TIDMLBS
RNS Number : 7747C
Leeds Building Society
25 February 2022
25 February 2022
Record lending by Leeds brings home ownership within reach for
thousands more
Building Society CEO hails landmark year as he reports 2021
results
Setting new records for mortgage lending helped Leeds Building
Society to an exceptional performance in 2021 as it delivered on
its purpose of bringing home ownership within reach for more people
than ever before.
Reporting its annual results, Chief Executive Officer Richard
Fearon said the Society's record support for the housing market,
particularly under-served sectors including 20,000 first time
buyers, had been key to success in an extremely demanding year.
The benefits of the mutual's ongoing investment to future-proof
IT systems became evident in handling its busiest-ever year for
applications, with gross lending reaching a record GBP4.4bn, and it
continued to lead in the affordable housing space.
Growth in lending was aided by an increase in savings balances
to top GBP15.25bn (GBP14.2bn 2020), as the Society maintained its
support for savers by consistently paying above the market average
savings rate, which equates to an annual benefit of more than
GBP71m(1) to its saving members.
In addition, the lender added to its track record for
innovation, launching preferential mortgage deals for the most
energy-efficient homes and developing a unique carbon neutral
product for other purchasers.
"2021 was a landmark year for Leeds Building Society and I'm
incredibly proud of our successful performance, and all my
colleagues have done for us to achieve this," said Richard.
"We delivered on our purpose by supporting the housing market,
bringing home ownership within reach for record numbers of first
time buyers and Shared Ownership purchasers.
"The Society broke so many records in 2021 - it was our busiest
12 months ever for mortgage applications and our biggest year for
first time buyer lending, which accounted for almost one in three
of all our new mortgages, another record.
"Our successful strategy for supporting customers less well
served by the wider market saw us join the Government's new First
Homes scheme and complete the mortgages for its very first
purchasers, and we remained active in Shared Ownership, winning
further awards. With first time buyers in mind, we also launched a
new Regular Saver account, ideal to start building up a
deposit."
Leeds Building Society's strong performance in a vibrant housing
market delivered record profit before tax of GBP163.7m (GBP80.7m
2020), enabling the business to further increase capital and
reserves to GBP1.46bn (GBP1.35bn 2020), well above the regulatory
requirement. The Society continues to retain very strong levels of
liquidity.
The UK's fifth-largest mutual has used its financial strength to
protect members in the historic low rate environment, supporting
borrowers by holding SVR (standard variable rate) after the Bank
Base Rate rise in December, before helping its savers by increasing
rates in response to the Base Rate rise announced earlier this
month.
Significant investment in IT continued to improve resilience,
security and capacity, which increased the Society's operating
costs for the year, although its keen focus on efficiency mean its
cost to income ratio of 43.9% and cost to mean asset ratio of 0.58%
(51.0% and 0.48% respectively, 2020) are still among the best in
the building society sector.
IT systems, such as the Mortgage Hub broker platform, are now
integrated with major sourcing systems, saving brokers time and
effort, and will facilitate further enhancements and improvements
to online services for brokers and direct customers.
The Society also invested further in its colleagues, creating
121 skilled jobs in key areas including data, IT, risk, and
mortgage underwriting, as well as raising the minimum base level
salary to GBP10 per hour, building on its existing Fair Pay Charter
and going beyond its commitment as an accredited Living Wage
Employer.
"Our colleagues' skill and commitment is what drives our
business success and our record customer satisfaction scores, so I
was delighted we were crowned the best financial services company
to work for by Best Companies," said Richard.
"The importance of giving great service to our members, and the
role played by our branch network, was behind one of our two
landmark moves in Leeds in 2021 - to our new Leeds Central branch
in Commercial Street.
"The other move was leaving our historic Albion Street home for
an award-winning new head office in Sovereign Street, which
provides the room to unite office teams formerly split across three
city centre sites.
"It's modern and airy, with plenty of collaborative space to
support our new hybrid ways of working, giving colleagues
flexibility to be in the office when it's most useful and make the
connections which build our fantastic culture. We're asking people
to be in eight days each month and empowering them to choose how
this works for their role.
"As our new headquarters are very environmentally friendly,
being carbon neutral in operation, relocation also helped our
commitment to cutting the Society's carbon footprint.
"We're making good progress against the challenging targets
we've set ourselves to reduce the Society's environmental impact
and I'm pleased we were able to achieve carbon net neutral status
for scope 1, 2 and 3 (business travel) emissions, more than a year
ahead of plan.
"With our green mortgages and tree dedications for new
children's account openings, we've also taken a lead in linking our
products to positive environmental action.
"H ousing is responsible for 16% of the UK's total emissions(2)
, so we believe it's important that we support our members as they
seek to reduce their own carbon footprint.
"Listening to our members and colleagues, and staying close to
the communities where they live and work, remains fundamental to us
as a mutual, and how we've evolved and stayed relevant over the
past century and a half.
"By the end of 2021, their passion and generosity had taken
total fundraising for Dementia UK, our national charity partner,
past GBP380,000 and I'm excited that the Closer to Home project
will expand in 2022, bringing specialist dementia care to even more
communities across the UK.
"That sense of having a stake in something bigger and being able
to achieve success by working together shows that we're still
living the purpose for which we were founded almost 150 years
ago.
"Combined with our financial security and the resilience we've
shown through the unique challenges of the pandemic, this gives me
great confidence as we look ahead to the future."
Ends
(1) We paid an average rate of 0.79% against the rest of the
market rate of 0.29%. CACI's CSDB, Stock, December 2020 to November
2021, latest data available
(2) Source: 2020 UK Greenhouse Gas Emissions, final figures (publishing.service.gov.uk)
Notes to Editors
Key information from the Society's Group Results for the year ended 31 December 2021 follows.
To arrange an interview with Leeds Building Society Chief
Executive Officer Richard Fearon, or for a hi res photo of Richard,
please contact the press office on 07769 675330.
The Society operates throughout the UK and had assets of
GBP22.5bn at 31 December 2021 (GBP20.6bn at 31 December 2020). The
UK's fifth-largest mutual has its head office in the centre of
Leeds, where it was founded in 1875.
The Society won the title of Best Shared Ownership Mortgage
Lender in the 2021 What Mortgage Awards, its sixth consecutive year
of success in this category. It also received a Gold Ribbon from
Fairer Finance for savings accounts for the fourth year running,
based on customer happiness and trust, along with the ability to
explain things clearly.
Key facts and figures from Group Results
for the year ended 31 December 2021:
Record support for first time buyers and the housing market
-- Record support for the housing market with our biggest ever
year for applications and GBP4.4bn of gross lending
-- Helped more than 20,000 first time buyers step onto the
housing ladder, another Society record
-- Continued strong performance in Shared Ownership lending,
earning industry awards including the title of Best Shared
Ownership Mortgage Lender in 2021's What Mortgage Awards, for the
sixth year running
-- Supported new initiatives such as First Homes, being the
first lender to complete applications under the Government scheme
and see our newest members realise their home owning dreams
-- Waived arrears fees during the year and continue to work
closely with members at risk of financial difficulty to agree a
solution to best suit their circumstances
Continued to innovate to meet members' evolving needs and lead
in green finance
-- Introduced a popular fixed rate savings bond in support of
Dementia UK, our national charity partner
-- Launched new high LTV (loan to value) mortgages with
preferential deals for the most energy efficient homes
-- First lender to launch a carbon neutral mortgage, offsetting
the carbon footprint of the property during the initial fixed term
of the mortgage
-- Dedicated more than 1,000 trees through partnership with
Yorkshire Dales Millennium Trust, one for each children's account
opened in branch, as well as a further 1,500 on behalf of our
colleagues
Used our financial strength to support members and invest for a
successful future
-- Continued to pay our savings members above the market
average, equating to more than GBP71m extra in their pockets
-- Invested in our people, creating 121 skilled jobs in key
areas including data, IT, risk, and mortgage underwriting, as well
as raising the minimum base level salary to GBP10 per hour, beyond
our commitment as an accredited Living Wage Employer
-- Our colleagues deliver great service and their votes saw us
crowned best financial services company to work for by Best
Companies
-- Completed the move to our award-winning, energy-efficient new
head office in Sovereign Street, bringing together Leeds office
teams previously split across three sites
-- Sovereign Street also offers modern, collaborative space for
future ways of working, including our new hybrid working model
(eight days in the office each month) as we look forward to
welcoming back office colleagues in greater numbers
-- Opened our new Leeds Central branch, part of our commitment
to a sustainable branch network and another investment in the
future of our home city
-- Accelerated our investment in our IT systems to boost
capacity, resilience and security, while remaining among the most
efficient businesses in the banking and building society sector
-- Completed successful rollout of our Mortgage Hub online
platform for brokers, which is now integrated with major sourcing
systems, saving brokers time and effort, and supporting further
enhancements and improvements to online services
GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER
2021
Summary Consolidated Income Statement
2021 2020
GBPM GBPM
Interest receivable and similar income 424.7 402.6
Interest payable and similar charges (142.5) (197.2)
------------ ------------
Net interest receivable 282.2 205.4
Fees and commissions receivable 6.8 5.6
Fees and commissions payable (0.4) (0.6)
Fair value losses from financial instruments (0.5) (16.8)
Other operating (expense) / income (1.1) 3.2
------------ ------------
Total income 287.0 196.8
Administrative expenses (116.9) (92.9)
Depreciation and amortisation (9.1) (7.5)
Impairment credit / (charge) on loans and
advances to customers 4.1 (14.6)
Provisions charge (1.4) (1.1)
Operating profit and profit before tax 163.7 80.7
Tax expense (43.5) (18.7)
Profit for the financial year 120.2 62.0
============ ============
Summary Statement of Financial Position
31 December 31 December
2021 2020
GBPM GBPM
Assets
Liquid assets 3,646.8 2,974.8
Derivative financial instruments 219.3 192.8
Loans and advances to customers 18,527.2 16,988.9
Fair value hedge accounting adjustment (169.1) 96.1
Other assets, prepayments and accrued income 166.5 270.4
Current tax assets 2.8 -
Deferred tax assets 4.5 5.6
Intangible assets 25.0 28.8
Property, plant and equipment 82.4 81.3
Retirement benefit surplus 8.3 1.0
Total assets 22,513.7 20,639.7
============ ============
Liabilities and equity
Shares 15,258.0 14,162.7
Fair value hedge accounting adjustment (72.9) (13.5)
Derivative financial instruments 166.8 237.9
Deposits and securities 5,111.0 4,654.7
Current tax liabilities - 2.3
Deferred tax liabilities 6.2 4.7
Other liabilities, accruals and provisions 203.3 194.7
Subordinated liabilities 339.4 -
Subscribed capital 227.3 241.5
Total equity attributable to members 1,274.6 1,154.7
Total liabilities and equity 22,513.7 20,639.7
============ ============
Statement of Comprehensive Income 2021 2020
GBPM GBPM
Fair value (losses) / gains on investment
securities (6.5) 8.6
Actuarial gain / (loss) on retirement benefit
surplus 7.1 (1.9)
Revaluation (loss) / gain on properties revalued (1.0) 2.7
Tax on items taken directly to equity 0.1 (2.8)
-------- --------------------------
Other comprehensive income net of tax (0.3) 6.6
Profit for the year 120.2 62.0
Total comprehensive income for the year 119.9 68.6
======== ==========================
Summary Consolidated Cash Flow 2021 2020
GBPM GBPM
Net cash flows from operating activities 637.9 (209.1)
Net cash flows from investing activities (14.1) 735.3
Net cash flows from financing activities 48.8 (116.2)
-------- --------------------------
672.6 410.0
Cash and cash equivalents at the beginning
of the year 2,025.1 1,615.1
Cash and cash equivalents at the end of the
year 2,697.7 2,025.1
-------- --------------------------
Summary of key ratios
Net interest margin 1.31% 0.99%
Liquid assets as a percentage of shares and
borrowings 17.9% 15.8%
Profit after tax for the financial year as
a percentage of mean total assets 0.56% 0.30%
Management expenses as a percentage of mean
total assets 0.58% 0.48%
Notes to the Financial Information
1. The financial information set out above, which was approved by the
Board of directors on 24 February 2022, does not constitute accounts
within the meaning of the Building Societies Act 1986.
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END
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