Having made “significant progress” on its future-proofing investment programme, Leeds Building Society is confident about the future.
This comes as the Society reports its latest 12 months’ performance. Profit before tax was £88 million in 2019 (2018: £116.9m), a reduction primarily due to a fair value charge of £19.7 million under international accounting rules.
Meanwhile, the Society’s investment programme continues at pace, with major projects – upgrading IT systems and fitting out its new head office in central Leeds – progressing to plan and on budget.
Richard Fearon, who completed his first year as CEO, said both projects will bring efficiency savings to ensure the Society can keep delivering long term value and better service to its membership as a whole.
The new building will offer substantial environmental benefits, and the IT improvements include a new mortgage platform to be phased in during 2020.
This ‘Mortgage Hub’ will simplify the application process end-to-end, saving the Society‘s intermediary partners time and effort, and enabling borrowers to be in their homes sooner.
“Our approach to providing long term value to our membership as a whole is illustrated by our performance in 2019,” said Mr Fearon.
“Last year we carried on paying above the market average on savings and our net mortgage lending approached £1 billion, in spite of fierce competition.
“However, high levels of borrower refinancing translated into lower mortgage income, without an equivalent reduction in funding costs, and has suppressed net interest income.
“In addition, under International Financial Reporting Standards (IFRS), we have booked a fair value measurement reduction of £19.7 million, which includes the effect of market rate volatility on both our legacy equity release portfolio and other mortgage assets. This is an accounting adjustment which will typically unwind in future periods.
“A reduction in our profit before tax was anticipated and, while we expect profits in the short to medium term to remain at lower levels than in recent years, they’ll be at the right level to support planned, sustainable growth, and add to our reserves.”
He added: “Our long term financial strength ensures we’re well-placed to withstand economic shocks and market uncertainty, and retain a confident outlook.