Manchester Building Society Results for the year ended 31 December 2020 (8973Q)
March 02 2021 - 8:30AM
UK Regulatory
TIDMMBSR TIDMMBSP
RNS Number : 8973Q
Manchester Building Society
02 March 2021
Manchester Building Society Group ("the Society") Results for
the year ended 31 December 2020
2020 2019
GBP000 GBP000
Total operating income 7,022 6,856
Administrative expenses and
depreciation (4,239) (4,829)
Operating profit before impairment 2,783 2,027
Expected credit losses (600) (272)
Other impairment losses (2,527) (1,814)
Impairment gain on property,
plant and equipment - 640
Financial Services Compensation
Scheme levy - 11
(Loss)/Profit for the period
before taxation (344) 592
Tax expense - -
(Loss)/Profit for the period (344) 592
---------------------- --------------------
Total assets 221,532 247,106
The GBP0.8m increase in operating profit before impairments and
provisions compared to 2019 is a result of:
-- Other income increasing by GBP0.8m due to an increase in
income from foreign exchange movements. The foreign exchange gain
is however largely offset by a GBP0.5m foreign exchange charge in
impairment.
-- Administrative expenses reducing by GBP0.5m. This included a
GBP0.3m reduction in professional fees, largely in relation to the
Grant Thornton legal case. Other savings were achieved across the
cost base.
-- Depreciation reduced by GBP0.1m following the disposal of the
Group's head office building in 2019.
Partially offset by:
-- Net interest income in the year being GBP0.7m lower than in
2019 due to lower margins following the Bank of England base rate
reductions in March 2020 and an 8% reduction in Loan balances as
the Society continues a managed reduction of the balance sheet.
The Group recorded a credit impairment charge of GBP0.6m
relating to the UK portfolios and other impairment of GBP2.6m
relating to the Society's Spanish lifetime portfolio.
There was no impairment on property, plant and equipment whereas
a GBP0.6m release of impairment was recorded in the prior year on
the sale of the Group's head office building.
The Group's reserves reduced in 2020 by GBP0.6m to accumulated
losses of GBP11.0m.
The Society continues to have a strong liquidity position.
The 2020 accounts have been prepared on a going concern basis of
accounting and, as with the accounts for previous years, set out a
"material uncertainty" regarding the long-term future of the
Society.
Covid-19
2020 was a challenging year for the Society owing to the
Covid-19 pandemic and the ultra-low interest rate environment that
followed the reduction in Bank Base Rate in March.
As the scale of the pandemic became apparent, the Society moved
quickly to maintain its service to members.
The Society offered payment deferrals to customers affected by
the pandemic during 2020 and continues to work with customers to
ensure that appropriate levels of forbearance are provided where
necessary. A total of 334 deferrals were requested and granted in
2020 on GBP46m of balances. At 31 December 2020, 22 deferrals
remained in place.
Legal claim against Grant Thornton UK LLP
In October 2020 the Supreme Court heard the Society's appeal
against the decision of the Court of Appeal in the Society's claim
against Grant Thornton (UK) LLP, the Society's former auditors. The
Society is currently awaiting the judgment. The date on which it
will be handed down is unknown.
Strategic future and capital position
The Group continues to have headroom above its Total Capital
Requirements in total capital terms, but, as previously stated,
does not meet the qualitative standards for the level of CET 1
regulatory capital. As at 31 December 2020 the Society met, and
continues to meet the requirement to hold CET 1 Capital in excess
of 4.5% of Risk Weighted Assets.
The Board continues to engage with its regulators as to the
strategic future for the Society. The Society's 2018 strategic plan
was updated in 2020 and the PRA have confirmed that they will
monitor the Society's progress against this revised plan.
Permanent Interest Bearing Share ("PIBS") coupon payments April
2021
As a result of the shortfall against qualitative standards for
the level of CET 1 regulatory capital, applicable regulatory
capital conservation rules mean the Society may be prohibited from
making the PIBS coupon payments due in April 2021. The Society last
paid these coupons in April 2016 and the Board considers that there
continues to be uncertainty over the Society's ability to make
future coupon payments. A further announcement will be made in due
course regarding the April PIBS coupon payments.
2020 Annual Report & Accounts
The accounts for the 12 months ending 31 December 2020 are
available to view on the Society's website:
http://manchesterbuildingsociety.co.uk/Main/FinancialInformation
Enquiries
Andy Donald - Maitland/AMO 020 7379 5151
adonald@maitland.co.uk
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