Big three regional mutuals play pivotal role in recovery

The combined net lending of Yorkshire, Skipton and Leeds hit £4bn in a mortgage market worth £11.2bn in 2013.

All three institutions reported annual results yesterday showing growth in profits, jobs and capital strength.

Robin Fieth, chief executive of the Building Societies Association, told the Yorkshire Post: “It’s good to see three sets of strong results from our largest Yorkshire-based societies.

“Last year, for the first time since the financial crisis, consumer demand for mortgages picked up.

“Building societies did virtually all of the net lending and more than their market share of gross lending.

“Yorkshire, Leeds and Skipton all grew their market share.”

Peter Hill, chief executive of Leeds Building Society, described the figures as a resounding endorsement for the mutual movement.

The sector has been under the spotlight following a series of well-publicised problems at the Co-operative Group.

Mr Hill said that overall, the mutual sector has performed well since the financial crisis of 2007-08 because of its strong capital base, good heritage and prudent business model.

Leeds said net residential lending rose 42 per cent to a best-ever £1bn, while pre-tax profit rose by 18 per cent to a record £64.2m.

Savings balances grew by £884m to £8.6bn, the highest level in its history, it said. Total assets stood at £11.1bn at year end.

Leeds added 71,000 new members, taking total membership to a record 714,000.

David Cutter, chief executive of Skipton Building Society Group, said the strong set of results from the three lenders is very encouraging for the region and good for the local economy.

Skipton’s net lending more than doubled to nearly £1bn during 2013. The group’s pre-tax profits soared to £102.5m, from £35.4m the previous year.

This was helped by the core savings and mortgages division, which saw a massive increase in pre-tax profits to £50.4m, from £4.5m in 2012.

Connells, the estate agency division, reported a 41 per cent rise in pre-tax profits to £50.2m. Total group assets rose 5 per cent to £14.5bn.

Skipton added 21,000 new members, taking total membership to 763,000.

Mr Cutter said: “It was a challenging environment back in 2009-10 but it is really pleasing that we have resumed growth of the customer base and increased both mortgages and savings balances. It is good, balanced growth.”

Yorkshire, Britain’s second biggest building society behind Nationwide and an important market consolidator in recent years, reported an 11 per cent increase in core operating profit to £152m.

Its net lending more than trebled to £2bn during 2013. It had total assets of £34.5bn at the end of December.

Chris Pilling, chief executive, told the Yorkshire Post that growing confidence and the improving economy helped the society’s performance last year, but the mutual sector’s ethos also played a role.

He said: “Customers are clearly still fed up with the banks and banks are still not in the position to provide what customers want.”

The Bradford-based lender, which has opened new offices in Leeds, is planning to increase investment in its business to £273m over the next five years.

Savers have had a difficult time since the Bank of England reduced interest rates to a historic low of 0.5 per cent in March 2009.

The market average interest rate is 1.72 per cent. Leeds said on average it paid 2.33 per cent during 2013. Skipton said its saving rate averaged at 2.24 per cent during the year. Yorkshire said its average rate at October 31 was 2 per cent.

UK inflation fell to 1.9 per cent in January, providing some respite to savers who should start to see a real return on their deposits, said Mr Hill.

He said the UK economic recovery feels sustainable, but it will take some time before the recovery reaches everyone.

He added there are signs that the positive environment in London and the South East is starting to spread to the regions.

“Here in Yorkshire, we are starting to see positive signs come through as well,” said Mr Hill.

Mr Cutter said Connells, Skipton’s estate agency business, sold more houses in January than any month in 2013.

But he warned that many uncertainties remain, in particular any impact from Government measures used to reduce its borrowing, weaknesses in many eurozone economies and the consequences of actions taken by central banks around the world to wind back the extraordinary measures of support provided in recent years.

Mr Pilling said he sees “steady progress” in the UK economy.

The three building societies together employ more than 14,000 people and between them created nearly 600 new jobs last year.