The mutual was upbeat about its results for the six months ended June 30, 2020, as lending remained strong and it witnessed decent growth in savings.
Underlying pre-tax profit was down from £78.9m in the same period last year to £47.9m, despite the coronavirus disruption.
David Cutter, CEO of Skipton Building Society, told The Yorkshire Post: “The reason for the reduction in underlying profits, which is about 40 per cent, has come from two areas.
“It’s the increase in mortgage impairments in the society and the reduction in profits in our estate agency business Connells, which has nearly 600 branches.
“We took a £18.7m charge for loan impairments because under the accounting regulations you have to book those upfront, rather than when they’re incurred.
“There’s a huge amount of estimate and judgement of what we think will happen in terms of the economy and mortgage losses actually arising.
“The second half of the major impact was the Connells branches had to close for about two months.
“The turnover was £53m lower in the six month period compared to the previous year, which was about a 24 per cent reduction, but they did a fantastic job in managing their costs.”
However, Connells, which has 600 branches, bounced back as the housing market showed great resilience, initially due to pent up demand and then following the Chancellor’s announcement of a stamp duty holiday.
“We’ve continued to operate in a highly uncertain world and it’s very difficult to forecast what will happen to the economy over the next months but we feel we’re in as good a place as anybody to weather that storm,” Mr Cutter said.
Initially the most challenging aspect of adapting to the new environment was reacting quickly to social distancing rules, Mr Cutter said.
He added: “We kept on average at least 95 per cent of our 88 branches open at any one time albeit on slightly reduced hours.
“We’ve had to cope with reductions in bank base rate at very short notice and then react to the Government mortgage payment deferrals, where about one in six of our customers elected to take a payment holiday.”
The building society was buoyed by the Bank of England’s Term Funding Scheme, which provided additional liquidity.
Mr Cutter said: “Our liquidity levels are extremely strong but it is worthwhile giving credit to the central bank and the authorities who immediately at the same time as reducing bank base rate also gave access to all major lenders to the facility to draw down on what they call the Term Funding Scheme.
“There’s plenty of liquidity available in the market at a very low rate from the central bank. That’s not a concern for us and it’s not a concern for the industry in general either.”
Skipton Building Society has around 9,500 staff across the group of which 1,500 work at the head office in the market town.
The mutual has not furloughed any staff and says it has been extremely busy dealing with mortgage payment holidays, rate changes, lending and helping customers with financial advice.
Mr Cutter said: “We have no plans to cut jobs. In fact, we’re recruiting in some areas at the moment. We’re confident that although we remain extremely cautious about what might happen to the economy, we don’t have plans for any job losses.”
Currently, there are about 200 people at the headquarters at any point in time due to social distancing with the rest working from home. Skipton Building Society expects that to increase to 350 by autumn.
“It’s too early to consider what might happen after that,” Mr Cutter said. “We’re clearly extremely cautious in terms of health and safety.”
Skipton was one of the first organisations to set up a dedicated mortgage payment deferralmailbox, enabling customers to quickly log requests for help.
The mutual arranged over 22,000 mortgage payment deferrals - a Government initiative in response to the coronavirus outbreak.
Mr Cutter said: “Clearly a lot of customers probably took it out as a bit of an insurance policy because they weren’t sure what was going to happen.
“The majority of those have now completed their three month holiday and as of the end of June that reduced to about 5 per cent and it keeps going down week on week.”
At its peak, 15 per cent of the group’s borrowers had a mortgage payment deferral.
By June 30, 2020, 67 per cent of the society’s borrowers who had been granted a mortgage payment deferral had reached the end of their deferral period. Of these, 13 per cent elected to extend their deferral for up to another three months.
Of the remaining 87 per cent of society borrowers, who did not extend their mortgage payment deferral, 98 per cent paid the full monthly amount due on their mortgage in the following month.