Newcastle Building Society says a change in strategy is paying off, after reporting steady growth for the year ended December 31, 2013.
Financial results released yesterday revealed the organisation’s operating profits rose from £10.4m to £10.6m during the period, while profit before tax for the year was £2m, compared to £1.5m in 2012.
The business’s liquidity at the end of year was likewise strong at 26.3%, compared to over 30% at the start of 2013.
Chief executive Jim Willens said: “Our year-on-year continued improvement in performance is evidence that our strategy is working and we will continue to pursue our strategic goals with vigour.
“After five long years of the ‘credit crunch’, we can see signs that the economy is building momentum and that a recovery is more firmly in train, which should enhance ongoing delivery of our strategy.”
The results come at a strong time for UK building societies, which, in 2013, almost doubled net lending.
Newcastle Building Society had previously moved into some areas outside the traditional remit of such organisations, including commercial lending, which carries a higher level of risk than residential lending, being more deeply impacted by fluctuations in the economy.
However, in 2010, following Willens’ appointment to the top role, the business shifted focus to a classic building society model, at the heart of which, it says, are the interests of its members, its staff and the communities in which it operates.
As part of the new direction, Newcastle Building Society has unwound £600m of legacy portfolios with higher risk or lower margins.
In 2013 alone, a reduction of £160m was achieved, including £30m of commercial investment loans and £48m on loans to housing associations.
Meanwhile, the society facilitated £350m of gross mortgage lending and doubled its lending to first-time buyers year-on-year.
While admitting that profitability remained “modest”, Willens also noted that sound results had been achieved despite lower levels of financial advice income following the implementation of the Retail Distribution Review.
The business likewise continued to contribute significantly to charity, with special Sir Bobby Robson Foundation accounts so far raising over £700,000.
Willens added: “I am more confident than ever that building societies will continue to thrive and that the society will be able to continue its focus on mortgage lending and good long-term value savings products, trusted financial advice and pursuit of excellent customer service.”