Society’s strong financial results highlight another year of support for customers

Yorkshire Building Society supported a record number of people to save money last year with interest rates on average 0.56 percentage points higher than the market average, equating to an additional £198.6m in interest paid to savers, according to its annual financial results, announced today.

The building society grew both sides of the balance sheet to 31 December 2022, with net lending remaining at an elevated level of £3.0bn (2021: £3.6bn) and savings deposits increasing by £6.5bn (2021: £2.1bn), delivering the mutual’s ambition to help people have a place to call home and improve financial wellbeing.

Furthermore, significant investment in improving its customer experience has increased the Society’s Net Promoter Score®ⁱ to +54 (2021: +51).

Strong trading performance in both mortgages and savings, combined with the rising interest rate environment, supported an increase in profitability in 2022. Statutory profit before tax was £502.5m (2021: £320.0m), and core operating profit was £425.6m (2021: £297.3m). This level of profitability drives capital generation which positions the Society well for anticipated changes to regulatory requirements as it continues to grow strongly.

These results come the same day the mutual welcomes its new Chief Executive Officer, Susan Allen OBE, subject to regulatory approval.

Financial highlights:

• Mortgage balancesⁱⁱ increased to £43.7bn (2021: £41.9bn)
• Paid savers 0.56 percentage points above the market average, delivering an additional £198.6m of interest to membersⁱⁱⁱ.
• Saving balances increased to a record £42bn (2021: £35.5bn).
• Statutory Profit Before Tax of £502.5m (2021: £320m).
• Core operating profit of £425.6m^iv (2021: £297.3m).
• Common Equity Tier 1 ratio remained stable at 16.8% (2021: 16.8%).

The full financial results are included in the appendix below.

Alasdair Lenman, Interim Chief Executive of Yorkshire Building Society, said:

During what proved once more to be a difficult year for many, our focus on supporting members, customers, communities and colleagues highlighted the best of our Society, which once again delivered a strong set of financial results that we are very proud of.

We’ve helped more people to save this year than ever before, rewarding members for their loyalty by offering an above market average return and ensuring they benefited from the majority of Bank rate rises.

Our appetite to help people have a place to call home further strengthened our mortgage book too and despite the absence of any government initiatives seen previously and the turmoil that followed the mini-Budget, we saw record mortgage applications in May with overall mortgage balances increasing to £43.7bn during the year.

Such growth and sustained strength in our financial performance means we’re able to reinvest profits in our ambitious transformation programme, which has continued at an efficient pace to better meet the needs of members and customers both now and in the future. Improvements to our digital journey for example, have helped to increase our customer satisfaction.

However, we know just how hard it is for many households financially right now, and we’re cognisant of the role we play in many towns and cities across the UK. We’ve taken steps to support our members, customers, colleagues and communities throughout the year, both on an individual level and through our work with Age UK, charities local to our branches, and our award-winning partnership with Citizens Advice.

This fantastic initiative – which sees us fund Citizens Advice advisers to work from a number of our branches - is making a real difference to lives, supporting more than 2,000 people so far. I’m delighted we’ve made a further investment to increase the number of appointments offered this coming year.

Our performance last year is one I am honoured to have overseen, but the results could not have been achieved without the hard work and dedication of our colleagues. Their desire to go above and beyond to provide real help to those we support has been outstanding.

From today, I handover to our new CEO, Susan Allen, confident that the Society is in a strong financial position to deliver continued long-term value and exceptional service, a combination that has never been more needed as we help our members and customers navigate the current economic climate.

Looking forward

As a mutual, it’s important to balance savings and mortgage growth. The Society is in a robust financial position and is committed to continuing its support for members, customers, colleagues and communities throughout 2023.

A key uncertainty is for how long inflationary pressures will persist, and what this will mean for the cost-of-living and the normal functioning of markets. The UK housing market is likely to be constrained to some degree as long as the cost-of-living pressures remain elevated, with economic tightening reducing demand and affordability criteria posing greater restrictions for prospective borrowers.

There is also potential for some existing mortgage holders to be negatively impacted. Adverse movements in house prices would increase the risk of negative equity, and borrowers may find their ability to continue to meet their monthly payments impaired.

The Society has operated a policy of responsible lending for many years, and the low risk profile of our mortgage book is reflected in the current level of arrears being much lower than the market average, as well as being one of the lowest we have observed historically. The credit performance of our mortgage book already forms a key measure as part of our established risk management processes and will continue to be monitored closely. Where possible we will be proactive in seeking to work with borrowers who are facing difficulties and offer support as they navigate their individual circumstances.

ⁱ Net Promoter Score and NPS are trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc. Data period January – December 2022, based on 41,703 responses. Following a change in the calculation methodology for Group NPS in 2022, the comparative period 2021 has been restated on a consistent basis.
ⁱⁱ Includes Accord Mortgages Ltd
ⁱⁱⁱ YBS Group average savings rate compared to rest of market average rates. Source: CACI’s Current Account and Savings Database (CSDB), Stock. Data Period: January – December 2022.
^iv Core operating profit is an alternative performance measure which excludes items such as fair value volatility and material one-time charges that do not reflect the Group’s day-to-day activities

 

Appendix: Summary Financial Statements
Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Key ratios