Newcastle Building Society announces ‘very positive’ year
27 February 2019
Key highlights:
- Operating profit of £14.7m compared to £12.1m for 2017
- Charitable giving of 6% of profit before tax at £797,000
- Growth in income of £6.6m against growth in investment costs of £3.9m
- Helped 1,100 first time buyers own their own home
- Ongoing commitment to branches across the region will see the entire network refurbished by the end of 2019.
In a ‘very positive’ year, Newcastle Building Society saw continued growth in residential lending, increasing membership numbers, increased levels of financial advice business, and strong growth in its market leading outsourced savings management subsidiary, Newcastle Strategic Solutions.
Profit before tax improved to £13.3m, compared to £13.1m for 2017. Whereas 2017 profit before tax included a one-off credit of over £2m relating to the purchase of its Cobalt office in North Tyneside, the 2018 figure represents an operating profit of £2.2m, reflecting an enhanced business performance. Operating profit before provisions and exceptional items increased by £2.6m to £14.7m (from £12.1m in 2017).
The Society delivered an overall growth in income to £6.6m (total operating income £64.5m in 2018, compared to £57.9m in 2017). This was offset by an increase in costs of £3.9m.
The Group’s capital ratios remain robust. Common Equity Tier 1 ratio improved from 15.3% to 15.7%, and Tier 1 capital ratio reduced slightly from 16.6% to 16.3%. The Group’s overall capital ratio (Solvency ratio) also reduced to 17.7% from 18.9% in 2017. Both reductions were as a result of a planned repayment of £10m of the Group’s Permanent Interest Bearing Shares (PIBs) during the year.
Despite a very competitive mortgage market and weak mortgage market growth, gross residential mortgage lending was maintained at a healthy £520m (£535m 2017) and net residential lending at £160m (£220m 2017). Newcastle Building Society helped more than 1,100 first time buyers onto the housing ladder during the year.
Continued support for the Newcastle Building Society Community Fund at the Community Foundation saw a Society donation of £797,000, equivalent to 6% of the Group’s pre-tax profits. This is a long term fund to be used for the benefit of communities in the North East, which in 2018 made over 60 grants to local charities and community groups, including a £50,000 ‘Building Improvement Grant’ to Springfield Community Centre and funded the first year of a £100,000 four-year partnership with The Prince’s Trust, to support programmes which seek to invest in young talent and improve employability in the region.
Chief executive, Andrew Haigh said:
“2018 has been a significant year of change and progress for Newcastle Building Society. We have seen our highest growth in income compared to recent years, increasing profitability and growth in our member base.
“Whilst economic uncertainties may continue, we will maintain our focus on investing in our business, our colleagues and our communities to build a strong regional building society that is recognised for making a genuine difference to people and communities across the North East.”
