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Newcastle Building Society posts increased profits following strong mortgage lending and customer growth

Newcastle Building Society chief executive Andrew Haigh

Newcastle Building Society has announced its 2019 financial results to 30 June, reporting an H1 performance that includes increased profits, record mortgage lending, thousands of new customers and achieved growth in headcount of 41 so far this year.

The Society’s profit before tax was up 18% to £8.2m for the six months ended 30 June 2019, compared to £6.9m for the first half of 2018. Operating profit before impairment and provisions increased to £8.5m from £7.2m.

Helping people own their own home is core to its purpose and for the first six months of 2019, it has reported record gross mortgage lending of £380m, an increase of 65% on the first half of 2018. Net core residential lending of £220m was £60m higher than that delivered across the whole of 2018.

Its mortgage arrears remain at low levels at 0.36% demonstrating the quality of the Society’s mortgage lending.

The Society grew its customer base by over 25,000. Customers deposited record levels of savings attracted by competitive high street savings rates, a multi-million pound branch investment programme and exceptional customer service.

Since its launch in the second half of 2018, the Society’s successful cash Lifetime ISA account has helped around 30,000 people who are either first time buyers and saving for a home, or people saving towards their retirement. So far, customers have received £16.5m in Government bonuses to help them on their way.

Despite the continued closures of many bank branches in towns and cities, Newcastle Building Society has continued to deliver on its commitment to growing its presence on high streets across its region. A commitment earlier this year to open a new branch in Barnard Castle was followed by recent announcements that it would support the provision of financial services to two further towns deprived of banking services. In Hawes in North Yorkshire and Wooler in Northumberland, it will create community branches to meet the needs of local communities. It expects to announce additional new locations as the year progresses.

Alongside its intended branch expansion, a multi-million pound branch investment programme has continued in to 2019, seeing the Society invest in new locations for some branches and refurbish others, creating new, modern, open plan environments, and wherever possible, incorporating a community room for use by the local community.

The Society’s Newcastle Financial Advisers subsidiary has continued to provide much needed face to face advice across the region and despite difficult market conditions has seen growth in new business volumes compared to H1 2018. Six new financial adviser trainees have also been appointed this year to deal with future growth.

Newcastle Building Society chief executive, Andrew Haigh summarised: “We can see clear evidence that our strategy is delivering meaningful progress.

“At a time when many banks are withdrawing from high streets, we still passionately believe in the role that branches and face to face advice plays in supporting local communities. That’s why we have been re-imagining our branch formats, investing heavily in them to ensure they continue to meet the needs of local people, and in the process growing our customer base.”

The Society’s fintech subsidiary, Newcastle Strategic Solutions, the UK’s leading provider of outsourced savings management services, saw further growth in savings balances under administration and income. Its clients have so far won 16 industry awards this year, underpinned by the excellent service provided by its dedicated customer team in North Tyneside.

Through its partnership with the Prince’s Trust, Newcastle Building Society is engaging with young people across the North East to help them learn new skills, achieve qualifications and future employment. Over the past year, the Society has supported 56 young people on the Prince’s Trust Team programme, and in 2019 welcomed five young people into a two week World of Work experience. Two have since taken up apprenticeships with the Society.

The Newcastle Building Society Community Fund at the Community Foundation continues to help hundreds of local community groups and charities every year through the provision of grants across its region. The Society has been growing the fund, which now stands at over £1m.

Earlier this year it announced it will double its Building Improvement Grants programme providing a total of £100,000 for community groups who need to make improvements to their buildings. Similarly, its main grant donations programme (grants of up to £3,000) are to increase by 50%, bringing its annual donation to £180,000. Alongside its grants, the Newcastle Building Society Community Fund provides ongoing financial support to the Sir Bobby Robson Foundation and The Prince’s Trust.

Funding is just one element of the support the Society provides to its communities. The Society’s commitment to the Dementia Friends initiative via running its popular Dementia Friends awareness sessions saw it celebrate its 100th session earlier this year.

The Society’s run of industry awards has continued into 2019. Voted second in the top 50 places to work in the North East, it also received award recognition from L&G Mortgage Club’s Best Smaller Lender, was voted What Mortgage Awards’ Best Regional Building Society for the third year in a row, and featured on the Rate My Apprenticeship Top 100 Employees List in recognition of the quality of its apprenticeship experience.

Andrew Haigh, concluded: “The Society continues to make excellent progress in the face of very strong competition in the mortgage and savings market. Investing in branches and local High Streets, delivering an outstanding customer experience and enabling our colleagues to realise their potential remain at the heart of our strategy and will continue to ensure we make a positive contribution to our members and the communities in which we operate.”


Key highlights

  • Operating profit before impairment and provisions increased by 18% to £8.5m (2018: £7.2m);
  • Profit before tax was up 18% to £8.2m (2018: £6.9m);
  • Gross lending up 65% to £380m (2018: 229m);
  • Net core residential lending for the first half of year was £220m, which exceeded the 2018 full year equivalent by £60m (Full year 2018: £160m);
  • We grew our customer base by over 25,000 during the first six months of 2019;
  • Three new branches announced to address the reduction in face to face financial services in rural locations;
  • Half way point reached in multi-million pound branch investment programme;
  • Customer satisfaction at 96%;
  • Mortgage arrears remain at low levels at 0.36% (2018: 0.36%);
  • Capital ratios remain robust with Common Equity Tier 1 Ratio at 15.1%; and
  • Liquidity as a percentage of shares, deposits and liabilities (excluding encumbered assets) was 15.5%.

Note: financial results quoted are for the half-year to 30 June 2019 (and equivalent period in 2018)