Skipton Building Society delivers big rise in profits but warns over likely pressure on margins in mortgages business

Skipton Building Society today said it had delivered a 'significantly improved' performance over the last half year, although it warned that it was likely to see margins in the mortgages and savings business come under pressure.

David Cutter

Skipton, which is the UK’s fourth largest building society, has announced its half year results for the six months ended 30 June 2021.

In a statement, Skipton, said: "The last 16 months or so have been dominated by the coronavirus pandemic, directly impacting upon the health and finances of people within our communities.

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"The first half of the year has again seen various levels of national lockdowns in the UK as the pandemic continued to impact different parts of the group’s operations.

"However, through the resilience and adaptability of Skipton’s colleagues, together with its strong capital position and healthy levels of liquidity, the society has continued to deliver for its members with excellent customer service."

Total group profit before tax (PBT) was £159.2m over the period, compared with £34.4m in the same period the previous year.

The statement added: "Profits in the period, under both performance measures, have benefitted from a credit to loan impairment of £14.8m reflecting the updates to the economic outlook in light of the improving COVID-19 situation, principally due to the successful roll out of the vaccine.

"In the year that the society marks 25 years of owning its estate agency business Connells, Connells completed the acquisition of Countrywide plc on 8 March, creating the UK’s largest estate agency network of 1,235 branches.

"Connells and the society believe that a well-invested high street estate agency branch network, coupled with a diversified brand portfolio, will allow the combined business to provide an attractive offering to its customers.

"The acquisition of Countrywide will provide further diversification to the group’s business model, and the society believes that the strong management team at Connells will deliver enhanced returns over the medium and longer term, further enhancing the society’s capital strength at a time when it is likely we shall see margins within the mortgages and savings business come under pressure going forward, primarily due to increased competition in the industry combined with a historical low Bank base rate.

David Cutter, Skipton Group Chief Executive, said: “At a time of continued uncertainty for our customers, colleagues and their families, Skipton’s performance seems a secondary interest while we all adjust to the ongoing impact of the global pandemic.

"But it is against such a challenging social and economic backdrop that we’ve seen Skipton’s mutuality, agility, and first-rate customer service come to the fore and be reflected in our results today.

"Skipton’s founding purpose in 1853 was to tackle the housing and savings issues Victorian society faced. Today we continue to serve that purpose, albeit evolved, for our one million customers, helping them have a home and to save with confidence for their futures.

"During the first six months of the year, Skipton has become the UK’s eleventh largest mortgage lender, with more people than ever having turned to us to help them have a home. We continue to play a significant role in getting first time buyers across the UK the keys to their first homes, with Skipton cash Lifetime ISA (LISA) customers benefiting from £64.4m in government bonuses towards their deposits over the last six months alone.

"For our savers we’ve paid on average 0.39% more than the rest of market average on their hard-earned savings over the first five months of the year.

"The global pandemic has continued to disrupt all our lives, and our priorities continue to be keeping our customers and colleagues safe and being there when and where they need us. While we continue to adapt to meet evolving customer needs, our financial strength, mutuality and commitment to sustainability, together with excellent customer service and colleague engagement, see us look forward with confidence.”