Building society optimistic of the future despite unprecedented impact of Covid
The UK’s fifth largest mutual, Leeds Building Society, claims there is no precedent for the scale and speed of the impact of Covid-19, but it’s chief executive is optimistic of the future.
Speaking as the Society published its interim results for the first half of the year, CEO Richard Fearon said, “Leeds Building Society has weathered many external shocks in its long history, but in terms of scale and speed, the current pandemic – and the challenges it’s created for individuals, businesses and our communities – has no precedent in recent times.”
Despite these challenges, Fearon states that the mutual’s strong capital position and the fact it is “one of the most efficient [businesses] in the sector” has enabled it to deliver “healthy sustainable profits” of £32.6m, down 34% on last year.
Although gross residential lending is down 53% on the same period in 2019 to £1bn, Fearon is optimistic about the future, particularly of the mortgage market. He stated that, “June this year was our best ever month for shared ownership lending that we’ve had in our history.”
He believes that pent up demand, coupled with the Government’s stamp duty holiday and people having had time to plan future moves through lockdown, has resulted in a market that is “on fire at the moment”. He adds that Leeds Building Society is” very well placed to take advantage of that”, as a result of it’s “financial strengths and firepower.”
Away from the mortgage market the mutual has also continued to battle the historically low interest rate and has continued to offer customers at least 0.05% above the base rate, which equates to an annual benefit of circa £88m to it’s members.
The reason for this according to Fearon is efficiency, something delivered through the firm’s focus on innovation and technology.
Speaking on innovation the chief executive added that automation has been crucial in it continuing to deliver for its customers throughout lockdown.
With Fearon highlighting that although the firm proudly didn’t furlough any staff, it was only able to complete the quantity of work including 26,000 payment holidays for its members because of the technology available. Highlighting the benefit of technology including the firms 30 robots, Fearon stated: “The was one day when we were processing payment holidays where the robots did 200 full time equavalents worth of work in a day, but they were working 24 hours a day without making a single mistake.”
However, the chief executive highlights that none of the work or success would have been possible without ” my colleagues’ professional response to the pandemic and their dedication to the service of our members.”
Looking to the future and the longer term impacts of the pandemic, there has been no delay in timescales for the mutual’s move to a new office on Sovereign Street. With the Fearon highlighting that the “partnership” with contractor Graham has meant that even with a small shutdown they will still move in spring and that they are creating a flexible modern and environmentally friendly base.
Alongside the partnership with Graham, Leeds Building Society is also a sponsor of Leeds Rhinos, so with the Super League season restarting this weekend he said, “We’re looking forward to that getting going again. I just hope the rhinos can pick up where they left off because they were in great form before lockdown. I think [sport] is a great thing for people to have as it takes your mind off other things.”
Ultimately Fearon said he had set three priorities for the business moving forward, one was managing the evolving guidance by Government, second is to stay “absolutely financially resilient and strong” at which point he highlighted that the firm is at record capital and satisfaction levels; and third is to keep communicating with colleagues and members to and support them throughout this period as trust is crucial in the financial sector and the business needs to be there to support its members who may be worrying.