Mutual continues to invest for the future

Richard Fearon

Continuing to break records for helping thousands more people into homes was key to Leeds Building Society’s strong performance in the first half of this year, said its Chief Executive Officer.

Reporting interim results for H1 2022, Richard Fearon said the mutual had built on the exceptional performance of 2021 with gross lending climbing to £2.5bn (£2.0bn 30 June 2021) and net lending rising to £1.2bn (£0.6bn 30 June 2021), both record half-year amounts for the Society.

Nine of its 10 biggest lending days ever occurred during the first six months of this year leading to its highest number of completions in the first-half of a year.

Total membership grew to 815,000, including the 9,000 new members who chose the Society when deciding to buy their first home.

Lending growth was supported by a corresponding rise in savings balances, with the increase topping £1bn, taking total savings balances to £16.4bn (£15.25bn 31 December 2021).

Richard said good value savings products were essential to bring in the level of funds required to support Leeds Building Society’s lending ambitions and he was pleased by how many new savings members were attracted to join in H1 2022.

“I’m delighted we’ve delivered a record breaking first half of the year, achieved a series of landmarks across our lending and supported savers at a critical time,” said Richard.

“Being mindful of our roots as a mutual, we’ve reaffirmed our purpose – to put home ownership within reach of more people – and future generations of first-time buyers are integral to our plans.

“To successfully deliver on that purpose means ensuring we offer a competitive savings range. We’ve consistently paid above the market average rate – which equates to an extra £66m in our savings members’ pockets – and our fixed rate products have been a notable strength, appealing to new and existing savers alike.

“The value that we give to savers is especially important during a cost of living crisis, and we have also been considerate of the challenges facing our borrowers too.

“While the Bank of England’s Base Rate increased four times during the first half of the year, we raised our variable savings rates on each occasion but only raised our standard variable mortgage rate (SVR) once.

“I’m proud we were able to attract so many new members but acknowledge the elevated demand for our savings products led to some long waiting times for callers.

“We didn’t always meet the high standards of service we strive for but I’m pleased that we’ve taken steps to address this and the situation has now returned to normal.

“Work is ongoing to increase online functionality and capacity for savings members and this remains a key focus over the coming months to ensure our savings processes are simpler and quicker to use.

“This should deliver benefits like those seen since upgrading our mortgage systems – Mortgage Hub, our online mortgage platform, is now capable of processing applications from intermediaries in as little as 11 seconds and further enhancements are planned.

“Our ambitious multi-year IT transformation is progressing to plan and on budget, and during the first six months of 2022 we successfully completed the transfer of our data centres, boosting our resilience and security, both of which must be priorities for any financial services provider.”

Investment this year includes improvements and refurbishment across Leeds Building Society’s 50-strong national network of branches, as part of a commitment to face-to-face service where this is sustainable.

“We’ve continued to recruit, creating a further 65 skilled jobs, such as adding to the varied and specialist IT skills within the Society,” said Richard.

“One in five of our colleagues now works in a ‘tech’ role and we are successfully trialling hybrid working to make effective use of our energy-efficient new head office in Leeds city centre.

“Developing and future-proofing our operations helps us to carry on doing what we do best, meeting consumer need with product innovation, such as launching mortgages that incentivise greener homes. We have also taken significant steps in reaching net zero as a business and supporting our stakeholders to do the same. Having already achieved carbon neutral status on scope 1 and 2 emissions and business travel, we are now assessing our scope 3 emissions to help us reduce our indirect impact on the environment.”

H1 2022’s strong lending performance delivered profit before tax of £146.5m (£70.3m 30 June 2021), buoyed by an exceptional fair value adjustment of £42.0m. The UK’s fifth-largest building society maintains capital and reserves well above the regulatory requirement at £1.57bn (£1.46bn Dec 2021), as well as continuing to retain very strong levels of liquidity.

The success of the Society’s business model and a keen focus on efficiency means it has a reduced cost to income ratio of 30.1 per cent and a stable cost to mean asset ratio of 0.56 per cent (44.9 per cent and 0.56 per cent respectively, 30 June 2021), both among the best in the building society sector.

The proportion of residential mortgages in arrears, calculated as 1.5 per cent or more of outstanding mortgage balances, fell to 0.62 per cent (0.66 per cent December 2021), reflecting the Society’s responsible approach to lending and our members’ financial resilience in the face of inflationary pressures.

Richard continued: “Having reaffirmed our purpose and looked at how we deliver on this, we’ve taken the decision to withdraw from lending on second homes. Second homes reduce the number of properties available to live in and we want to direct more of our efforts to other sectors, especially first-time buyers.

“Serving our members and supporting their communities remains at the heart of our business, as demonstrated daily by the commitment, drive and expertise of our fantastic people throughout what has been another extremely demanding period.

“Our colleagues and members continued their enthusiastic support for our national partnership with Dementia UK, taking fundraising beyond £400,000 as our ‘Closer to Home’ project expands to bring specialist dementia care into more communities across the UK.

“Their compassion and generosity were evident again in the speed and scale of donations for the humanitarian disaster in Ukraine. With matched funding from the Society, more than £100,000 was given to relief efforts in Ukraine and the UK, including refugee aid in our home city of Leeds.

“In Peterborough, work is ongoing to redevelop vacant office space above the Society’s city centre branch for use as emergency accommodation for refugees, which has been a widely-supported and collaborative effort with local businesses and stakeholders.

“The past couple of years have been challenging for everyone but reminded us all of how we can achieve more when we work together, and this remains true as concerns about Covid-19 are overtaken by new worries about rising bills and inflation.

“We’ll continue to support our members and look for new ways we can help and deliver on the purpose for which we were founded almost 150 years ago.

“Keeping the needs of our members and their communities at the heart of our business, combined with our enduring financial strength and security, means I continue to look to the future with confidence.”

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