Newcastle Building Society reports a robust half year performance. Healthy lending volumes, more new savers and increased levels of its branch-based financial advice business have contributed to the Society delivering an increase in operating profit of 16% to £7.2m.
Chief executive, Andrew Haigh summarised: “I am delighted that we have been able to improve operating profitability at a time when we continue to invest in our branch network, our community and creating a great place to work for our colleagues.
“Our financial performance at half year is particularly encouraging as we are reporting increased profits from ongoing operations, strong capital ratios, a robust liquidity position and low levels of arrears, reflecting the excellent credit quality of our residential mortgage lending.”
Newcastle Building Society has driven healthy volumes of mortgage lending in the first six months, delivering performance in line with its plan.
With £229m of gross lending, the Society continues to provide mortgages for first time buyers with 5% deposits, and has helped more than 500 of them own their own home so far this year. Responding to changing employment trends with new products to meet changing needs it has seen its self employed mortgage volumes double in the first half of the year. Already in 2018 it has picked up two national awards (What Mortgage Award’s Best Regional Building Society and the Legal & General Mortgage Club’s Best Smaller Lender).
Levels of mortgage arrears of three months or more (already well below industry average) reduced further to 0.36%, (from 0.39% at the same point last year) reflecting strong credit risk management and robust affordability assessments on the lending being carried out.
The Society continues to provide some of the best buy savings on the high street and earlier this year supplemented this with the launch of a new regular saver product at 2.25% (including bonus) helping to encourage a savings habit.
The Society is the biggest building society in the North East and has reiterated its commitment to maintaining a branch presence in towns and cities across the region. As part of a wider investment and refurbishment programme to provide modern, bright branch spaces across its 28 branch network, its most recent new format branch launched in Durham earlier this year. It will be followed by Carlisle and Gosforth branch transformations this year as part of an ambitious plan that will see all its branches updated by early 2020.
With a desire to provide a great place to work in the North East where people can realise their potential, the Society has enhanced pay and benefits for many colleagues, while investing in leadership programmes across all levels.
Twenty six new jobs were created across the business in the first half of the year to support its growth and infrastructure, and there is an expectation of similar jobs growth in the second half of 2018. The Society is continuing to provide career opportunities via its financial adviser training programme, which leads to professional status, and has committed to grow its apprenticeship programme.
Income from Newcastle Strategic Solutions Limited, the Group’s award winning savings management outsourcing business continues to grow as balances under management rise. Income from Newcastle Financial Advisers Limited, the Group’s financial advice subsidiary was up by £0.2m when compared to the period ended 30 June 2017.
The Society’s operating profit before provisions for liabilities and charges and one-off items increased by 16% to £7.2m from £6.2m at the same point last year.
Profit before tax was £6.9m. In the comparable period ending June 2017 this was £7.2m and included a credit of £2.1m on the purchase of the Group’s Cobalt Park office. Excluding this exceptional gain from 2017, this year’s half year profit increased by £1.8m (35%).
The quality of Society liquidity continues to be excellent, comprising assets held in cash or that can easily be converted to cash through treasury markets (repo) or via the various Bank of England liquidity schemes.
The Total Capital Ratio (Solvency) increased to 18.9% from 18.3% at the prior comparable period.
The Newcastle Building Society Community Fund at the Community Foundation has continued to grow, both through donations made by the Society in proportion to balances held in its Community Saver accounts, and colleague fundraising. Its grant programme is expanding year on year and now includes larger grants up to £50,000 to support community building improvements.
To date more than £2.8m has been given in cumulative donations to the Sir Bobby Robson Foundation which funds leading cancer research, diagnosis and treatment for people across the region.
Community funding is supplemented by a very active colleague volunteering programme. Colleagues have doubled their volunteering contribution so far this year. Over 117 organisations have been able to count on willing support in 2017/18.