Yorkshire Building Society falls to annual loss

The mutual, which merged with Chelsea Building Society earlier this year to create the UK's second-biggest building society, said bad debt provisions hit 58.5m in 2009, compared to 24m in 2008.

The mutual insisted the provisions were "an appropriate step taken in response to the harsh economic conditions".

YBS said it made an operating profit of 7.7m, but this was a fraction of the 53m operating profit acheived a year earlier.

However, the mutual said it made significant progress in the second half of the year, and was "very optimistic" about its future. It added its capital position makes it among the UK's strongest financial institutions.

Chief executive Iain Cornish said: "I am pleased to report that the Yorkshire has demonstrated continued resilience throughout 2009 and has maintained a strong underlying performance.

"Throughout the year our actions have been driven by our primary focus to provide financial security and long-term value to our members. This has been clearly demonstrated by a number of specific actions we have taken.

"We have strengthened our capital position and continue to hold high levels of liquid assets – both factors that provide extra protection for our members. We have also protected our loyal, long-standing savers by not passing on the full impact of the base rate cuts, an action that we believe has resulted in a benefit of over 85m in additional interest payments in 2009. At the same time, we have continued to offer competitive mortgage products to our existing borrowers.

"We are seeing green shoots in the housing and mortgage markets and we are very optimistic about the future prospects of the group and plan to prudently increase our lending in core prime residential mortgages. Our agenda, through the merger with Chelsea Building Society, is to provide a compelling alternative to banks and a real choice to consumers across the UK."