The West Brom has announced its half-year results for the six months to 30 September 2016.

Key highlights:

• Gross residential mortgage lending for the half year of £441m, up nearly 50% from the previous year (30 September 2015: £295m)
• Loss before tax of £23.7m for the six months to 30 September 2016 (30 September 2015: Profit £6.0m) after allowing for costs of £27.5m relating to a one-off reimbursement of interest charged on certain buy to let mortgages
• Underlying profit before tax of £3.8m (30 September 2015: £1.3m)
• Members’ savings balances maintained at £4.4bn (31 March 2016: £4.4bn)
• Strong capital position, with a Common Equity Tier 1 ratio of 13.8% (31 March 2016: 14.6%) and a particularly strong leverage ratio of 7.2% (31 March 2016: 7.6%). 

Jonathan Westhoff, Chief Executive, commented:

Following the disappointing outcome from the Court of Appeal decision in overturning the previous High Court judgement in our favour, our half year results include a one-off cost of £27.5m to refund certain buy to let customers for a proportion of interest charged since December 2013. As expected, and forecast when the outcome of the legal case was announced, this has resulted in a pre-tax loss of £23.7m for the half year.

The underlying business, however, continues to go from strength to strength with increased advances of £441m (30 September 2015: £295m) almost 50% higher than the previous half year, reduced arrears across residential mortgages (falling from 1.07% of mortgage balances at 31 March 2016 to 0.88% at 30 September 2016) and further reductions in our non-core lending (Commercial lending has reduced by £46m (6.8%) since the year-end to £634m).

These results demonstrate a sound performance of the underlying business, with growth in underlying profitability, before the one-off impact of the buy to let refund, from £1.3m for the 6 months to 30 September 2015 to £3.8m. Our capital position is robust and liquidity remains strong, with customer deposit balances being maintained.

The strength of the underlying progress that the Society has made in the first six months of this financial year is pleasing. We have continued to invest in developing the systems to support the Society’s ambitions of enhancing our ability to provide an increasing number of members with the opportunity to fulfil their ambitions for home ownership. At the same time we remain very aware of the impact ultra-low investment rates continue to have on the Society’s savers. Although savers’ rates have reduced, we have ensured that the average rates paid by the Society have remained above those for the sector.

Following the Brexit decision the economic environment has become more uncertain, particularly in the commercial real estate sector where the Society still has an exposure albeit significantly less so than in previous years. This presents the most prominent area of uncertainty for the second half of the financial year. Despite this, we are confident that the Society will deliver on its lending plans.