Yorkshire Building Society, the UK's second-largest building society, is pleased to report an extremely positive financial performance in 2011. The Society improved profitability, raising core operating profit by 27% to £163m, maintained its strong capital position and increased its lending by 46%, whilst continuing to deliver long-term value and financial security to an increasing number of members.
The volatile economic and market conditions which continued in 2011, as well as regulatory changes, presented the Society with fresh challenges and opportunities. The Yorkshire's financial strength and stability enabled it to successfully conclude two major transactions during the year - a merger with Norwich & Peterborough Building Society (N&P) and the acquisition of the savings and mortgage balances of Egg Banking plc.
The Society's strong financial performance in 2011, which reflects the merger and acquisition activity undertaken during the year, includes the following highlights:
*Source - PressWatch Financial from Kantar Media.
"I am extremely pleased to report very strong financial results for the Yorkshire in 2011. This performance shows significant growth in mortgage and savings balances, increased level of operating profit, stable net interest margin and robust capital and liquidity positions despite the continuing challenges presented by the economic and market conditions.
"I would like to thank Iain Cornish for his tremendous leadership which resulted in the Society being in an exceptionally strong position and with a very bright future. The Society has a long-held reputation for delivering outstanding value and excellent service to its members and as the new Chief Executive I have inherited a fantastic legacy. A key indicator of how effectively the Group is delivering an exceptional customer experience is the net promoter score, which continued to rank the Yorkshire well above the average for the financial services industry.
"The Society's focus throughout 2011 has been on providing good, long-term value to both our savers and borrowers. Throughout the global financial crisis, the Society has ensured that the focus has been on protecting savers as far as possible from historically low interest rates and continuing to lend to borrowers looking to get on to the property ladder, whilst demonstrating forbearance to those who are struggling with repayments. I am delighted that throughout 2011, the Society has been able to offer savers in around 90% of our variable rate accounts a return greater than the Bank of England base rate and has enabled 5,475 first-time buyers to get onto the property ladder. As a building society, these achievements are very important to us.
"One of the Yorkshire's strategic priorities is 'looking ahead and seizing new opportunities'. To date, the focus of this priority has been on undertaking strategic mergers and acquisition activities. Our focus for 2012 will be to ensure that we take full advantage of the opportunities presented by our newly enlarged business. This will include the effective integration of N&P and the Egg business, delivering planned synergies and developing the range of products and services we offer to members by leveraging the capabilities and expertise we have acquired in our recent transactions.
"Looking forward, we will continue to develop and invest in the attributes of the Society that make it successful and differentiate us from our competitors. It is clear to me that when trust in banks is at an all-time low, the Yorkshire's success is based on our operating principles as a trusted independent mutual, our financial strength and the commitment, attitude and skills of our people. I would like to thank my colleagues for the way in which they have continued to prioritise providing our members with excellent customer service across all brands throughout a period of considerable change."
|2011 £m||2010 £m|
|Statutory Profit before tax||129.7||115.4|
|Reverse out the following items:|
|Net losses from fair value volatility||10.1||10.5|
|Sales of assets/other income||(0.6)||0.6|
|Non core provisions|
|- Structured Credit||-||5.1|
|- Financial Services Compensation Scheme||5.6||3.6|
|Mergers, acquisition and closure costs||24.0||10.4|
|Core Operating Profit||163.2||128.5|
|2011 £m||2010 £m|
|Net interest income||328.6||272.7|
|Other income and charges||47.4||43.4|
|Net losses from fair value volatility||(10.1)||(10.5)|
|Net realised profits||3.5||15.2|
|Merger & acquisition costs||(17.5)||(10.4)|
|Operating profit before provisions||159.8||147.8|
|Financial Services Compensation Scheme levy||(5.6)||(3.6)|
|Profit before taxation||129.7||115.4|
|Profit for the year||106.2||91.8|
|2011 £m||2010 £m|
|Valuation gains taken to equity, net of releases||70.6||3.6|
|Cash Flow hedges:|
|Profits/(losses) taken to equity||(3.8)||5.3|
|Actuarial gain on retirement benefit obligations||18.7||4.8|
|Tax on items taken directly to or transferred from equity||(36.4)||(7.6)|
|Net income not recognised directly in the income statement||49.4||6.1|
|Net profit for the financial year||106.2||91.8|
|Total comprehensive income for the year||155.6||97.9|
|2011 £m||2010 £m|
|Derivative financial instruments||373.8||579.8|
|Derivative financial instruments||609.1||472.3|
|2011 %||2010 %|
|Group net interest margin||1.05||1.03|
|Group management expenses/mean assets||0.67||0.66|
|- excluding impact of merger/acquisition/closures||0.61||0.56|
|Group asset growth||8.6||32.4|
|Group loans and advances growth||15.6||57.0|
|Member balances growth||21.5||55.0|
|Gross capital ratio||6.59||6.20|
|Free capital ratio||6.06||5.69|
|Core tier 1 capital ratio||12.6||12.4|
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