TIDMYBSC
RNS Number : 2807D
Yorkshire Building Society
02 March 2022
Wednesday, 2 March 2022
MUTUAL'S RECORD SUPPORT FOR BORROWERS AND SAVERS DELIVERS STRONG
RESULTS
Yorkshire Building Society today announces its results for 2021
and details its financial performance and work to support
customers, colleagues and communities.
Financial highlights:
-- Provided 75,732 mortgages (2020: 72,172) to help people find
a place to call home and supported a record number of first-time
buyers.
-- Mortgage balances increased to GBP41.9bn (31 December 2020:
GBP38.8bn), the highest in our history.
-- Paid 0.32% above the market average to savers which delivered
an additional GBP107m of interest to them(1) .
-- Saving balances increased to a record GBP35.5bn (31 December 2020: GBP33.4bn).
-- Core operating profit of GBP297.3m(2) (2020: GBP170.5m).
-- Statutory Profit Before Tax of GBP320.0(3) (2020: 161.3m).
-- Common Equity Tier 1 ratio increased to 16.8% (31 December 2020: 16.7%).
The full financial results are included in the appendix
below.
Stephen White, Interim Chief Executive of Yorkshire Building
Society, said: "I am delighted to report that in a challenging year
for the economy when many members and customers have faced very
difficult circumstances we have been able to help more people with
their key financial needs than ever before.
"Our mutual model has helped us to deliver record savings and
mortgage balances allowing us to both increase our savings rates
and help a record number of first-time buyers.
"The strength of our mortgage book has helped us to support
borrowers facing serious financial difficulty and, at a time of
rising house prices, release some of our provisions.
"At the same time, the ongoing work to improve the efficiency of
the Society and reduce cost alongside good commercial judgments and
disciplines has meant that core operating profit increased to
GBP297.3m, allowing us in turn to increase our capital and reserves
and reinvest for the long term.
"All of this has only been possible because of the hard work and
dedication of our highly engaged colleagues and I'm extremely proud
and grateful to each and every one of them. They have worked
tirelessly in 2021 to meet every challenge and support our
customers and their resilience has once again been outstanding.
"Our role as a mutual is to deliver real help with real life and
help people find a place to call home by providing mortgages,
funded by our members' savings. I'm particularly pleased that 2021
was a record year in terms of our support for first-time buyers,
who are less well served by the wider market.
"Supporting our savers at a time of historically low interest
rates has been a key commitment of ours and while the Bank of
England increased base rate to 0.25% in December last year, the
first increase since August 2018, 2021 was another tough year for
savers. To deliver value to members and ensure we share our
success, we further increased our rates above the rest of the
market average and rewarded our loyal members.
"I am also very proud to report that our deep-seated conviction
to engage with and support the communities we serve has continued
and developed to ensure we further support those people facing
challenges around skills, employment, financial education and
wellbeing.
Mortgages
Throughout the year the Society provided 75,732 mortgages and a
total of GBP10.3bn in new funding of which 36% (GBP3.6bn) was to
first-time buyers. As a result, total mortgage balances increased
to GBP41.9bn which is the highest in its history.
While the number of mortgage approvals fell in October,
following the stamp duty holiday coming to an end in September,
they grew again in November and December and exceeded pre-pandemic
averages. Despite rising house prices demand remains strong
although larger properties with more outside space proved more
popular as people reassessed their needs following a year of
lockdowns.
The Society remains committed to helping first-time buyers, who
are less well served by the wider market, find a place to call home
and was the first lender to re-enter the 95% mortgage market 2021.
This, combined with other support such as Shared Ownership lending,
resulted in a record 42,000 people having a place to call home for
the very first time.
Savings
The Bank of England raised base rate to 0.25% in December last
year having reduced it to a historical low of 0.10% in March 2020.
A key element of the Society's purpose is to deliver value to
members which in turn supports their financial resilience.
Yorkshire Building Society increased the minimum rate on the
vast majority of its variable savings accounts to 0.5% even before
the base rate rise in December last year and further increased
rates to a new current minimum of 0.6% last month. Our member
loyalty programme returned an additional GBP41m(1) to savers
through a combination of targeted products and increased rates.
The Society launched a number of regular savings accounts to
reward loyal savers, help create a savings habit and build
financial resilience. These include a market leading 3.5% Regular
Saver, a Christmas Regular Saver and prize draw account which, in
addition to paying double current bank base rate, also enters
savers into a monthly draw to win GBP1,500 to cover the average
household monthly bills.
Throughout the year, the Society paid 0.32%(1) above the rest of
the market average (31 December 2020: 0.17%), which means savers
have benefited from an additional GBP107m of interest in total and
savings balances have reached an all-time high of GBP35.5bn
(December 2020: GBP33.4bn).
Supporting customers and colleagues:
The Society continues to prioritise its customers and colleagues
by keeping customers in their homes, ensuring their savings are
safe, supporting first-time buyers, and looking after colleagues'
health and wellbeing.
Once again, highly engaged colleagues have been there to support
members by keeping the vast majority of branches and agencies open
throughout the year. Contact centres also remained open and some
colleagues transitioned to homeworking.
The mutual is committed to maintaining a face to face service
where there is sufficient demand, and currently has over 230
branches and agencies throughout the UK, and continued to invest in
its Transformation Programme which is delivering to plan.
Providing a high standard of customer service is critical and
the Society further increased its Net Promoter Score in 2021 to +54
(31 December 2021: +53)(4) despite processing record business
volumes, demonstrating its commitment to delivering on service when
its members need it the most.
Throughout the pandemic, the Society provided over 40,000
mortgage payment deferrals to help those suffering an income
shortfall. The vast majority of those who received a mortgage
payment deferral have now resumed their normal repayments.
All colleagues continued to benefit from unlimited dependents
and carers leave at full pay and the mutual did not call on the
government's job retention scheme.
Community investment
The Society remains committed to supporting those people across
all ages hardest hit by the pandemic and has committed more than
GBP1.8m of investment over two years (2021/22) as part of its
purposeful agenda focusing on skills, employment, financial
education and wellbeing.
Our partnership with Age UK supports people in later life with
financial wellbeing. The Society's fundraising will support the
Building Better Lives programme to help prevent 4,700 older people
reaching crisis point.
So far, the programme has helped 1,400 people access tailored
financial advice. Age UK have helped older people to submit more
than 1,150 claims for benefits to which they can potentially access
over GBP4.8 million in financial support, an average of GBP3,460
per person supported.
In May the Society launched an innovative pilot partnership with
Citizens Advice to provide free and confidential access to expert
advisers available to both members and non-members in six of our
branches. Almost 500 people have received support and more than 50
people will benefit from an estimated total of GBP394,746 in
additional income. Following this success, we will treble the
number of Citizens Advice advisors in our network to cover 18
branches.
Young people have faced some of greatest adverse impacts from
the pandemic and have been more likely to lose their job or face a
cut in income. To support them, the Society is investing in its
flagship financial education programme, Money Minds, to expand its
reach significantly through digital resources to over 55,000 young
people aged 11-19 by the end of this year.
Yorkshire Building Society is committed to delivering its
strategy while taking action to further minimise its impact on the
environment and has launched its 'Building a Greener Society'
climate plan. To further support its mortgage borrowers, it will
create a member Net-Zero transition plan to improve the
environmental impact of their homes and is committed to achieve
Net-Zero on direct business emissions by 2025.
Outlook
The economy continued to be dominated by the pandemic throughout
2021, with lockdowns and other measures disrupting activity.
However, as restrictions eased and sectors including retail, travel
and hospitality opened up the focus changed to the rising cost of
living and inflation increasing beyond the Bank of England's target
of 2%.
Competition in the mortgage market will remain high and the
Society's mortgage proposition will be developed to help borrowers
improve the energy efficiency of their properties in line with the
climate change agenda.
Further investment in digital servicing capability and
developing the functionality of the YBS app will continue to help
more members interact with the Society how, when and where they
want to, and this will complement its branch and telephone
channels.
Yorkshire Building Society is focused on being an outstanding
provider of savings and mortgages and will continue to provide
real, meaningful benefits to our members, customers and communities
for years to come.
ENDS
Notes to Editors
About Yorkshire Building Society
Yorkshire Building Society has assets of GBP52.7 billion and
nearly 3 million customers.
Chelsea Building Society and Norwich & Peterborough Building
Society are part of Yorkshire Building Society. Its subsidiary
companies include Accord Mortgages Limited. For more information on
Yorkshire Building Society visit www.ybs.co.uk
For further media information please contact:
Paul Addison, Yorkshire Building Society Head of External
Affairs - 07592 589870.
Gary Brook, Yorkshire Building Society Communications Manager -
07866 455111.
(1) YBS Group average savings rate compared to rest of market
average rates. Source: CACI's Current Account and Savings Database
(CSDB), Stock. Data Period: January - December 2021.
(2) GBP297.3m core operating profit includes the release of
GBP19.2m of expected loss provisions (2020: GBP12.2m charge).
(3) The main difference between statutory profit before tax and
core operating profit is a recorded GBP26.7m gain on fair value
volatility, the majority of which relates to timing differences for
mortgage pipeline interest rate swaps.
(4) Net Promoter Score and NPS are trademarks of Bain &
Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.Data
period January - December 2021, based on 24,305 responses.
Group results for the year 2021 2020
GBPm GBPm
Net interest income 537.4 438.0
Fair value gains/(losses) 26.7 (10.7)
Net realised gains/(losses) 0.8 12.9
Other income 12.7 13.8
Total income 577.6 454.0
Management expenses (274.5) (275.8)
Operating profit before provisions 303.1 178.2
Impairments of loans and advances
to customers 19.2 (12.2)
Movement in provisions (2.3) (4.7)
Profit before tax 320.0 161.3
Tax expense (62.9) (37.8)
Net profit 257.1 123.5
Group Statement of Financial
Position 2021 2020
GBPm GBPm
Liquid assets 9,996.7 8,403.2
Loans and advances to customers 41,922.4 38,798.6
Other assets 804.6 729.0
Total assets 52,723.7 47,930.8
------------------------------------- --------- ---------
Shares - retail savings 35,506.4 33,368.3
Wholesale funding and other
deposits 12,854.2 10,500.9
Subordinated liabilities 857.7 645.0
Other liabilities 416.8 619.7
Total liabilities 49,635.1 45,133.9
------------------------------------- --------- ---------
Members' interest and equity 3,088.6 2,796.9
Total members' interest, equity
and liabilities 52,723.7 47,930.8
------------------------------------- --------- ---------
Reconciliation of Core Operating 2021 2020
Profits
------------------------------------- --------- ---------
GBPm GBPm
Statutory profit before tax 320.0 161.3
Reverse out the following items:
Fair value gains and losses (19.1) 10.7
Historic fair value credit
adjustments on acquired loans (3.2) (1.2)
Movement in restructuring provision 2.1 2.8
Other non-core items (2.5) (3.1)
Core operating profit 297.3 170.5
------------------------------------- --------- ---------
2021 2020
--------- ---------
GBPm GBPm
Net profit 257.1 123.5
Items that may be reclassified through
profit or loss
Cash flow hedges:
Fair value movements taken
to equity 15.3 -
Amounts transferred to income
statement 0.4 0.6
Tax on amounts recognised in
equity (4.2) (0.2)
Effect of change in corporation
tax rate (0.9) -
Assets measured through other comprehensive
income:
Fair value movements taken
to equity 18.3 36.6
Amounts transferred to income
statement (3.7) (29.8)
Tax on amounts recognised in
equity (4.0) (1.8)
Effect of change in corporation
tax rate (1.9) (0.2)
Items that will not be reclassified through
profit or loss
Remeasurement of net retirement
benefit obligations 30.5 4.3
Tax on remeasurement of retirement
benefit obligations (8.0) (1.4)
Effect of change in corporation
tax rate (7.2) (1.7)
-------------------------------------
Total comprehensive income
for the year 291.7 129.9
------------------------------------- --------- ---------
Key ratios 2021 2020
-------------------------------------
% %
Net Interest Margin 1.07 0.95
Management expense ratio 0.55 0.60
Asset growth 10.0 8.3
Loans and advances growth 8.1 2.1
Member balance growth 6.4 8.8
Liquidity ratio 20.7 19.2
Funding ratio 26.6 23.9
Gross Capital 8.2 7.9
Free Capital 7.8 7.4
Total Capital Ratio 18.7 18.9
Common Equity Tier 1 ratio 16.8 16.7
MREL Leverage ratio 7.6 7.3
Leverage Ratio 5.9 5.9
Cost: Core Income ratio 49.8 59.4
------------------------------------- --------- ---------
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