Skipton Building Society  

Skipton sees profits double as members flock to cash Lisa

Skipton sees profits double as members flock to cash Lisa

Skipton Building Society has reported a 56 per cent growth in pre-tax profits coinciding with a steep increase in membership figures attributed to cash Lisa sales.

In its interim results for the six months ending 30 June, the building society reported profits before tax of £104.7m, compared with £67m in the same period in 2017.

The society welcomed 52,842 new members in the period to reach 971,902. It attributed its growth in membership numbers to the success of its cash Lisa, which attracted 55,087 clients in the period.

In total, more than 110,000 customers held a cash Lifetime Isa (Lisa) with Skipton at 30 June 2018, benefitting from £99m of bonuses paid by the government during the period. 

By comparison, Hargreaves Lansdown's latest Lisa figures are 42,000 accounts and Nutmeg has more than 11,000 Lisa customers. But Skipton is the only lender offering the cash version of the Lisa.

Last week, MPs on the Treasury select committee called for the Lisa to be abolished, claiming it was too complex and unpopular amongst savers.

In its mortgage and savings division, Skipton also saw growth with profit before tax growing to £65.8m, from £41.5m the year before - a rise largely attributed to £8.1m net gains on fair value movements in relation to the society’s equity release book compared with a £15m loss in the same period last year.

Despite an increasingly competitive mortgage market, the lender’s net interest margin, the difference between interest income generated and the amount of interest paid out to lenders, rose to 1.14 per cent compared with 1.11 per cent at the same point in 2017.

However, in the first half of 2018 the society’s gross mortgage lending dropped to £1.8bn, from £2.4bn the year before - a reduction blamed on more stringent customer affordability criteria introduced towards the end of last year and competition in the market.

The society said it was primarily funded by retail savings which represent 82.2 per cent of total funding .

David Cutter, chief executive at Skipton, said: "The society's performance in the first half of 2018 is pleasing, with sustainable growth in mortgage and savings balances, strong liquidity, and a growth in our net interest margin.

"As a mutual, we will continue re-investing in our business for the benefit of our members."

The report stated Skipton is well placed to face any outcome of the Brexit negotiations over the next six months with the society’s performance during the second half of this year not expected to be materially different to that already achieved.

Elsewhere, the building society has reported plans to merge with Holmesdale Building Society at the beginning of October this year remain on track.