THE Newcastle Building Society insists it is poised for growth and job creation after a return to profit in the second half of last year.
The mutual’s annual figures show an overall £4.7m loss for 2010, compared with £100,000 profit a year ago, but that was mainly the cost of a restructure which cut the jobs of 170 staff last summer.
Chief executive Jim Willens said the Newcastle had benefited from a recovery in the UK economy and the £200,000 return into the black in the second half of the year was a sign of better times ahead.
“When I arrived a year ago the business was in good shape and I can certainly say that it is in even stronger shape looking ahead to 2011,” he said. “We are looking for growth and an increase in lending at a level at least that which we have seen this year”
The outsourcing of the Solutions business, which handles banking administration or sales for other financial firms, was performing particularly strongly, he said.
It had won millions of pounds worth of contracts last year and was due to win more than the same again this year. It had recruited 80 staff and the 200-strong division would recruit at least as many in 2011, said Willens.
The Newcastle said that revenues from interest and similar income was £101m compared with £139.7m a year earlier and other income and charges had slid from £19.5m to £18.8m in 2010 which Willens said was due to high interest charges.
The society, which has more than 900 staff and 30 branches, stressed that the £4.7m loss in 2010 was largely down to £4m restructure and this one- off cost would generate £8m savings a year from this year.
The society is working to reposition itself as a traditional building society and over the next five to seven years will stop the commercial lending it began nine years ago. This will see it withdraw up to £1.5bn it has invested in companies and organisations such as housing associations and make the money available to lend to customers.
Willens said: “We are a regional building society and that is where our expertise lies. This is not just about profit, it is about focusing on where we should be in the long term.”
The mutual is also looking to increase mortgage lending, particularly to first-time buyers, as the housing market recovers.
Willens added: “The economic growth figures published for the fourth quarter of 2010 demonstrate the fragility of the UK economy. I’m very much of the view that recovery will be steady, comparatively slow and not without further challenge.”