The West Brom's profits hit by pandemic
The West Bromwich Building Society's annual pre-tax profits slipped from £9.2 million to £1.5m for its latest financial year as it was hit by the start of the coronavirus pandemic.
It has provided more than 5,000 mortgage payment holidays to help those in financial difficulty.
The West Brom's chief executive Jonathan Westhoff said: "Our end of year results come during an unprecedented global crisis that required dramatic and immediate action from government, industry and communities across the UK. The economic consequences of the lockdown period are secondary to the tragic human cost we have seen, and the need to safeguard individuals and protect our vital health service from being overwhelmed.
"Also, as part of the key workers group, our primary focus has been to ensure that we continue to deliver essential services, so our members can manage their finances and have access to their money when needed, as well as prioritising the safety of both members and staff."
The financial year to the end of March saw £569m of new mortgage lending across an extended product range, a reduction from the previous year's £691m, which reflected a strategy of only lending if it is in the best interests of the society's membership.
Mr Westhoff said that during the crisis the 171-year-old society was continuing to help people with mortgage completions, mortgage redemptions and product transfers.
"We have enabled penalty-free early access to savings on accounts that would normally be subject to withdrawal restrictions and facilitated transfers to nominated bank accounts or trusted third parties, so any members that are self- isolating can safely access their savings.
"We haven’t placed any of our staff on the furloughing scheme and continue to pay 100 per cent of salaries. This includes those that have a significant reduction in working hours. This was our choice, driven by our clear focus on the wellbeing and financial security of the society’s staff," he explained.
Mr Westhoff added that despite representing only a very small proportion of the society’s financial year, Covid-19 still had a significant impact on results because of the additional provisions it had made due to the potential economic consequences of the actions taken to manage the pandemic.
"These additional provisions relate primarily to the legacy commercial lending portfolio, reflecting the dramatic impact of the steps taken under lockdown for retail and leisure businesses. Given the above, our results demonstrate the society’s strength. Whilst the statutory profit before tax has fallen from £9.2m to £1.5m, without the final quarter provision charge of £14.7m,which largely arose in anticipation of the potential consequences of the pandemic, profit before tax would have been significantly higher.
"Aside from our response to Covid-19, the provision of quality products and excellent customer service, plus our long-term strategies to keep control of costs and reduce legacy risk, have helped the dociety deliver benefits to members.
"In the highly competitive marketplace, our approach to managing the interests of savers over the last 12 months has been to preserve rates for existing members. We continued to deliver on our commitment to provide savers with a safe and good return by paying an average interest rate 49 per cent above that paid by the market which represents an additional £13m in interest directly to savers," he said.
For borrowers, the society’s purpose of supporting home ownership led to is approving a further 3,423 new mortgages, circa 50 per cent of these to first-time buyers.
"Part of this achievement was due to our new range of shared ownership products, supporting 481 borrowers to become part homeowners through both lower initial deposits and more affordable monthly payments.
"In value terms, at £569m, our gross new lending was lower than the previous year, due to a conscious decision to protect our wider members’ best interests and scale back lending where returns would prove uneconomic or where pricing would be irresponsible for the associated risk," added Mr Westhoff.
Sorry, we are not accepting comments on this article.