Profits and lending rise at The LoughboroughBack to News & Views
The Loughborough Building Society has reported a 13% rise in pre-tax profits and a 7% increase in gross mortgage lending.
Its latest annual results for the year ending 31 October 2011 released today (Wednesday 25 January 2012) show that the Society, with branches and agency outlets in Leicestershire, Derbyshire and Nottinghamshire, is performing well despite the current economic conditions.
Chief Executive Gary Brebner said the progress had been made even though there had been no significant change in the financial and housing markets, with record low interest rates, a continuing squeeze on household and consumer disposable incomes and a subdued housing market.
The financial highlights include:
- Gross mortgage advances up 7% on the previous year
- Profit before tax and Financial Services Compensation Scheme levy up to £751,000 from £661,000, a 13% rise
- Mortgage assets rose by 1.3%
- Increased gross capital to £19.5 million or 7.8% of shares and borrowings (2010 £18.9 million and 7.5% respectively).
Describing the previous year, Mr Brebner said: “The Loughborough has performed well. During the past year the economic climate has not been easy for borrowers or savers and the UK mortgage market has contracted. We have achieved increased gross lending in the year without compromise on quality.
“The amount of interest we received has remained at about 2010 levels, thanks to a rise in mortgage assets and greater customer retention. However, the low interest rates reduce the income received from liquid assets held by the Loughborough.”
Although the Loughborough has allowed total liquid assets to decline to £70 million from the height of recent years, the level remains historically high and more than meets the requirements of the regulator, the Financial Services Authority. Fees and commissions receivable have fallen slightly as competitive pressures have reduced average mortgage fees.
The Loughborough has deliberately maintained the rates it pays to savers to support its investor members. The consequence of paying higher interest rates to investors is that the interest rate margin has only been sustained by careful management of other funding.
Mr Brebner added: “The Board believes this is the correct current policy.”
During the year, the Society strengthened its management team, commenced a training and development programme for staff and upgraded its website.
The Loughborough has put aside a further £57,000 to cover any potential losses on mortgages. It says that that arrears cases remain under control and are lower in number than last year and it has pledged to continue to exercise judgement and provide forbearance to help those in times of distress, while protecting the wider interests of the membership.
Overall the Society increased retained profits by £0.5m and further strengthened its capital ratio.