Leeds Building Society has more than doubled its half year profit before tax, growing from £32.6m in June 2020 to £70.3m this year.
Chief executive Richard Fearon told FTAdviser the record-breaking results were driven by a solid housing market, a strategy focused on first-time buyers, and savvy technology investments which sped service levels up.
“Everything has come together this year,” said Fearon. The UK’s fifth-largest mutual issued mortgages to more than 8,600 first-time buyers in the first half of 2021.
The demographic made up a 37 per cent share of the society’s new lending during the period. “This has been our biggest ever year for first-time buyers,” said Fearon.
The lender was one of a number of banks to rejoin the 95 per cent loan-to-value space in order to cater for small deposit holders.
Overall, Leeds saw its gross lending shoot up 97 per cent to £2bn, compared to the same period last year when lending amounted to about £1bn.
In terms of mortgage applications, the society had its best half year yet with £3.2bn worth of applications - beating its previous record of £2.9bn in the second half of 2016.
It said mortgage payment deferral schemes were made use of on more than 28,400 mortgages.
Leeds’ strategy has focused on ‘underserved’ demographics such as first-time buyers for some years now, with products such as its shared ownership mortgage.
“This strategy hasn’t changed but we’ve got better at delivering it,” said Fearon.
In the last six months, the society has hired 80 extra employees. Fearon told FTAdviser “a big bulk” of these new hires now make up the IT and data teams, as well as being underwriters and business development managers.
“We’ve got the best cost-income ratio of our peer groups,” said Fearon. Leeds’ cost to income ratio is 44.9 per cent, and its cost to mean asset ratio is 0.56 per cent.
“That’s where our IT investments come in,” Fearon continued. The society launched a new mortgage frontend last year called ‘Mortgage Hub’, which integrated application programme interface connections and stripped documents out of the process.
This year, it launched Lender Connect to help brokers avoid re-keying in details and speed up the application process.
Looking ahead, Fearon believes climate change is the next underserved market Leeds should tap into.
“We’re just about to launch our green mortgage range,” he told FTAdviser. “And we’re going to be net neutral by the end of this year.”
The society has already released a string of green savings products.