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27/02/20

Increased customer satisfaction, over £1.0bn of growth in both mortgages and savings and higher core profits underpin another good year for Yorkshire Building Society, which helped tens of thousands of people to secure a place to call home and improve their financial wellbeing.

The mutual created value for its members by providing average savings rates 0.34% higher than the market average, resulting in account holders receiving £95m in additional interest.[1] It improved the service it provides to customers, demonstrated by a 10-point increase in its Net Promoter Score, a measure of customer satisfaction, to +51 (2018: +41).[2]

The Society estimates it supported more than 49,000 people into a home[3] through financing more than 33,000 residential and buy-to-let house purchase mortgages, lending to registered providers of social housing, and via its work with its charity partner End Youth Homelessness (EYH). It recorded gross lending of £7.9bn (2018: £8.9bn), and net lending of £1.1bn (2018: £1.6bn).

It helped more than 84,000 additional people to increase their financial wellbeing through savings, financial education and employability support. More than 56,000 new savers opened access accounts, and over 17,000 people started contributing to workplace savings schemes administered by the Society. This activity helped to grow total savings balances to £30.7bn (2018: £29.6bn). Through the Society’s Money Minds and Career Minds programmes, 8,500 young people received financial education and employability support.

Against the backdrop of a competitive market, the mutual recorded a core operating profit of £184.6m (2018: £180.8m) and a pre-tax profit of £167.2m (2018: £192.5m), whilst maintaining its financial strength and delivering on its overall purpose.

Increased financial strength:

  • Increased core profit to £184.6m from £180.8m, with statutory pre-tax profits at £167.2m (2018: £192.5m).
  • Increased Common Equity Tier 1 ratio to 16.6% (2018: 16.3%).
  • Achieved an MREL ratio of 7.2% (2018: 7.2%), above end-state regulatory requirements.
  • Maintained liquidity ratio above regulatory requirements at 13.8% (2018: 13.9%).
  • Reduced cost to core income ratio to 60% (2018: 63%) and management expense to mean assets ratio decreased to 0.66% (2018: 0.73%).

Excellent progress against its strategic plan:

  • Launched new mortgage sales and origination platform, simplifying application process for brokers.
  • Achieved compliance with new payment services (PSD2) regulations.
  • Relaunched commercial lending business under the YBS brand.
  • Reduced costs to £290m (2018: £311m).

Provided customers with Real Help With Real Lives:

  • Increased Net Promoter Score (NPS) to +51 (2018: +41).
  • Provided higher savings rates at 0.34% above market average (2018: 0.37%), resulting in more than £95m of benefit to members.
  • Helped more than 49,000 people into a home.
  • Supported more than 84,000 people to increase their financial wellbeing.
  • Provided competitive products and excellent customer service, with 16 accolades for mortgages, savings and customer experience, including Best Mortgage Lender at the Mortgage Strategy Awards 2019; a Gold Ribbon for savings customer experience from Fairer Finance; and the Treating Customers Fairly category at the Mortgage Finance Gazette Awards 2019.

Creating value for communities and colleagues:

  • Contributed an estimated £1.0m to communities through charitable giving and volunteering programmes, with support from our members and colleagues.
  • Helped charities and good causes to benefit from over 14,000 hours of volunteering by enabling colleagues to share their skills and experience.
  • Recognised as one of the top 30 UK employers for flexible, family-friendly workplaces by charity Working Families for the second year in a row.
  • Continued to create a supportive and inclusive culture for colleagues, demonstrated by winning four national accolades for inclusivity and diversity as well as awards for financial and mental wellbeing at the REBA Employee Wellbeing Awards.[4]
  • Reduced carbon footprint by 17% year on year (2018: 16% reduction), offsetting 5,253 tCO2e and maintaining CarbonNeutral® status for the second year running.

Mike Regnier, Yorkshire Building Society Group’s Chief Executive, said:

I’m pleased to report another good set of results. Not only have we increased our financial strength, to support the long-term sustainability of the Society, but we’ve also made excellent progress against our strategic plan. The increase in customer satisfaction comes as a result of a lot of hard work by all of our colleagues, supported by investment in improving our services and launching new products specifically designed to help our customers.

As a mutual, keeping costs down is a key focus for us. Using members’ money wisely and ensuring that we are focused on our core mortgage and savings business enables us to deliver against our purpose of providing real help with real lives.

We estimate that we helped more than 49,000 people into a home through financing residential and buy-to-let mortgages, lending to housing associations and through our work with charity partner End Youth Homelessness (EYH). We also helped more than 84,000 people to increase their financial wellbeing through saving, financial education and employability support.

We’re proud of the difference we are making to people’s lives by supporting them with the financial ambitions which enable them to achieve their life goals.

 

[1] YBS average savings rate compared to rest of market average rates based on savings stock from CACI’s Current Account and Savings Database (CSDB), covering 87% of the retail savings market (based on stock value). Data period January to November 2019.

[2]   KPMG Nunwood Customer Voice Programme, January to December 2019. Based on 14,556 completed interviews with customers. Net Promoter score and NPS are trademarks of Satmetrix Systems, Inc. Bains & Company, Inc., and Fred Reichheld.

[3] Estimate is based on an average occupation of 2.4 people per home, in line with the Office of National Statistics (ONS) Families and Households in the UK (November 2019).

[4] YBS was placed in Top 50 Inclusive Companies; winner of Chief Executive of the Year, Diversity Steering Group of the Year and Employee of the Year at the National Centre for Diversity Grand Awards 2019, as well as Best Company for Financial Wellbeing and Best Company for Mental Wellbeing (fewer than 5,000 employees) at the REBA Employee Wellbeing Awards.

 

Group Income Statement

2019

2018

 

 £m

 £m

Net interest income

       464.6 

       471.7 

Non-interest income

8.5 

10.4 

Net gains from financial instruments held at fair value

(22.0) 

20.1 

Net realised profits

6.3 

8.0 

Total income

457.4 

510.2 
     

Administrative expenses

(289.6)

(311.2)

Operating profit before provisions

       167.8 

       199.0 

Provisions for liabilities and charges

(0.6)

(6.5)

Profit before tax

167.2 

192.5 
     

Tax expense

(38.3)

(42.7)

Net profit

128.9 

149.8 

 

 

 

Reconciliation of Core Operating Profits

2019

2018
 

 £m

 £m

Statutory Profit before tax

167.2 

192.5 

Reverse out the following items:

    

FSCS levy

0.1

(0.9) 

Restructuring provision

0.5 

10.5 

Non-core investments

(1.5)

(6.9)

Timing differences - fair value volatility

23.6

(13.3)

Mergers – adjustments to balances acquired

(2.2)

(2.5)

Other non-core items

(3.1)

(0.3)

GMP equalisation

0.0 

1.7 

Core Operating Profit

184.6 

180.8 

Group Statement of Financial Position

2019

2018
 

 £m

 £m

Liquid assets

5,602.3

5,504.7

Loans and advances to customers

37,984.4

36,702.4

Derivative financial instruments

367.6

564.4

Fixed and other assets

323.6

283.2

Total Assets

44,277.9

43,054.7

 

 

 

Shares

30,677.3

29,558.6

Borrowings

9,924.4

10,139.6

Derivative financial instruments

230.8

97.8

Other liabilities

152.2

139.1

Subscribed capital

0.0

6.1

Subordinated liabilities

626.4

585.1

Reserves

2,666.8

2,528.4

Total Liabilities

44,277.9

43,054.7

Key ratios

2019

2018
 

 %

 %

Net interest margin

1.06

1.11

Management expenses/Mean assets

0.66

0.73

Asset growth

2.8

2.4

Loans and advances growth

3.5

4.7

Member balance growth

3.8

2.1

Liquidity ratio

13.8

13.9

Total capital ratio

18.8

20.3

Common Equity Tier 1 ratio

16.6

16.3

Leverage ratio

5.8

5.8

MREL leverage ratio

7.2

7.2

Cost core income ratio

60

63

Arrears ratio (volume)*

0.56

0.50

Arrears ratio (value)

0.41

0.38

*Compares to the market average 31 December 2019 (retail arrears only, includes possessions) of 0.76% (2018: 0.80%).