REG - Yorkshire B.S. - Final Results

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02/03/2022 08:15

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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 £41.9bn (31 December 2020: £38.8bn),
the highest in our history.

·    Paid 0.32% above the market average to savers which delivered an
additional £107m of interest to them(1).

·    Saving balances increased to a record £35.5bn (31 December 2020:
£33.4bn).

·    Core operating profit of £297.3m(2) (2020: £170.5m).

·    Statutory Profit Before Tax of £320.0(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 £297.3m, 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
£10.3bn in new funding of which 36% (£3.6bn) was to first-time buyers. As a
result, total mortgage balances increased to £41.9bn 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 £41m(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 £1,500 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 £107m of interest in total and savings balances have reached an
all-time high of £35.5bn (December 2020: £33.4bn).

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 £1.8m 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 £4.8 million in financial
support, an average of £3,460 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 £394,746 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 £52.7 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) £297.3m core operating profit includes the release of £19.2m of expected
loss provisions (2020: £12.2m charge).

(3) The main difference between statutory profit before tax and core operating
profit is a recorded £26.7m 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
                                                           £m                              £m

 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
                                                           £m                              £m
 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 Profits                  2021                            2020
                                                           £m                              £m

 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
                                                           £m                              £m
 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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