘robust’ year of increased lending as mutual reports £4m profit drop

Richard Fearon

Leeds Building Society has this morning reported an annual £1bn mortgage lending increase to £15.8bn but has seen its pre-tax profits drop to £116.9m in a year its incoming chief executive described as “robust” in a competitive marketplace.

This morning reporting on the 12 months to December 31 2018, the mutual said it delivered UK net lending of £1bn and “grew more than twice as quickly as the market.” As a result, mortgage balances rose to £15.8bn; up from £14.9bn in the previous year. Savings balances increased by over £800m, to £13.9bn (2017: £13.1bn). Total assets rose by 5% to £19.4bn.

However, its pre-tax profits dropped to £116.9m  from £120.9m in 2017, which its new CEO Richard Fearon said was still a “robust” set of results achieved “despite intense competition in the mortgage market”.  He added that profits were lower primarily as a result of the one-off impact of the sale of its Irish mortgage book (£6.5m).

Leeds Building Society’s gross lending also dropped to £3.8bn (£4.1bn 2017).

Speaking to TheBusinessDesk.com this morning, on his first day in the CEO role after a six month handover with retiring CEO Peter Hill,  Fearon said: “We were pleased to achieve the Irish sale. It was a decision taken in the best interest of our members in order to concentrate on our core UK business.”

As only the eighth CEO in the history of the mutual, which was established in 1886, Fearon said: “It is a very competitive marketplace and that’s why we are pleased with these set of results.

“We have achieved a robust profit in line with expectations and this gives me firepower for the future of the society.”

He added that the mutual, which is the UK’s fifth largest building society, was delivering mortgage innovation and that it was essential to balance the needs of all members, whether borrowers or saver.

Fearon added: “Paying 0.62% above the market average on savings equates to an annual benefit to the Society’s savers of £81.5m. This strong performance in its core markets of mortgages and savings means the Society has an excellent platform to invest in the future to meet the changing needs of its 800,000 members.”

The results brings to an end Peter Hill’s seven and a half years as CEO. Fearon joined the Society Board three years ago. Fearon added that he would continue to concentrate on “transforming the image” of the building society sector and that there would be a heavy focus on innovation.

Fearon added: “As the eight CEO in the 140 history I feel very proud and humbled to take on this role. The business is n excellent shape, we have a fantastic culture and I am looking forward to taking the society forward into the next stage of development.”

Fearon added: “Under Peter’s leadership the Society’s total assets and profits have more than doubled, giving us the platform to keep growing sustainably and focusing on what matters to our members, as we carry on striving to offer them security and value.

“Building societies, including our own, have been around a long time but have always embraced innovation and we’ll continue to adapt as the pace of change in modern financial services moves ever faster.

“Investment during 2019 will be the highest in our history so we can carry on helping more members save and have the home they want, while increasing our digital capability and moving forward with pace and focus to meet and surpass their expectations.

“This is possible thanks to the fact we’re financially stronger than we’ve ever been, because of our sustained and carefully-managed growth, supported by record profits in recent years.”

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