Skipton Building Society's profit before tax increases by 129% as it receives boost from 'incredibly hot' housing market

Skipton, which is the UK's fourth largest building society, has seen its full year group profit before tax (PBT) increase by 129% to £271.8m and underlying group PBT increase from £124.0m to £233.4m.

The mutual said this improvement had been driven by an improving economy and the continued success of Skipton's Group strategy.

In the year that the society marked 25 years of owning its estate agency business, Connells completed the acquisition of Countrywide plc, creating the UK's largest estate agency.

The combined Connells group delivered dividends totalling £60.0m to the society and during 2021 has already repaid £124.8m of the £253.0m which was loaned to Connells as part of the acquisition of Countrywide.

In a statement, Skipton said: "The strong housing market, supported by low interest rates and competitive mortgage products, boosted by Stamp Duty Land Tax (SDLT) relief, has driven increased sales across the enlarged Connells group, and led to record mortgage completions by the society in excess of £5bn, including record lending to first time buyers.

"This robust performance has seen Skipton achieve a mortgage portfolio of over £23bn and lending that accounts for 2.0% of the growth in the UK residential mortgage market compared to the society's 1.4% share of UK residential mortgage balances "

The society provided 30,282 mortgages in the year, including 7,893 to first time buyers. Skipton said that mortgage arrears continued to be low, at almost a quarter of the industry average (0.83%), with only 0.22% of residential mortgages in arrears by three months or more and Connells PBT increased by £59.5m to £111.3m.

The society grew its savings balances by more than £1bn to £19.8bn, while continuing to pay savers well ahead of market average rates.

Skipton donated £575,000 to charities and community groups across the UK; and Skipton was awarded the Disability Smart Customer Service Award by Communication Access UK, together with exceeding the 77% accessibility benchmark set by the Business Disability Forum.

David Cutter, Skipton Group Chief Executive, said: "It's incredibly pleasing to report these record profits. Today's results are testament to the strength of the Skipton Group business model, high colleague engagement, a strong culture, and our ability to move at pace in spotting and seizing opportunities for the benefit of our customers and our purpose-driven organisation. Coupled with this has been growing economic confidence, together with an incredibly hot housing market during late 2020 into 2021.

"Today's results present a significant improvement from 12 months ago, when despite reporting good profits, our results were a clear indication of the challenging times the UK faced in the midst of a global pandemic. As a building society, our consistency in always making decisions based on the long-term best interests of the business and our members, not shareholders, has seen us successfully prepare for and navigate those challenges. And it's exciting that we can utilise these profits to invest in activities that align to our ambitions and further strengthen experiences for both customers and our colleagues.

"2021 was a remarkable year for Skipton as all of our people continued to support our customers at the moments that matter, regardless of what the ongoing pandemic threw at everyone. And while the UK adjusts to a post-pandemic future, with new social norms and consumer behaviours, our purpose remains the same - helping people have a home, save for their life ahead, and supporting their long-term financial wellbeing."

Commenting on the outlook, Skipton said: "Despite the long-term impact of the pandemic, and subsequent economic recovery, Skipton has started 2022 from a position of great strength. From this standpoint the society will continue to invest in the business and in its people to ensure it is well placed to respond to the changing market conditions that lie ahead."