Newcastle BS  

Newcastle BS adviser arm sees revenues dip 4% year-on-year

Newcastle BS adviser arm sees revenues dip 4% year-on-year

Newcastle Building Society said its financial advice business is “well ahead” of targets despite suffering a slight drop in revenue year-on-year.

According to the mortgage lender’s latest interim results, its regulated advice business - called Newcastle Financial Advisers - saw revenues slip from £2.5m in the first half of 2020, to £2.4m in the first half of 2021.

However, this represented a bounceback from the £1.8m posted in the second half of 2020.

The building society has traditionally offered face-to-face advice on the high street, but during the pandemic it moved to a hybrid structure and offered advice around financial planning, pensions and investments, via video.

In its 2020 results, Newcastle BS said it had seen its “best ever year for new investments” through the financial advice arm, with more than £66m invested.

In the latest set of results it said it had “successfully grown its customer base, level of funds invested, and funds under management”, which were all “well ahead of planned targets” for H1 2021.

Whilst the lender doesn’t break down these targets, overall it had seen its pre-tax profits jump 500 per cent from £2.2m in the first half of 2020 to £13.9m in the six months to the end of June 2021.

“The increase in profit before tax is primarily due to an increase in income combined with a smaller increase in the cost base but also a modest write-back of impairment charges,” the lender said.

In 2019, it bought North Yorkshire advice firm, Fidelis Financial Solutions, bringing on 2,000 more customers to its advice arm.

The subsidiary, set up some 18 years ago, also works with Openwork Partnership to provide an adviser training academy programme. 

Meanwhile Newcastle saw its net interest margin grow by 12 basis points in the first six months of this year, as market interest rates continued to fall and funding from the central bank remained cheap.

Net interest income was £23.9m for the first six months of 2021, and its net interest margin increased to 99bps, compared with 81bps in June 2020. 

“The increase in margin is driven by falling market interest rates as well as the group continuing to access central bank funding via the TFS and TFSME schemes,” it said.

ruby.hinchliffe@ft.com