2007 Financial Results
YORKSHIRE BUILDING SOCIETY DELIVERS A STRONG PERFORMANCE IN TURBULENT YEAR In a turbulent year the Yorkshire has delivered a strong performance:
- Retail savings inflow up 46%
- Assets up to record £20bn
- Liquidity maintained at 25%
- Management expense ratio reduced to 0.63%.
Financial Results
- Excellent retail savings inflow of £649m, up 46% on 2006 (excluding acquisitions) leading to a £1bn increase in savings balances
- Retail savings fund over 81% of the Group’s mortgage assets
- Group assets up 17% to £20.5bn (2006 £17.6bn) – 15% mortgage loan growth to £15.3bn (2006 £13.3bn). Gross mortgage lending up 19% to £4.7bn (2006 £4.0bn). Direct internet mortgages increased by 44%. Group mortgage retention improved by 11%
- Group mortgage accounts 12 months or more in arrears just 0.10%, less than half the industry average, resulting from a legacy of prudent lending and no exposure to commercial, unsecured or buy-to-let markets
- Liquidity (i.e. cash and short-term investments) remains at 25%, amongst the highest of the major banks and building societies and well above the regulatory minimum
- Overall funding position supported by a ‘AAA’ rated covered bond funding issue in May 2007 – prior to the market upheaval – no capital markets maturities until well into 2009
- Group core operating profits increased by 19% to £91.1m (2006 £76.8m). Profit before tax £54.6m (2006 £77.9m) reflecting, principally, the impact of fair value and impairment losses on treasury assets and other fair value volatility
- Improved services across the business including:
- Retail network expansion with new branches in Warrington, Chester and Oldham
- Launched the UK’s first paperless online mortgage application service for direct customers
- Launched e-conveyancer service for borrowers to help cut legal costs
Iain Cornish, Chief Executive of Yorkshire Building Society said:
"Our primary focus during the year was directed at improving member value and maintaining our prudent approach to all aspects of the business. We had terrific organic savings inflows without having to resort to unsustainable savings rates. By offering consistent value across our mortgage and savings products we achieved almost 1,000 ‘best buy’ mentions in national press."
"The Society has no exposure to buy-to-let, unsecured or commercial loans and has maintained a sensible approach to its lending policy throughout 2007. Core operating profitability improved by 19% to £91.1m, helped by strong growth in net interest receivable and a substantial further reduction in the management expense ratio. Like most major financial institutions, however, our pre-tax profits have been impacted by fair value and impairment losses on some of our treasury investments, although these account for only a little over half of one per cent of the Group’s assets. The year on year movement in pre-tax profits was also exaggerated by a big turnaround in fair value hedging volatility. The figure in 2007 partly reflects the reversal of the prior year’s positive movements and partly reflects items which will themselves reverse in later years."
"It is particularly pleasing to report a huge growth in our internet business, with mortgage completions up almost 50% through this channel. This is an area where we have made great strides in developing new technology, which has been recognised by a number of industry awards. Whilst this provides an extremely cost effective route to growing the business we have also expanded our branch network, with more new branch openings planned this year."
Other Highlights
- For the 3rd year running customer satisfaction survey shows that 9 out of 10 members would recommend the Society to friends and family
- Achieved carbon neutral status and committed to reduce carbon emissions within the areas of energy, travel and waste over the next three years
- Awards received in 2007 by the Group included:
- Most Innovative Application of Technology by a Bank or Building Society – ifs Financial Innovation Awards
- Most Effective Delivery Channels Initiative – ifs Financial Innovation Awards
- Innovator of the Year – Mortgage Finance Gazette
- Service Excellence Award – Mortgage Introducer
- Best Service & Best Web Support Awards – Mortgage Introducer
- Best Online Support Award – Mortgage Edge
- Five Star Service Award – Financial Adviser
- Gold Standard Award – Mortgage Strategy Technology Awards
- Successfully integrated the Abbey sharesave business acquired in 2006 whilst maintaining the Society’s position as a leading provider of sharesave schemes in the UK with several new clients including John Lewis Partnership
- Foreign money transfer service launched with American Express
- 2,000 members a month moving to the Society’s home insurance product provided in partnership with Royal & SunAlliance – up 400% in four years
- The Society’s Charitable Foundation supported 1,350 local charity and community groups during 2007
- The Society’s innovative Small Change, Big Difference Scheme (where members donate their pence interest to the Charitable Foundation) has raised over £1m since its launch in 1999.
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