The West Brom today announces its results for the financial year ended 31 March 2019, reporting pre-tax profits of £10.5m and continued support for people who want to buy their own home.
Key highlights of the 2018/19 financial year include:
- Despite intensified competition, particularly in the second half of the year, £691m of new mortgage lending (2017/18: £837m) across an extended product range, continuing to support home ownership and enabling more than 2,700 borrowers (2017/18: more than 3,100) to purchase their first home.
- Delivering savers a significant increase in the average rate earned on their savings compared with the market average1; during the year, on average, we paid savers some 45% more than the market average (2017/18: 26% above).
- Sustained high levels of customer satisfaction of 94% (2017/18: 94%) and higher customer service Net Promoter Score®2 of +72 (2017/18: +65) which compares favourably with the Financial Services Benchmark of +50 (2017/18: +45).
- Profit before tax of £10.5m (2017/18: £8.8m), representing a 19% increase year on year which, along with the successful modernisation of the Society’s capital structure through a liability management exercise (announced in March 2018 and completed in April 2018), resulted in a 14.5% increase in members’ general reserves and further strengthening of the Society’s capital position. The Common Equity Tier 1 ratio increased to 16.0% from 14.8%.
- Enhanced stakeholder engagement, following the establishment of Member and Employee Councils and the sector first of a binding vote on Executive Director Remuneration Policy in July 2018.
- Continued success in rebalancing the lending portfolio: a 9% reduction in the non-core commercial loan book (2017/18: 17%) and 5% (2017/18: 13%) increase in prime owner occupied balances.
Jonathan Westhoff, Chief Executive, commented:
The provision of good quality products and services, plus our long-term strategies to reduce legacy risk and keep control of costs, have helped the Society to deliver significant benefits to members, maintain excellent levels of customer service and achieve a 19% increase in pre-tax profits to help strengthen further our members’ capital.
The increases we made to our savers’ rates, following the increase in Bank Rate in August, saw the level we pay above the average increase significantly. With our mortgage borrowers having benefited now for over a decade from ultra-low interest rates, a position which continued throughout the year, this improvement for our savers represents our commitment to striving to balance the needs of both borrowing and saving members.
Guided by the Society’s purpose of supporting home ownership, we have shown a particular strength in helping the next generation of homeowners to secure their first property. We are proud to say that, over the last 12 months, first-time buyers accounted for 43% (2017/18: 34%) of all the new mortgage borrowers we welcomed to the Society.
The year on year reduction in overall lending volumes reflects a strategic decision to focus only on those market segments where sustainable returns can be evidenced, once again demonstrating how we always act in the best interests of our members, as we will not look to existing members to subsidise uneconomic lending segments.
We are working hard to extend our lending proposition to support more diverse groups of borrowers who are less well served by mainstream mortgage providers. Successful examples include mortgages where a sponsor assists with monthly repayments, mortgage funding for self-build projects, remortgaging an existing Help to Buy property and a selection of products for portfolio landlords operating in the private rented sector.
In the second half of the year we launched a market-leading easy access account, which subsequently attracted more than 3,000 new savers to the West Brom. Over the year as a whole, we grew savings balances in our branch network by 3%.
We know our members value having use of local branches and recently unveiled new flagship premises in our hometown of West Bromwich within the vibrant New Square Shopping Centre. Our investment in digital solutions and system enhancements also continues apace to ensure the full spectrum of members’ expectations and service requirements is being addressed.
Last month the West Brom celebrated a major milestone when we reached our 170th anniversary.
The values and objectives that first inspired 20 local citizens to form our building society back then remain unchanged and will continue to guide us, and the way we support our 425,000 members, long into the future.
A copy of our Preliminary Results is available to view and download here.
1 Average market rates sourced from Bank of England Bankstats table A6.1
2 Net Promoter Score and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.