Profits grow but mortgage lending down for the West Brom
The West Bromwich Building Society, which is celebrating 170 years in business, saw profits rise for its latest financial year despite drop off in mortgage lending.
Pre-tax profit was up 19 per cent on £8.8 million in 2017-2018 to £10.5m.
The West Brom's new mortgage lending fell from £837m to £691m in the year to the end of March due to intensified competition, particularly in the second half of the year.
Across an extended product range it enabled more than 2,700 borrowers to purchase their first home – down around 400 from the previous year.
Total assets also fell from £5.78 billion to £5.55bn for 2018-2019.
Chief executive Jonathan Westhoff said: "The provision of good quality products and services, plus our long-term strategies to reduce legacy risk and keep control of costs, have helped the society to deliver significant benefits to members, maintain excellent levels of customer service and achieve a 19 per cent increase in pre-tax profits to help strengthen further our members’ capital.
"The increases we made to our savers’ rates, following the increase in the bank rate in August, saw the level we pay above the average increase significantly. With our mortgage borrowers having benefited now for over a decade from ultra-low interest rates, a position which continued throughout the year, this improvement for our savers represents our commitment to striving to balance the needs of both borrowing and saving members.
"Guided by the society’s purpose of supporting home ownership, we have shown a particular strength in helping the next generation of home owners to secure their first property. We are proud to say that, over the last 12 months, first-time buyers accounted for 43 per cent of all the new mortgage borrowers we welcomed to the society. "
It paid £11.4m in mutual benefit to savers from £6.5m the previous year and during the year, on average, the West Brom paid savers 45 per cent more than the market average – in 2017-2018 it was 26 per cent.
The society sustained high levels of customer satisfaction of 94 per cent .
The increase in profits along with the successful modernisation of the society’s capital structure through a liability management exercise, resulted in a 14.5 per cent increase in members’ general reserves to £247.1m.
Mr Westhoff said the year-on-year reduction in overall lending volumes refleced a strategic decision to focus only on those market segments where sustainable returns can be evidenced, demonstrating how the society always acted in the best interests of members.
"We are working hard to extend our lending proposition to support more diverse groups of borrowers who are less well served by mainstream mortgage providers. Successful examples include mortgages where a sponsor assists with monthly repayments, mortgage funding for self-build projects, remortgaging an existing Help to Buy property and a selection of products for portfolio landlords operating in the private rented sector.
"In the second half of the year we launched a market-leading easy access account, which subsequently attracted more than 3,000 new savers to the West Brom. Over the year as a whole, we grew savings balances in our branch network by three per cent.
"We know our members value having use of local branches and recently unveiled new flagship premises in our home town of West Bromwich within the vibrant New Square Shopping Centre. Our investment in digital solutions and system enhancements also continues apace to ensure the full spectrum of members’ expectations and service requirements is being addressed.
"Last month the West Brom celebrated a major milestone when we reached our 170th anniversary. The values and objectives that first inspired 20 local citizens to form our building society back then remain unchanged and will continue to guide us, and the way we support our 425,000 members, long into the future."
