Yorkshire Building Society announces 2020 half-year results

Yorkshire Building Society has today (23 July 2020) announced its financial results for the first six months of 2020.

Financial highlights:

• Created sustainable profit: Profit before tax of £67.3m (30 June 2019: £76.5m) and core operating profit of £74.7m (30 June 2019: £97.5m).
• Maintained financial strength and security: Common Equity Tier 1 ratio at 16.6% (31 December 2019: 16.6%).
• Helped people to buy homes: Advanced 3,002 mortgages to first time buyers and completed 31,384 mortgages. Mortgage balances remained flat at £38.0bn (31 December 2019: £38.0bn).
• Created value for savers: Delivered rates which consistently beat the market average by 0.19%[i] (31 December 2019: 0.34%), equating to £23.6m in additional interest for savers, with savings balances at £30.8bn (31 December 2019: £30.7bn).

The full financial results can be in the appendix below.

To view the full half-yearly 2020 financial report please visit https://www.ybs.co.uk/your-society/financial-results

Response to Covid-19:

Throughout the Covid-19 outbreak, the Society has focused on supporting its customers and colleagues. It has prioritised keeping members in their homes, ensuring their savings are safe and looking after colleagues’ health and wellbeing.

The Society helped its borrowers to stay in their homes, enabling customers to take 37,307 mortgage payment deferrals. It also supported members in building financial resilience, opening 105,283 savings accounts in the six months to 30 June 2020.

Delivering high standards of customer service has become even more important at this time and the Society increased its Net Promoter Score in the first half of 2020 to +54 (31 December 2019: +51)[ii], demonstrating its commitment to delivering on service when its members need it the most.

Throughout the crisis, the Society’s colleagues have stepped up to continue to support members, with the vast majority of branches and agencies remaining open throughout, contact centres remaining open and 1,400 staff  transitioning to working from home. 

The mutual is offering staff unlimited dependents and carers leave at full pay and anyone who is shielding, unwell or needs to self-isolate and cannot work from home qualifies for paid sick leave at their full salary. It has not put any staff on furlough and all staff remain on full pay.

It has remained committed to working with communities to deliver financial wellbeing and education. Through online lessons, Society colleagues delivered Money Minds financial education sessions to 1,450 families across the country during lockdown. Colleagues have now delivered financial education sessions to more than 25,000 children and young people since Money Minds launched in 2015.

The Society also continued its work to help homeless young people, launching a bond for its outgoing charity partner End Youth Homelessness, which raised more than £75,000, bringing the total raised for the charity to more than £1.1m and helping 455 young people with 95 dependent children into a home.

The Yorkshire Building Society Charitable Foundation has supported communities by making more than £140,000 in donations to 145 charities in the first six months of 2020.

Outlook:

Covid-19 has dominated the economic landscape since March, severely impacting the UK economy and the housing market.

As lockdown ends we are seeing an uptick in economic and housing market activity, supported by the Government’s unparalleled economic support packages and the Bank of England’s fiscal stimulus.

However, a rebound could be limited as Government support is withdrawn, or by a possible second wave of infection, alongside the ongoing uncertainty of Brexit. The Society’s balance sheet strength and profit levels mean it is well-prepared for any adverse economic impacts.

The increase in Stamp Duty thresholds to 31 March 2021 may bring more homes onto the market and create activity in the short term.  The mortgage market is likely to remain highly competitive for the rest of the year, with lenders coming in and out of the 90% LTV tier for the foreseeable future. The Society remains keen to lend in this part of the market and will continue to do so where service levels allow.

Mike Regnier, Chief Executive of Yorkshire Building Society, said:

 

From the very beginning, our response to Covid-19 has been to focus on the key priorities of keeping members in their homes, making sure their savings are secure and accessible, and looking after our colleagues’ safety and wellbeing. Our mutuality is important in these challenging times, as it enables us to take an approach which puts our customers, colleagues and communities first.

 

For borrowers worrying about meeting their mortgage payments, we are supporting them with a variety of solutions, including mortgage payment holidays. We are also helping savers who need emergency access to their money by enabling them to make withdrawals from fixed rate accounts without any penalty.

We have kept branches open in as many communities as possible and helped more customers to access our online services so they could manage their money whilst staying at home.

In terms of financial results, I’m pleased to report that our 2020 half-year performance illustrates that our prudent strategy over the longer term has enabled us to weather the challenging economic environment and impacts of Covid-19. Our balance sheet has stayed strong, our statutory and core profits remain healthy and we retain strong levels of capital and liquidity.

To support our communities, Yorkshire Building Society launched a bond which raised more than £75,000 for End Youth Homelessness, bringing our total fundraising over the three-year partnership to more than £1.1m. To promote financial wellbeing during these difficult times, we made our Money Minds lessons accessible online to help families with financial education.

Our aim as we come out of the Covid-19 crisis is to carry on helping members, customers, communities and colleagues for many years to come.

 

[i] 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 April 2020.

[i] KPMG Nunwood Customer Voice Programme, January to June 2020. Based on 12,710 completed interviews with customers. Net Promoter, Net Promoter Score and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld

Group Income Statement
							6 months to 30 June 2020		6 months to 30 June 2019		Year to December 2019
							£m		£m		£m
Net interest income							211.4		229.6		464.6
Non-interest income (net)							5.6		8.2		8.5
Net (losses)/gains from financial instruments held at fair value							(7.9)		(24.2)		(22.0)
Net realised profits							6.5		5.7		6.3
Total income							215.6		219.3		457.4
Administrative expenses							(133.6)		(141.6)		(289.6)
Operating profit before provisions							82.0		77.7		167.8
Provisions							(14.7)		(1.2)		(0.6)
Profit before tax							67.3		76.5		167.2
Tax expense							(15.0)		(17.7)		(38.3)
Net profit							52.3		58.8		128.9
Reconciliation of Core Operating Profit
							6 months to 30 June 2020		6 months to 30 June 2019		Year to December 2019
							£m		£m		£m
Statutory profit before tax							67.3		76.5		167.2
Reverse out the following items:
FSCS levy							-		0.1		0.1
Provision for restructuring costs							0.4		1.1		0.5
Timing differences - fair value volatility							8.7		29.2		27.4
Mergers - adjustments to balances acquired							(0.9)		(1.4)		(2.2)
Non-core investments							(0.8)		(5.0)		(5.4)
Other non-core items							-		(3.0)		(3.0)
Core operating profit							74.7		97.5		184.6
Statement of Comprehensive Income
							30 June 2020		30 June 2019		31 December 2019
							£m		£m		£m
Net profit							52.3		58.8		128.9
Items that may be reclassified to profit and loss:
Financial assets measured through other comprehensive income
		Fair value movements taken to equity					13.3		6.3		12.0
		Amounts transferred to the income statement					(13.0)		(1.8)		(10.2)
		Tax on amounts recognised in equity					(0.3)		(1.1)		(0.4)
Cash flow hedges:
		Fair value movements taken to equity					-		(0.5)		(0.2)
		Amounts transferred to the income statement					0.3		1.1		1.9
		Tax on amounts recognised in equity					(0.1)		(0.1)		(0.4)
Items that will not subsequently be reclassified through profit and loss:
Remeasurement of net retirement benefit obligations							39.9		21.7		8.4
Tax relating to retirement benefit obligations							(10.9)		(5.5)		(2.3)
Effect of change in corporation tax rate							(1.7)		-		0.2
Tax adjustment							(0.4)		-		-
Total comprehensive income for the period							79.4		78.9		138.0
Group Statement of Financial Position
							30 June 2020		30 June 2019		31 December 2019
							£m		£m		£m
Liquid assets							6,257.2		4,682.9		5,602.3
Loans and advances to customers							37,962.8		37,803.2		37,984.4
Derivative financial instruments							523.0		639.4		367.6
Other assets							358.7		348.0		323.6
Total assets							45,101.7		43,473.5		44,277.9
Shares							30,845.8		30,294.6		30,677.3
Borrowings							10,191.5		9,521.3		9,924.4
Derivative financial instruments							548.9		228.4		230.8
Other liabilities							120.9		162.3		152.2
Subordinated liabilities							648.4		659.2		626.4
Reserves							2,746.2		2,607.7		2,666.8
Total liabilities							45,101.7		43,473.5		44,277.9
Key ratios
							30 June 2020		30 June 2019		31 December 2019
							%		%		%
Net Interest Margin							0.95		1.06		1.06
Management expenses/Mean Assets							0.60		0.65		0.66
Asset growth							1.9		1.0		2.8
Loans and advances growth							(0.1)		3.3		3.5
Member balance growth							0.5		2.5		3.8
Liquidity ratio							15.2		11.8		13.8
Total capital ratio							18.9		18.6		18.8
Common Equity/Core Tier 1 ratio							16.6		16.1		16.6
Leverage Ratio							5.8		5.6		5.8
Cost core income ratio							59.8		58.1		60.4
MREL leverage ratio							7.3		7.1		7.2

All information correct at time of publication.

W26-20