An increase in mortgage lending wasn’t enough to prevent total group profits dropping at Skipton Building Society in the first six months of the year.
Total profit was £67m for the six months to June 30, compared with £76.8m for the same period in 2016.
Net mortgage lending grew by £700m to the end of June when compared with the final six months of 2016.
Skipton recently sold a £220m portfolio of what it called “non-performing or recently non-performing loans.” The cost of that transaction was £15m.
Aside from that disposal, the total provision the building society has made for bad debts has also fallen.
The savings balance held by the company rose to £14.6bn, up £500m since the end of 2016.
The company announced that it has returned for the markets to raise capital of £350m, on an unsecured basis.
This is the first foray by the Skipton Building Society into the wholesale capital markets in a decade. Some of this capital replaced existing debt that reached maturity during the period of these financial results.
Skipton reported that the ratings agency Moody’s upgraded the building societies creditworthiness to “stable outlook” from the previous “positive outlook.”
The building society stated that during the period of these results it was the “first, and so far only” business to announce the launch of a cash lifetime Isa product.
In a separate statement today (1 August), the building society reported savers have rushed to open the so-called Lisa, with 28,000 people opening the account following its launch on 6th June 2017.
Over half (51 per cent) of those who’ve opened an account are under the age of 30. But, it’s not just younger savers who’ve opened Skipton’s Lifetime Isa, as 6 per cent are 39 years old.
Kris Brewster, head of products at Skipton Building Society, said: “It’s great to see many young people are using our Lisa as a step towards helping them own their own home. And we are pleased to offer a product that is helping to encourage future homeowners to save towards this significant milestone. ”
Skipton’s cash Lifetime Isa can be opened online, earning annual interest at a rate of 0.50 per cent, though help can also be found in branch.
The Lisa is available to those aged between 18 and 39, to contribute a maximum of £200 a month, with the government committing to contribute a further 25 per cent in bonus. It is designed to help young people save for their first home, or as additional retirement savings.
david.thorpe@ft.com
