Newcastle BS  

Newcastle BS sees profits rise as lending dips

Newcastle BS sees profits rise as lending dips

Newcastle Building Society has seen its operating profit rise 35 per cent in the half year to the end of June, according to its latest results.

Figures out this morning (31 July) showed Newcastle's pre-tax profits rose from £5.1m in the half year to June 2017, to £6.9m now.

The firm had posted a £7.2m pre-tax profit for the six months to June 2017 but that included a credit of £2.1m on the purchase of its Cobalt offices. Excluding the gain on purchase, profit had increased £1.8m, the building society said.

Gross lending however, dipped 24 per cent in the period, from £303m last year to £229m in the first half of 2018.

Mortgage arrears meanwhile reduced, and stood at 0.36 per cent in June, down from 0.39 per cent the year before.

The society said it had supported more than 500 first time buyers and seen self-employed mortgage volumes double.

Andrew Haigh, chief executive at Newcastle Building Society, said he was pleased with the firm's performance.

He said: "We will continue to invest in the business and focus on our purpose and why we are here as a building society.

"Whilst our society, colleagues and communities look set to face continued economic uncertainty from Brexit and wider global issues, we will continue to do what we do best; helping people save and plan their finances and own their own home, being a great place to work and supporting our communities in making positive changes."

The data showed capital ratios remained robust with a total capital ratio of 18.9 per cent and a leverage ratio of 5.3per cent.

Liquidity as a percentage of shares, deposits and liabilities, but excluding encumbered assets, was 17.3 per cent.

Mr Haigh, said: "We recognise the power of communities and the role of the high street as a focus for community life. Despite the backdrop of extensive bank branch closures across our region, our commitment to being present in the towns and cities across the North East remains firm."

Alan Lakey, director of CIExpert and Highclere Financial Services, said: "The market is very competitive with most borrowers and a good proportion of advisers focusing on the ‘big’ lenders.

"Additionally, Newcastle has little presence in the South. Add to this the reduction in BTL interest and I am not particularly surprised. The reduction [in lending] is relatively small so I have no concerns."

aamina.zafar@ft.com