Leeds Building Society delivers big rise in profits

LEEDS Building Society has achieved a large rise in half year profits despite the economic turmoil.

Ian Ward, the society’s chief executive, said the society had achieved an excellent set of results and provided more capacity and choice for the UK mortgage market.

In the six months ended June 30, the society’s new lending increased by 61 per cent to £642m, while pre-tax profit rose by 49 per cent to £26.9m.

Hide Ad
Hide Ad

Mr Ward added: “The average loan-to-value (LTV) on new lending was only 52 per cent as we continue to adopt a prudent approach to underwriting. We intend to increase new lending further this year, to around £1.3bn, which will support many more FTBs (first time buyers) on to the housing ladder and enable other borrowers to move their mortgage to us.

“Savings balances, which are a vital component of our traditional, mutual building society business, rose by £127m to a record £7.15bn. This half year performance was £95m above our natural building society net retail market share, with savers attracted by the security and value we provide. Furthermore, this success means that all of the Society’s residential mortgage lending is funded entirely by retail investments.”

The society’s capital and reserves increased by £38m, to a record to £553m, figures which are “significantly ahead” of regulatory requirements.

Mr Ward added: “As expected, in view of the current pressures in the economy, there are some of our residential borrowers experiencing difficulties in meeting their mortgage repayments and we continue to work with them through this difficult period. Despite this, our residential arrears, 2.5 per cent or more of outstanding mortgage balances, have reduced to 2.29 per cent.”

Hide Ad
Hide Ad

“In June, the society re-entered the Sterling covered bond market, which we successfully reopened last year, and raised £250m of seven-year funding, satisfying our long term wholesale funding requirements for 2011 and beyond.

“In line with most other major UK financial institutions, the society made use of the Bank of England’s Special Liquidity Scheme (SLS) facility at the height of the market dislocation in 2008. We have now repaid all of our SLS drawings well ahead of schedule. This, combined with our above market share retail savings performance, has reduced our requirement for wholesale funding with the ratio falling to 18.5 per cent. Furthermore, we have also been able to improve the maturity profile of this funding, with 58 per cent of the total having a maturity date in excess of one year. Leeds Building Society maintained its strong long term deposit ‘A’ credit ratings, with both Fitch and Moody’s, despite the very challenging economic environment.”

Mr Ward will retire as chief executive today having held the position for almost 16 years. Peter Hill, the society’s operations director, will succeed Mr Ward and become only the seventh chief executive in the society’s 136 year history.