Building Society’s investment in innovation driving growth

Leeds Building Society is confident its focus on innovation and being a responsible business will be key to its long-term growth as it responds to “difficult market conditions”.

Richard Fearon, chief executive of Leeds Building Society, has just completed his first year in the job and pointed to its mortgage growth as evidence “the strategy is delivering”.

He said: “It has been a challenging market but we have out-performed that very strongly. We have grown at 6% when the market has grown by 3%.”

Innovation has helped drive the growth at the UK’s fifth-largest mutual, with robots processing 1.7m pieces of work last year. Automating highly-repetitive processes is part of the Fearon’s desire for it “to remain a very efficient organisation”.

Its investment in IT includes a new mortgage platform, called the Mortgage Hub, which is being phased in this year and should speed up the application process.

The desire for efficiency and savings – both factors in its decision to move next year to a single-site head office on Sovereign Street – are being pushed by market pressures.

Richard Fearon, chief executive of Leeds Building Society

Low interest rates and a very competitive market pushed down profits in 2019. Pre-tax profits were down £9.3m to £88.0m, after the impact of a £19.7m accounting adjustment caused by a fair value charge.

“A reduction in our profit before tax was anticipated,” said Fearon. “While we expect profits in the short to medium term to remain at lower levels than in recent years, they’ll be at the right level to support planned, sustainable growth, and add to our reserves.”

Fearon, who took over the chief executive role in February 2019 after three years with the business, is committed to the responsible business ethos which has been a key part of the Society’s 145-year history.

He said: “We pay our fair share of tax, we pay our staff a living wage, and we pay above market rate on interest.”

He added: Regardless of the fast pace of change in modern life, as a mutual we never forget our business is about people, which is twofold. One is our members, with their stake in a business run in the interests of the whole membership, and the second is our brilliant colleagues, highly engaged and essential to our continuing success.”

Skipton Building Society’s branch in Leeds

Skipton Building Society believes its solid and balanced performance means it will “start in a good place” to respond to the “significant uncertainty” it expects is likely in the future.

The UK’s fourth-largest building soociety saw underlying pre-tax profits fall 17% to £155.2m in 2019.

This was largely caused by a £9.6m drop in profits at its estate agency business Connells, increased costs in its mortgage and savings division of £7.9m, and a £3.1m fall in net interest income.

David Cutter, Skipton’s group chief executive, said: “In a challenging operating environment, with intense competition and ultra-low interest rates, these results are solid and reflective of a balanced performance.

“Whilst the economic environment remains uncertain we start in a good place to face the coming years, with high customer satisfaction levels, leading employee engagement scores and being well-capitalised.”