West Bromwich Building Society reports financial results

Preliminary results announcement for the year ended 31 March 2018.

The West Brom today announces its results for the financial year ended 31 March 2018, reporting further growth in residential mortgage lending and pre-tax profits of £8.8m.

Key highlights include:

  • Statutory and underlying profit before tax of £8.8m (2016/17: statutory loss of £19.8m, underlying profit of £7.7m), a 14% improvement in underlying performance.
  • Gross residential mortgage advances up 18% to £837m (2016/17: £712m). At £265m (2016/17: £167m), new lending to first time buyers was the highest in the Society’s history.
  • Strengthened capital position, with a Common Equity Tier 1 (CET 1) capital ratio of 14.8% (2016/17: 13.8%). Successful modernisation of the capital structure after the year-end date through the issue of Core Capital Deferred Shares, qualifying CET 1 capital instruments.
  • 17% reduction in non-core commercial loan book, falling to under £0.5bn at 31 March 2018 (2016/17: £0.6bn).
  • Achievement of the Gold accreditation standard from Investors in People for our approach to people management.
  • Recognition for our ongoing commitment to members and local communities being Highly Commended in the Community Services and Best Regional Building Society categories in the Mortgage Finance Gazette Awards for the second year running.

Jonathan Westhoff, Chief Executive, commented:

This has been another satisfying year for the West Brom where we delivered on our stated purpose to support the financial wellbeing of our membership through the provision of mortgages and savings products.

Although our reported profit shows a dramatic swing compared with the previous year, this position is distorted due to the one-off costs of reimbursing the interest charged on certain buy to let mortgages in 2016/17. It would therefore be more appropriate to measure our progress in terms of the underlying performance, which shows a 14% increase in profits.

Pivotal to this success is our focus on lending to customers to support their plans for home ownership, which has grown for the fifth year in succession.

We have responded to customer demand to assist first time buyers by increasing our maximum loan to value ratio to 95%. We also added a government-backed Help to Buy ISA account to our savings portfolio for those who want to buy their own home but still need time to raise a deposit. With the Society’s new lending to first time buyers now at record levels, our commitment to this market sector is clear to see.

For savers, there has finally been some welcome relief from the low interest rate environment of recent years. We were pleased to be able to pass on benefits from the Bank of England’s decision to finally raise Bank Rate and there is a prevailing sense that further increases are to be expected as the economy stabilises.

Delivering a range of competitive savings accounts during the year, particularly a number of fixed rate bonds through our regional branch network, proved successful in attracting new deposits which we can then use to facilitate the majority of our planned mortgage lending activity.

Members value the safety and stability of their Society and this is why a strengthening of our capital position is to be welcomed. The successful delivery of our plans for a Liability Management Exercise and the issue of a new financial instrument in Core Capital Deferred Shares leaves us well positioned to deliver more market leading lending and savings products.

While the West Brom’s focus on helping borrowers and savers is very much in line with our mutual heritage, we have to recognise that we operate in a fast-changing retail environment. New technology and the drive to digitalisation must be firmly on our radar. This is a challenge we are already responding to so that our overall proposition continues to meet the needs of our members, both present and future.

A copy of our Preliminary Results is available to view and download here.


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