TIDMLBS
RNS Number : 9014Q
Leeds Building Society
24 February 2023
24 February 2023
Leeds Building Society 2022 Annual Results
Record support for borrowers as Leeds Building Society
achieves GBP5bn annual lending
Leeds Building Society achieved an excellent business
performance in 2022, breaking records, reaching key milestones, and
supporting borrowers and savers through considerable economic
uncertainty.
Its latest annual results demonstrate how colleagues at the
Society put homeownership within reach of thousands more people in
a sustainable way that withstood rising UK interest rates and acute
inflationary pressures.
Key highlights:
-- Record mortgage lending: Leeds did even more to put
homeownership within reach of borrowers by achieving record gross
mortgage lending figures of GBP5.0bn (2021: GBP4.4bn) and record
net lending of GBP2.0bn (2021: GBP1.5bn). Total mortgage assets now
stand at GBP20.3bn (2021: GBP18.3bn), a record high.
-- Record growth in savings: the Society's focus on supporting
savers at the same time as borrowers by offering competitive, easy
access, notice and ISA savings products helped it achieve its
highest ever annual net savings inflow of GBP2.1bn (2021:
GBP1.0bn). Total savings deposits have now passed GBP17.5bn (2021:
GBP15.25bn), a record high.
-- Record number of members: continued strong lending and
savings growth enabled the Society to report a record 839,000
members (581,000 savings members, 252,000 mortgage members and
6,000 savings and mortgage members).
-- Ongoing support for first time buyers: Leeds remains
committed to helping people onto the housing ladder, including
through its shared ownership mortgages where it remains the market
leader [1]. Last year, despite the volatile market conditions, the
Society helped nearly 18,000 first time buyers, representing around
1 in 3 of all the Society's new loans.
-- Rewarding its members through mutuality: the Society paid its
savers an average interest rate 0.5% higher than the rest of the
market average [2], which equates to an annual benefit of GBP80.5m
(2021: GBP71.5m).
-- Continued strong financial performance: total assets of
GBP25.5bn (2021: GBP22.5bn) are the highest in the Society's
history. A record profit before tax of GBP220.5m (2021: GBP163.7m)
has been achieved with a cost income ratio of 37.4% (2021: 43.9%)
which remains one of the lowest in the financial sector.
Richard Fearon, Leeds Building Society Chief Executive Officer,
said:
"Our continued support for the housing market enabled us to
surpass all previous lending records. We really delivered on
helping to put home ownership within reach of more people with
total mortgage lending of GBP5bn. We continued to offer strong
support for customers less well served by the wider market despite
the extremely volatile conditions we were operating in.
Approximately one in three of all our mortgages went to first time
buyers - helped by our decision to withdraw from lending on second
homes to bolster our support for those yet to get on the property
ladder.
"We are again backing our values with actions by extending our
suspension of all mortgage arrears fees until at least the
beginning of 2024. Our mutual status, which makes us ultimately
answerable to our customers, enables us to go further in supporting
our members when they need it most.
"After a decade of low interest rates in the UK, our savings
members started to benefit from rising interest rates. By
continuing to offer a competitive savings product range we saw
record savings inflows into the Society of GBP2.1bn. We
consistently paid above the market average rate which resulted in
GBP80.5m extra going into members' pockets, in keeping with our
mutual status and focus on members. The extra value that we give to
our savers is especially important, particularly now as we face
into a cost of living crisis.
"The past couple of years have been challenging for everyone and
we face into what could be prolonged economic headwinds. It is now
the hardest time to afford a home since our founding year in 1875,
a sad reflection of decades of inaction to tackle the UK's housing
crisis. But we will continue to find ways we can help and put
homeownership within reach of more people, just as we have for
almost 150 years ."
Addressing the UK's homeownership crisis
-- The Society's continued support for the housing market
enabled it to surpass all previous records. As well as its highest
ever recorded gross lending of GBP5bn, nine out of its 10 busiest
lending days ever occurred in 2022.
-- The political and economic upheaval seen during 2022,
including that caused by the Government's mini budget, resulted in
the cost of fixed rate mortgages increasing rapidly. As many
lenders temporarily pulled out of the mortgage market, the Society
continued to offer products aimed particularly at first time buyers
and shared ownership customers. The Society accounted for
approximately 3.4% of the UK first time buyer market [3], around
three times its normal mortgage market share.
-- As a mutual, the Society is acutely aware of its commitment
to its borrowers to be there for them, particularly when times get
tough. Since December 2021, as the UK's economic situation
worsened, the Bank of England increased the Bank Base Rate on nine
occasions by a total of 3.40%. In response to these increases, the
Society only increased its standard variable mortgage rate (SVR) by
a total of 1.70%.
-- The Society will continue to work with those members at risk
of financial difficulty, by offering them a range of initiatives
such as tailored arrears guidance, as well as further extending the
waiver of arrears fees until at least the beginning of 2024.
-- Service offered to borrowers via mortgage brokers is key to
the Society's success. It has further improved processes to reduce
application to offer times and for some cases can now do this in
seconds through cutting edge automation. The work in this area is
reflected in achieving the coveted five star rating in the
Financial Adviser Service Awards.
-- Housing has never been less affordable in the 148 years that
Leeds Building Society has existed [4]. The UK needs to develop a
long term plan for housing by delivering more homes, supporting
first time buyers to save for their deposit and extending
affordable routes into homeownership. In November the Society
published 'Tackling the UK's Homeownership Crisis' - a clear set of
public policy proposals that it believes should guide both the
Government and the housing industry in their support of first time
buyers.
Record savings performance
-- After a decade of low interest rates in the UK, the Society's
savings members started to benefit from rising interest rates. By
continuing to offer a competitive savings product range the Society
now has over 580,000 savings members and total savings deposits of
over GBP17bn - both the highest in its history.
-- The Society has continued to improve its 50 strong national
network of branches. The branch network is a real asset for the
Society and the ongoing enhancement reinforces its commitment to
offer a face-to-face service for its members where this is
sustainable.
-- The Society keeps investing for the future, focusing on
improving service for its members and intermediaries. This included
bolstering the size and capability of key teams, including its
contact centre as well as the IT and underwriting departments with
a total of 205 new jobs created. The Society's Contact Centre was
awarded an Institute of Customer Service (ICS) 'ServiceMark' in
recognition of its ability to provide outstanding customer
service.
Standing together with colleagues and local communities
-- Buying an energy efficient home was made easier through the
Society's Green Mortgages. Using detailed data about projected fuel
bill savings for new build homes with an A or B Energy Performance
Certificate (EPC) rating, it enabled members to borrow more
compared with an equivalent, less energy efficient property.
-- We have set ambitious science-based carbon emission targets
and made good progress towards reaching them. By 2030 we aim to cut
our absolute scope 1 and 2 emissions by 90% (using a market-based
approach) and by 60% (using a location-based approach) compared to
2021, helping us to support a net zero economy. In 2022 we achieved
a 19% market-based reduction and a 43% location-based
reduction.
-- Supporting the communities and the causes its members care
about are key to the Society's identity as a mutual. Colleagues and
members continued their enthusiastic support for the Society's
national partnership with Dementia UK, taking fundraising beyond
GBP500,000. In 2023, through the 'Closer to Home' project, the
Society will be offering face to face specialist dementia care
through its branch network.
-- In July as the country faced into a cost of living crisis the
Society agreed that all permanent and fixed term contract
colleagues, excluding senior management, would receive a GBP1,200
payment [5] which reflected the amount by which expenditures were
expected to rise during the year.
-- In September, The Fair Tax Foundation confirmed that the
Society had been re-accredited with the Fair Tax Mark, recognition
that we continue to do the right thing when it comes to tax
transparency and paying its fair share of tax. It was the first
national high street financial institution to receive the Fair Tax
Mark in 2018 and has received re-accreditation each year since.
-- The Society increased its funding to the Leeds Building
Society Charitable Foundation - it more than tripled its funding to
the Foundation by announcing an annual GBP300,000 grant. In total
during 2022, the Society donated almost GBP1m to good causes.
Ends
[1] Based on analysis of illustrations provided by Twenty7Tec's
mortgage sourcing platform
[2] Source: CACI's CSDB, Stock, January to December 2022, latest
data available. The Society paid an average of 1.15% to our savers
compared to the rest of market average of 0.65%, which equates to
an annual benefit to our savers of GBP80.5m. CACI is an independent
company that provides financial benchmarking data of the retail
cash savings market.
[3] Based on number of loans. Sources: internal data and UK
Finance Table RL1A: First time buyers, new mortgages and
affordability, 2022
[4] Leeds Building Society analysis of Bank of England, ONS and
Land Registry average earnings and house price data from 1845 to
present day
[5] Payments were made on a pro rata basis for part time
colleagues
GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER
2022
Summary Consolidated Income Statement
2022 2021
GBPM GBPM
Interest receivable and similar income 675.9 424.7
Interest payable and similar charges (316.3) (142.5)
------------ ------------
Net interest receivable 359.6 282.2
Fees and commissions receivable 6.1 6.8
Fees and commissions payable (0.7) (0.4)
Fair value gains / (losses) from financial
instruments 14.7 (0.5)
Other operating expense (3.0) (1.1)
------------ ------------
Total income 376.7 287.0
Administrative expenses (130.1) (116.9)
Depreciation and amortisation (10.9) (9.1)
Impairment (charge) / credit on loans and
advances to customers (11.9) 4.1
Impairment of property, plant and equipment (3.8) -
Provisions release / (charge) 0.5 (1.4)
Operating profit and profit before tax 220.5 163.7
Tax expense (58.6) (43.5)
Profit for the financial year 161.9 120.2
============ ============
Summary Statement of Financial Position
31 December 31 December
2022 2021
GBPM GBPM
Assets
Liquid assets 4,580.7 3,646.8
Derivative financial instruments 679.9 219.3
Loans and advances to customers 20,493.2 18,527.2
Fair value hedge accounting adjustment (585.9) (169.1)
Other assets, prepayments and accrued income 248.3 166.5
Current tax assets 4.6 2.8
Deferred tax assets 0.3 4.5
Intangible assets 22.5 25.0
Property, plant and equipment 66.7 82.4
Retirement benefit surplus 3.6 8.3
Total assets 25,513.9 22,513.7
============ ============
Liabilities and equity
Shares 17,520.4 15,258.0
Fair value hedge accounting adjustment (100.7) (72.9)
Derivative financial instruments 251.9 166.8
Deposits and securities 5,209.1 5,111.0
Other liabilities and accruals 586.1 201.4
Deferred tax liabilities 33.0 6.2
Provisions for liabilities and charges 0.6 1.9
Subordinated liabilities 309.1 339.4
Subscribed capital 197.6 227.3
Total equity attributable to members 1,506.8 1,274.6
Total liabilities and equity 25,513.9 22,513.7
============ ============
Statement of Comprehensive Income
2022 2021
GBPM GBPM
Fair value gains recorded in cash flow hedge
reserve 112.9 -
Fair value losses on investment securities (9.1) (6.5)
Actuarial (loss) / gain on retirement benefit
surplus (4.9) 7.1
Revaluation loss on properties (1.9) (1.0)
Tax on items taken directly to equity (26.7) 0.1
-------- --------
Other comprehensive income net of tax 70.3 (0.3)
Profit for the year 161.9 120.2
Total comprehensive income for the year 232.2 119.9
======== ========
Summary Consolidated Cash Flow 2022 2021
GBPM GBPM
Net cash flows from operating activities 739.1 637.9
Net cash flows from investing activities (443.3) (14.1)
Net cash flows from financing activities 200.5 48.8
-------- --------
496.3 672.6
Cash and cash equivalents at the beginning
of the year 2,697.7 2,025.1
Cash and cash equivalents at the end of the
year 3,194.0 2,697.7
-------- --------
Summary of key ratios 2022 2021
Net interest margin 1.50% 1.31%
Gross capital as a percentage of shares and
borrowings 8.9% 9.0%
Liquid assets as a percentage of shares and
borrowings 20.2% 17.9%
Profit after tax for the year as a percentage
of mean total assets 0.67% 0.56%
Management expenses as a percentage of mean
total assets 0.59% 0.58%
Notes to the Financial Information
1. The financial information set out above, which was approved by the
Board of directors on 23 February 2023, does not constitute accounts
within the meaning of the Building Societies Act 1986.
Media contact:
John Brenan, External Relations Manager
jbrenan@leedsbuildingsociety.co.uk
Tel 07553 645576
About Leeds Building Society:
The Society operates throughout the UK and has assets of
GBP25.5bn at 31 December 2022. The UK's fifth largest Building
Society has its head office in the centre of Leeds, where it was
founded in 1875.
The Society won the title of Best Shared Ownership Mortgage
Lender in the 2022 What Mortgage Awards, its seventh consecutive
year of success in this category. It also received a coveted five
star rating in the Financial Adviser Service Awards, as well as 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.
https://www.leedsbuildingsociety.co.uk/
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END
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