Newcastle Building Society boosts profit before tax from £1.3m to £4m

Chief executive says company has continued to make steady progress, achieving its objectives laid out for the year

Chief executive of the Newcastle Building Society Jim Willens
Chief executive of the Newcastle Building Society Jim Willens

Newcastle Building Society is happy to be boring as it continues its strategy that has brought a trebling of profits in the last 12 months.

As it continues to progress with a change in business strategy introduced five years ago, the company posted encouraging results for the year ended December 31, 2014, which showed that pre-tax profits rose from £1.3m to £4m.

Operating profit before impairment provisions and exceptional items likewise increased from £10.6m to £12.4m and the percentage of loans in three months arrears or more reduced from 0.64% to 0.53%, well below industry averages.

Chief executive Jim Willens said: “I am pleased to report that 2014 has been another year of continued and steady progress during which the Society has achieved the objectives set out for the year as measured by our corporate key performance indicators.”

Founded more than 150 years ago, Newcastle Building Society, which employs around 870 people and has 30 branches in the North East, started life focussed solely on savings and supporting customers in purchasing new homes.

Aside from the company’s Solution business - through which it provides a robust technology platform to other financial institutions - plans introduced in 2010 have seen it gradually return to this traditional model.

As part of the shake-up, the business has been unwinding legacy portfolios involving higher risk or lower margins. In 2014 alone, reductions of £181m were made in this area, compared to £160m the year before, with £74m coming out of commercial investment loans and £64m from loans to housing associations.

Overall gross lending was maintained at £350m and more than 30,000 new savings accounts were opened during the period.

The company also reported a strong capital position across a range of indicators and maintained healthy liquidity at 23.6%, compared to over 26% at the start of 2014.

Mr Willens said he was particularly pleased the business had achieved such results while at the same time benefitting customers, staff, charities and the wider community.

The company last year reached a new high with the 90% satisfaction rate achieved on its annual staff survey. In its customer survey, meanwhile, the figure rose from 91% in 2013 to 92%, and engagement with members helped shape a number of changes, including the development of mobile phone and tablet versions for online savings accounts.

Newcastle Building Society’s Sir Bobby Robson Foundation accounts also remain a key part of its offering, reaching a milestone last year of £1m in donations.

Going forward, Mr Willens said the society was “well positioned to weather the more volatile markets and economic backdrop which have again been evident in 2014”.

He stressed, however, that the company’s focus would remain on “steady improvement and growth”.

“We’re not looking for peaks and troughs,” he said. “Some people may say, ‘That’s not very exciting, is it?’

“But our aim is to be reliable and trusted when it comes to what we deliver.”

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