Skipton Building Society sees profits fall to £124m as loan impairment charges rise

Total pre-tax profit was £118.8m, down from £153.2m. Its loan impairment charges increased to £25.7m, in 2019 they stood at £500,000.

In line with accounting standards, loan impairment charges are booked upfront before they are incurred.

However, Skpiton Building Society said that the nature of the pandemic, its impact on customers and businesses, and the actions taken by the Government to support the economy, make it extremely difficult to forecast loan impairments and therefore requires a significant level of estimates and judgement, based on limited observable data at the reporting date.

David Cutter, chief executive of Skipton Building Society, said: "Without a doubt 2020 was one of the most challenging years we have ever faced.

"Our fundamental priority remains of looking after our members and people, ensuring their safety and well-being, and being there for them when they need us, wherever they need us.

"I'm so incredibly proud that our people, all of whom were impacted by Covid-19 just like everyone else across the UK, adapted and responded positively by continuing to serve our customers throughout such unprecedented times.

"As a 168-year-old mutual, Skipton's values are firmly rooted in helping people have a home and save for the future.

"We will always make decisions based on the long-term best interests of the business and our members, not shareholders. Over the years this consistent approach has seen us successfully navigate through the good times, and the difficult times. And Covid-19 brought this purpose to the fore.

"Whilst we still reported good group profits for the year, our financial results reflect a challenging period.

"Our mortgages and savings division has been heavily impacted by increased impairment charges and our estate agency division, Connells, saw all of its UK branches forced to close for two months.

"However, the resilience of Skipton's business model has allowed the Society to maintain strong capital ratios throughout and we look to the future with confidence."

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