TIDMLBS
RNS Number : 1567U
Leeds Building Society
29 July 2022
29(th) July 2022
More first-time buyers join growing membership as Leeds
sets new lending records
Mutual continues to invest for the future to put home ownership
within reach
Continuing to break records for helping thousands more people
into homes was key to Leeds Building Society's strong performance
in the first half of this year, said its Chief Executive
Officer.
Reporting interim results for H1 2022, Richard Fearon said the
mutual had built on the exceptional performance of 2021 with gross
lending climbing to GBP2.5bn (GBP2.0bn 30 June 2021) and net
lending rising to GBP1.2bn (GBP0.6bn 30 June 2021), both record
half-year amounts for the Society.
Nine of its 10 biggest lending days ever occurred during the
first six months of this year leading to its highest number of
completions in the first-half of a year.
Total membership grew to 815,000, including the 9,000 new
members who chose the Society when deciding to buy their first
home.
Lending growth was supported by a corresponding rise in savings
balances, with the increase topping GBP1bn, taking total savings
balances to GBP16.4bn (GBP15.25bn 31 December 2021).
Richard said good value savings products were essential to bring
in the level of funds required to support Leeds Building Society's
lending ambitions and he was pleased by how many new savings
members were attracted to join in H1 2022.
"I'm delighted we've delivered a record breaking first half of
the year, achieved a series of landmarks across our lending and
supported savers at a critical time," said Richard.
"Being mindful of our roots as a mutual, we've reaffirmed our
purpose - to put home ownership within reach of more people - and
future generations of first-time buyers are integral to our
plans.
"To successfully deliver on that purpose means ensuring we offer
a competitive savings range. We've consistently paid above the
market average rate - which equates to an extra GBP66m in our
savings members' pockets [1] - and our fixed rate products have
been a notable strength, appealing to new and existing savers
alike.
"The value that we give to savers is especially important during
a cost of living crisis, and we have also been considerate of the
challenges facing our borrowers too. While the Bank of England's
Base Rate increased four times during the first half of the year,
we raised our variable savings rates on each occasion but only
raised our standard variable mortgage rate (SVR) once.
"I'm proud we were able to attract so many new members but
acknowledge the elevated demand for our savings products led to
some long waiting times for callers. We didn't always meet the high
standards of service we strive for but I'm pleased that we've taken
steps to address this and the situation has now returned to
normal.
"Work is ongoing to increase online functionality and capacity
for savings members and this remains a key focus over the coming
months to ensure our savings processes are simpler and quicker to
use. This should deliver benefits like those seen since upgrading
our mortgage systems - Mortgage Hub, our online mortgage platform,
is now capable of processing applications from intermediaries in as
little as 11 seconds and further enhancements are planned.
"Our ambitious multi-year IT transformation is progressing to
plan and on budget, and during the first six months of 2022 we
successfully completed the transfer of our data centres, boosting
our resilience and security, both of which must be priorities for
any financial services provider."
Investment this year includes improvements and refurbishment
across Leeds Building Society's 50-strong national network of
branches, as part of a commitment to face-to-face service where
this is sustainable.
"We've continued to recruit, creating a further 65 skilled jobs,
such as adding to the varied and specialist IT skills within the
Society," said Richard.
"One in five of our colleagues now works in a 'tech' role and we
are successfully trialling hybrid working to make effective use of
our energy-efficient new head office in Leeds city centre.
"Developing and future-proofing our operations helps us to carry
on doing what we do best, meeting consumer need with product
innovation, such as launching mortgages that incentivise greener
homes. We have also taken significant steps in reaching net zero as
a business and supporting our stakeholders to do the same. Having
already achieved carbon neutral status on scope 1 and 2 emissions
and business travel, we are now assessing our scope 3 emissions to
help us reduce our indirect impact on the environment."
H1 2022's strong lending performance delivered profit before tax
of GBP146.5m (GBP70.3m 30 June 2021), buoyed by an exceptional fair
value adjustment of GBP42.0m [2]. The UK's fifth-largest building
society maintains capital and reserves well above the regulatory
requirement at GBP1.57bn (GBP1.46bn Dec 2021) , as well as
continuing to retain very strong levels of liquidity.
The success of the Society's business model and a keen focus on
efficiency means it has a reduced cost to income ratio of 30.1% and
a stable cost to mean asset ratio of 0.56% (44.9% and 0.56%
respectively, 30 June 2021), both among the best in the building
society sector.
The proportion of residential mortgages in arrears, calculated
as 1.5% or more of outstanding mortgage balances, fell to 0.62%
(0.66% December 2021), reflecting the Society's responsible
approach to lending and our members' financial resilience in the
face of inflationary pressures.
Richard continued: "Having reaffirmed our purpose and looked at
how we deliver on this, we've taken the decision to withdraw from
lending on second homes. Second homes reduce the number of
properties available to live in and we want to direct more of our
efforts to other sectors, especially first-time buyers.
"Serving our members and supporting their communities remains at
the heart of our business, as demonstrated daily by the commitment,
drive and expertise of our fantastic people throughout what has
been another extremely demanding period.
"Our colleagues and members continued their enthusiastic support
for our national partnership with Dementia UK, taking fundraising
beyond GBP400,000 as our 'Closer to Home' project expands to bring
specialist dementia care into more communities across the UK.
"Their compassion and generosity were evident again in the speed
and scale of donations for the humanitarian disaster in Ukraine.
With matched funding from the Society, more than GBP100,000 was
given to relief efforts in Ukraine and the UK, including refugee
aid in our home city of Leeds.
"In Peterborough, work is ongoing to redevelop vacant office
space above the Society's city centre branch for use as emergency
accommodation for refugees, which has been a widely-supported and
collaborative effort with local businesses and stakeholders.
"The past couple of years have been challenging for everyone but
reminded us all of how we can achieve more when we work together,
and this remains true as concerns about Covid-19 are overtaken by
new worries about rising bills and inflation.
"We'll continue to support our members and look for new ways we
can help and deliver on the purpose for which we were founded
almost 150 years ago.
"Keeping the needs of our members and their communities at the
heart of our business, combined with our enduring financial
strength and security, means I continue to look to the future with
confidence."
Ends
[1] We paid an average rate of 0.73% against the rest of the
market rate of 0.28%. CACI's CSDB, Stock, May 2021 to April 2022,
latest data available
[2] Fair value adjustments are made under International
Financial Reporting Standards (IFRS), against the Society's legacy
equity release portfolio and other assets and liabilities. They are
accounting adjustments which arise due to market rate volatility
and will typically unwind in future periods
Notes to Editors
Key information from the Society's Group Interim Results to 30
June 2022 is attached.
For the Society's Interim Financial Report, follow the link:
http://www.rns-pdf.londonstockexchange.com/rns/1567U_1-2022-7-28.pdf
About Leeds Building Society
The Society operates throughout the UK and had assets of
GBP24.1bn at 30 June 2022 (GBP21.1bn 30 June 2021). The UK's
fifth-largest mutual has its head office in the centre of Leeds,
where it was founded in 1875. The Society received a Gold Ribbon
from Fairer Finance for savings accounts for the fifth year
running, based on customer happiness and trust, along with the
ability to explain things clearly.
Leeds Building Society is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority (FCA) and the Prudential Regulation Authority. Leeds
Building Society is registered on the Financial Services Register
under number 164992. You can check this on the FCA website at
https://register.fca.org.uk/s/ or by calling 0800 111 6768.
Leeds Building Society Head office: 26 Sovereign Street, Leeds,
West Yorkshire, LS1 4BJ.
As at 30th June 2022, the Board Directors of Leeds Building
Society were as follows:
-- Annette Marie Barnes
-- Andrew Peter Conroy
-- Iain Charles Andrew Cornish
-- Richard Guy Fearon
-- David Fisher
-- Neil Anthony Fuller
-- Andrew John Greenwood
-- Gareth John Hoskin
-- Robert James Howse
-- Lynn Reston McManus
-- Anita Tadayon
GROUP RESULTS FOR THE SIX MONTHSED 30 JUNE
2022
Condensed Consolidated Income Statement
Six months Six months Year to
to 30 June to 30 June
2022 (Unaudited) 2021 (Unaudited) 31 December
2021
(Audited)
GBPm GBPm GBPm
Interest receivable and similar income 271.0 201.6 424.7
Interest payable and similar charges (98.3) (73.9) (142.5)
------------------- ------------------- --------------
Net interest receivable 172.7 127.7 282.2
Fees and commissions receivable 2.9 3.1 6.8
Fees and commissions payable (0.3) (0.2) (0.4)
Fair value gains / (losses) from financial
instruments 42.0 (1.2) (0.5)
Other operating expense (3.0) (1.2) (1.1)
------------------- ------------------- --------------
Total income 214.3 128.2 287.0
Administrative expenses (59.5) (52.9) (116.9)
Depreciation and amortisation (4.9) (4.6) (9.1)
Impairment (charge) / credit on loans and
advances to customers (3.4) 0.7 4.1
Provisions charge - (1.1) (1.4)
------------------- ------------------- --------------
Operating profit and profit before tax 146.5 70.3 163.7
Tax expense (33.9) (18.0) (43.5)
Profit for the period 112.6 52.3 120.2
=================== =================== ==============
Condensed Consolidated Statement of Financial
Position
30 June 30 June 31 December
2021
2022 (Unaudited) 2021 (Unaudited) (Audited)
GBPm GBPm GBPm
Assets
Liquid assets 4,002.9 3,063.0 3,646.8
Derivative financial instruments 453.8 133.0 219.3
Loans and advances to customers 19,676.4 17,549.0 18,527.2
Fair value adjustment for hedged risk on
loans and advances to customers (413.4) (23.1) (169.1)
Other assets, prepayments and accrued income 242.9 245.9 166.5
Current tax assets - - 2.8
Deferred tax assets 1.5 6.8 4.5
Intangible assets 23.5 27.2 25.0
Property, plant and equipment 72.2 84.0 82.4
Retirement benefit surplus 6.7 2.1 8.3
Total assets 24,066.5 21,087.9 22,513.7
=================== =================== ============
Liabilities
Shares 16,398.7 14,470.8 15,258.0
Fair value adjustment for hedged risk on
shares (93.2) (51.7) (72.9)
Derivative financial instruments 231.0 162.2 166.8
Amounts owed to credit institutions 2,310.9 1,998.6 2,258.9
Amounts owed to other customers 328.6 293.6 297.5
Debt securities in issue 2,584.8 2,305.7 2,554.6
Other liabilities and accruals 383.8 110.8 201.4
Current tax liabilities - 3.1 -
Deferred tax liabilities 1.4 4.9 6.2
Provision for liabilities and charges 1.4 2.8 1.9
Subordinated liabilities 322.7 347.6 339.4
Subscribed capital 211.6 233.4 227.3
Total equity attributable to members 1,384.8 1,206.1 1,274.6
Total liabilities and equity 24,066.5 21,087.9 22,513.7
=================== =================== ============
Condensed Consolidated Statement of Comprehensive
Income
Six months Six months Year to
to 30 June to 30 June
2022 (Unaudited) 2021 (Unaudited) 31 December
2021
(Audited)
GBPm GBPm GBPm
Fair value losses on investment securities (4.3) (1.9) (6.5)
Actuarial (loss) / gain on retirement benefit
surplus (1.7) 1.1 7.1
Revaluation loss on properties revalued - - (1.0)
Tax on items 3.6 (0.1) 0.1
------------------- ------------------- --------------
Other comprehensive income net of tax (2.4) (0.9) (0.3)
Profit for the period 112.6 52.3 120.2
Total comprehensive income for the period 110.2 51.4 119.9
=================== =================== ==============
Summary Condensed Consolidated Statement
of Cash Flows
Six months Six months Year to
to 30 June to 30 June
2022 (Unaudited) 2021 (Unaudited) 31 December
2021
(Audited)
GBPm GBPm GBPm
Net cash flows from operating activities 292.9 275.0 637.9
Net cash flows from investing activities (289.8) 62.2 (14.1)
Net cash flows from financing activities 60.0 (178.3) 48.8
------------------- ------------------- --------------
63.1 158.9 672.6
Cash and cash equivalents at the beginning
of the period 2,697.7 2,025.1 2,025.1
Cash and cash equivalents at the end of
the period 2,760.8 2,184.0 2,697.7
------------------- ------------------- --------------
Key Performance Indicators
Six months Six months Year to
to 30 June to 30 June
2022 (Unaudited) 2021 (Unaudited) 31 December
2021
(Audited)
Net interest margin 1.50% 1.23% 1.31%
Profit after tax as a proportion of mean
assets 0.97% 0.51% 0.56%
Management expenses as a proportion of
mean assets 0.56% 0.56% 0.58%
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END
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