West Bromwich Building
Society
Preliminary results
announcement for
the year ended 31 March
2024
Forward-looking statements
This document contains certain
forward-looking statements with respect to certain of the West
Brom's strategy, plans, current goals and expectations relating to
the future financial position, business performance and results.
Although the West Brom believes that the expectations reflected in
these forward-looking statements are reasonable, we can give no
assurance that these expectations will prove to be an accurate
reflection of future performance and that actual results could
differ materially from those contained in the forward-looking
statements. By their nature, all forward-looking statements involve
risk and uncertainty because they relate to future events and
circumstances that are beyond the control of the West Brom
including, amongst other things, UK domestic and global economic
business conditions; market-related risks such as fluctuation in
interest rates and exchange rates; inflation/deflation; the impact
of competition; changes in customer preferences; risks concerning
borrower credit quality; delays in implementing proposals; the
timing, impact and other uncertainties of future acquisitions or
other combinations within relevant industries; the policies and
actions of regulatory authorities; the impact of tax or other
legislation and other regulations in the jurisdictions in which the
West Brom operates. As a result, the West Brom's actual future
financial condition, business performance and results may differ
materially from the plans, goals and expectations expressed or
implied in these forward-looking statements. Due to such risks and
uncertainties the West Brom cautions readers not to place undue
reliance on such forward-looking statements. We undertake no
obligation to update any forward-looking statements whether as a
result of new information, future events or
otherwise.
West Bromwich Building
Society
Preliminary results
announcement
for the year ended 31 March
2024
The West Brom today announces its
results for the financial year ended 31 March 2024.
Key highlights of the financial year
include:
• £1.1bn in new mortgage lending
(2022/23: £0.7bn) including a record amount of home ownership
lending. This included supporting 4,684 (2022/23: 3,413) first-time
buyers, an increase of nearly 40% year on
year.
• Savers rewarded with rates that
were, on average over the year, more than one third higher than the
market average1, equivalent to a savings member mutual benefit of
£38.6m (2022/23: £33.2m).
• Our market-first approach to
Differentiated Standard Variable Rate (DSVR) provides existing
borrowers, with a greater proportion of equity in their homes, a
reduced rate at the end of their mortgage deal. This means a DSVR
borrower at the West Brom would save circa £1,6002 a year for each
£100,000 borrowed compared with an average market SVR3.
• Strong capital position maintained
with a Common Equity Tier 1 ratio of 17.8% (2022/23: 18.7%) and a
Leverage Ratio of 7.5% (2022/23: 7.9%).
• The capital strength was supported
by a statutory profit before tax of £32.1m (2022/23: £31.8m),
driven by strong net interest income. Underlying profit, which
excludes one off items, increased by over 40% to £37.2m (2022/23:
£26.2m).
• Achieved recognition on a national
scale winning the First Time Buyers' Choice and the prestigious
Best Customer Service award at the Moneyfacts Consumer Awards.
Awarded the five-star rating in the Financial Adviser Service
Awards for the sixth consecutive year.
• Net Promoter Score®4 (NPS)
increased to +75 (2022/23: +74) with customer satisfaction
remaining at 95% (2022/23: 95%).
• Established the West Bromwich
Building Society Foundation in November 2023, with the primary aim
of supporting local people and community causes that are aligned to
the Society's core purpose.
• Achieved a 'Beyond Living Wage'
award this year in recognition of the high standard of our
employment practices, primarily our commitment to going above and
beyond the Living Wage accreditation.
1 Average market rates sourced from Bank of England Bankstats
table A6.1 March 2024
2 Interest saving in first year by borrower with less than 75%
Loan to Value
3 Average market reversion rate of 8.18%
sourced from Moneyfacts March 2024
4 Net Promoter Score and NPS are trademarks of Satmetrix
Systems, Inc., Bain & Company, Inc., and Fred
Reichheld.
Jonathan Westhoff, Chief Executive
Officer, commented:
"Our strong performance of 2023/24
was delivered despite the economic challenges and geo-political
uncertainty. A combination of rising interest rates and high
inflation has meant that cost of living pressures remain elevated,
and the challenges facing prospective home buyers continue to be
well-documented.
This year has seen us hit a
significant milestone, exceeding the £1billion level for new
residential mortgage lending across the financial year an increase
of 54% year on year compared with a market fall of circa 27% over
the same period. This means that since April 2023, we've helped
another 7,161 customers with their home ownership ambition, a 46%
increase from the previous financial year. For our savings
customers, who provide the funding that enables us to help so many
have the security of home ownership, we continue to provide value
by delivering average interest rates that are 36% above the market
average - a measurable member benefit of £38.6m.
As our Society grows, so do the ways
in which we support our members. We're proud to be leading the
charge on a number of tangible benefits for our borrowers,
including initiatives such as our market-first approach to
Differentiated Standard Variable Rate (DSVR) and not charging
arrears fees for anyone struggling to meet their monthly mortgage
payments. In the true spirit of mutuality, where members become
financially vulnerable, our focus is on providing support rather
than burdening them with additional charges.
We were delighted to achieve our
ambition of being a £1bn lender this year, and what makes this even
more impactful is knowing that 4,684 of purchase mortgages were for
first-time buyers, with 38% of these first-time buyers using shared
ownership, a vital route for those that cannot yet afford a
traditional route out of rental and into ownership.
Enabling these members to become
homeowners is a direct result of the savings deposited with us by
our savers. This year we welcomed 10,250 new savers to the Society,
attracting £570m in new savings, up 30% on last year, through a
highly competitive range of notice products, with ISA options to
help our customers maximise their tax-free savings.
Our commitment to doing the right
thing, not just the easy thing, has always been important to us,
but this year saw us achieve recognition for this on a national
scale when we took home two accolades at the annual Moneyfacts
Consumer Awards - First Time Mortgage Buyers' Choice and the
prestigious Best Customer Service award. These awards mean a great
deal to us as they are voted for by customers, reflecting their
true experiences with household and personal finance providers, and
it was fantastic for our colleagues to receive this level of
recognition for the hard work they put in, day in day
out.
We continue to work closely with a
number of charities and good causes, on both a national and local
scale, and we are immensely proud to hit the milestone of raising
over £1m for the Birmingham Children's Hospital through our
dedicated Red Balloon Appeal Account, which has been open to
members for the last 16 years.
The last few years has seen us
navigate a sea of change across the wider industry and indeed, the
economy, and we know this is unlikely to change as we head into our
next financial year. However, our strong capital position and
financial resilience will continue to support us through any
uncertainties and as always, we remain guided by our Purpose to
help more people own their own home and save for the
future.
We now have a particularly momentous
year ahead of us, as we celebrate 175 years of the Society. It
therefore feels fitting that, whilst we look back at our rich
history, we also look ahead at how we can reshape our strategy to
meet the evolving needs of our members. Over the coming year, and
beyond, we'll bring to life the next generation of the West Brom
for both our colleagues and our members, enhancing the Society for
the future whilst staying true to our Purpose which underpins all
that we do.
Chief Executive Officer's Review
The strong performance of 2023/24
was delivered despite the economic challenges and geo-political
uncertainty. A combination of rising interest rates and high
inflation has meant that cost of living pressures remain elevated,
and the challenges facing prospective home buyers continue to be
well-documented, although towards the end of the period interest
rates edged above inflation, offering the chance to achieve returns
for savers that increased the true value of their
savings.
It is in this environment that our
focus has been to balance the value we can deliver as a
purpose-led, customer owned building society to both sets of
members; our savers and our borrowers. Of course, the most tangible
form of value we can provide is through the rates we offer, but in
addition to this we're incredibly proud of the quality of service
and support we have delivered for our members.
This year has seen us hit a
significant milestone, exceeding the £1billion level for new
residential mortgage lending across the financial year, an increase
of 54% year on year compared with a market fall of circa 27% over
the same period. This means that since April 2023 we've helped
another 7,161 (2022/23:4,901) customers with their home ownership
ambition, a 46% increase from the previous financial year. For our
savings customers, who provide the funding that enables us to help
so many have the security of home ownership, we continue to provide
value by delivering average interest rates that are 36% above the
market average - a measurable member benefit of £38.6m.
It is during times of instability
that the true value of a purpose-led organisation can shine
through, and whilst we now embark on significant plans to develop
the Society for the future, our Purpose upon which we were founded
175 years ago still, and always will, remains at our
core.
Our
purpose-led activities
As our Society grows, so do the ways
in which we support our members. We're proud to be leading the
charge on a number of tangible benefits for our borrowers,
including initiatives such as our market-first approach to
Differentiated Standard Variable Rate (DSVR) and not charging
arrears fees for anyone struggling to meet their monthly mortgage
payments. In the true spirit of mutuality, where members become
financially vulnerable, our focus is on providing support rather
than burdening them with additional charges.
We were delighted to achieve our
ambition of being a £1bn lender this year, but what makes this even
more impactful is knowing that 4,684 (2022/23: 3,413) of purchase
mortgages were for first-time buyers, with 38% (2022/23: 33%) of
these first-time buyers using shared ownership, a vital route for
those that cannot yet afford a traditional route out of rental and
into ownership. These figures demonstrate our ongoing commitment to
helping people own their own home and change the difficult
landscape that so many people can face on their journey to home
ownership.
Enabling these members to become
homeowners is a direct result of the savings deposited with us by
our savers. This year we welcomed 10,250 new savers to the Society,
attracting £570m in new savings, up 30% on last year, through a
highly competitive range of notice products, with ISA options to
help our customers maximise their tax-free savings.
Our commitment to doing the right
thing, not just the easy thing, has always been important to us,
but this year saw us achieve recognition for this on a national
scale when we took home two accolades at the annual Moneyfacts
Consumer Awards - First Time Mortgage Buyers' Choice and the
prestigious Best Customer Service award. These awards mean a great
deal to us as they are voted for by customers, reflecting their
true experiences with household and personal finance providers, and
it was fantastic for our colleagues to receive this level of
recognition for the hard work they put in, day in day
out.
This year also saw the introduction
of the Consumer Duty regulation, as well as the launch of the
Government's Mortgage Charter, of which we are a signatory. Whilst
both raise the bar for governance across the industry, which we
welcomed as a Society, we will always strive to go above and beyond
standard practices to ensure our members receive the products and
services they deserve.
The autumn of 2023 saw us embark on
a major strategic review which will look to enhance and strengthen
the Society for the future by intensifying our purpose-led approach
in an increasingly digital world. We have already made investments
across both our people and our technology as we begin to shape what
the next era of the West Brom will look like, reaching customers
who increasingly prefer digital channels, whilst continuing to be
there for our members across our long-standing channels, in branch
and by telephone.
Whilst this digital transformation
will be a key development for us over the coming months and years,
our branches remain at the heart of the Society. In 2023 we made a
further investment into our branches through the installation of
digital screens and signage, allowing us to not only showcase a
wider variety of our products and services to customers, but also
update crucial information, such as rate changes, far more
quickly.
Building on our financial strength
Once again, the Society has
demonstrated a strong financial performance, continuing to build
its strength and resilience, underpinning our ability to pursue our
commitment to support our current and future members.
The statutory profit before tax for
the year, £32.1m (2022/23: £31.8m), is a strong performance. If we
exclude one off items (in the current year the cost of Tier 2 debt
buyback and in the prior year the benefit from recovery of
previously written off costs), our underlying profit increased from
£26.2m to £37.2m, an increase of 42%. This was driven by an
improvement in net interest receivable in the year which rose to
£103.6m (2022/23: £83.2m), despite more than doubling the interest
paid to savers to £142.5m.
Our continued profitability and
management of risk contributes to our overall financial resilience.
Our Common Equity Tier 1 (CET 1) capital ratio, a key measure of
capital, remained strong at 17.8% (2022/23: 18.7%). This capital
position provides the capacity to support investment in future
capabilities and help more people into home ownership.
Supporting our colleagues and communities
We're committed to providing our
colleagues with a rewarding and enjoyable place to work, fostering
a culture where every person can see and feel the difference they
are making to the Society and to our members.
We know that the uncertainties faced
by our members will also be a reality for some of our colleagues,
which is why we have a number of support networks in place to help
anyone who may be struggling, such as our Financial Hardship Fund
and access to health and wellbeing advice through our Employee
Assistance Programme.
We were thrilled to achieve the
'Beyond the Living Wage' award this year, in recognition of the
high standard of our employment practices and our commitment to
going above and beyond the Living Wage accreditation, and we will
aim to continue to set an example for other businesses both in our
sector and beyond.
Alongside supporting our colleagues
with their financial wellbeing, we're also committed to ensuring
that every colleague feels confident being their true self at work.
Through our dedicated equity, diversity and inclusion (ED&I)
network, Connect, we aim to recognise, celebrate and learn from
colleagues of all backgrounds. This year we have focussed on
ensuring we celebrate, acknowledge and raise awareness of multiple
religions, cultures and special events. We've also established a
number of focus groups/networks for colleagues to join including
the LGBTQ+ and Black Colleagues networks. Both groups enable us to
bring an independent listening ear and create a comfortable
environment for our colleagues to speak freely and share vital
information to help drive change and create better outcomes for our
colleagues and members.
We continue to work closely with a
number of charities and good causes, on both a national and local
scale, and we are immensely proud to hit the milestone of raising
over £1m for the Birmingham Children's Hospital through our
dedicated Red Balloon Appeal Account, which has been open to
members for the last 16 years. We also continued to support our
corporate charity partner, Barnardo's, turning all of our branches
into donation points for pre-loved clothing for one week in
November as part of the global Giving Tuesday campaign, as well as
raising over £9,500 for the charity throughout the year through
events and volunteering.
For the past decade we have provided
financial education sessions for local children, and last year
colleagues from across our branch network held workshops for over
1,800 children across 28 local schools. We believe that every child
should have the same opportunity to learn about money and we have
therefore introduced tailored sessions to support college students
and children with special educational needs. The expansion of the
programme now means that we have achieved our ambition of being
able to offer financial education to any child within an education
setting, and we look forward to growing the initiative even further
over the next year.
The ongoing work that we do to
support both colleagues and communities is something we have always
been incredibly proud of at the West Brom. Therefore, to
acknowledge this, last year we published our first Impact Report,
'Building a Fairer Future', which goes into further detail on the
above examples, as well as the many other ways in which we have
positively impacted our members, communities, colleagues and the
environment.
Outlook
The last few years has seen us
navigate a sea of change across the wider industry and indeed, the
economy, and we know this is unlikely to change as we head into our
next financial year. However, our strong capital position and
financial resilience will continue to support us through any
uncertainties and as always, we remain guided by our Purpose to
help more people own their own home and save for the
future.
We now have a particularly momentous
year ahead of us, as we celebrate 175 years of the Society. It
therefore feels fitting that, whilst we look back at our rich
history, we also look ahead at how we can reshape our strategy to
meet the evolving needs of our members. Over the coming year, and
beyond, we'll bring to life the next generation of the West Brom
for both our colleagues and our members, enhancing the Society for
the future whilst staying true to our Purpose which underpins all
that we do.
In closing I add my thanks to our
members for their loyalty and my colleagues for their dedication.
The Society's significant progress is founded on that loyalty and
dedication.
Jonathan Westhoff
Chief Executive Officer
30 May 2024