Diverse approach sees Skipton Building Society profits up almost 50%

SKIPTON Building Society’s ‘modern mutual’ approach has helped it increase its half-year profits by almost 50%.

The Yorkshire-based society saw losses in its main mortgage and savings operation offset by good performances from its estate agency and financial advice businesses.

In the six months to June 30 the society reported a pre-tax profit of £21.7m, up from £14.7m during the same period last year.

It reduced losses in its mortgage and savings business to £5.7m from £9.1m this time last year.

Estage agency arm Connells enjoyed half-year profits of £31.7m, up from £20.8m, driven by a 23% increase in new instructions and a 13% increase in house exchanges.

The charge for mortgage losses totalled £3.2m, compared to £22.1m in 2009. Skipton said this reflected a 12% reduction in mortgage arrears.

Core tier one capital ratio was up 38% to 9.9% while its tier one capital ratio was up 34% to 11.4%.

The financial advice division accounted for £1.7m of profit compared to a loss of £0.1m last year.

David Cutter, group chief executive, said that Skipton’s diversifed business model had allowed it to overcome difficult economic conditions.

He said: “A 48 per cent increase in profit and 34 per cent increase in our tier one capital ratio is a very pleasing performance compared to our June 2009 results. But there is no room for complacency. Uncertainty stemming from fears over the financial stability of certain European nations and the impact of the government’s austerity package has highlighted the need for continued vigilance.”

The society said 83.2% of its funding is comprised of retail balances, compared to 78.8% for the same period last year. Membership is up one per cent to 744,000, compared to 739,000 in June 2009.

The society said its merger with Chesham Building Society – which completed on June 1 – had boosted the member base by 21,000 and added three new branches to the network.