2017 Financial Results

Yorkshire Building Society Group has today announced a strong financial performance for 2017, as it continues to help millions of people across the UK achieve their saving and home-buying goals.

Despite a competitive market, the mutual recorded a 9% increase in pre-tax profits to £165.8m (2016: £151.5m) and a 25% rise in core operating profit to £160.2m (2016: £128.0m) while delivering sustainable long-term value for customers.

The Group supported thousands of people in homeownership, financing more than 36,000 home loans, increasing gross mortgage lending by 13% to a record £8.1bn (2016: £7.2bn) and net lending by 46.5% to £1bn (2016: £0.7bn).

It supported members in saving for their futures, opening 193,000 new accounts and increasing savings balances to £28.9bn (2016: £28.7bn).
 

2017 key highlights:

• Profit before tax of £165.8m (2016: £151.5m) and core operating profit of £160.2m (2016: £128.0m)
• Gross lending of £8.1bn (2016: £7.2bn) and net lending of £1bn (2016: £0.7bn)
• Average Net Promoter Score of +41, a seven-point improvement (2016: +34)[i]
• Helped homeowners by providing 36,064 mortgages (2016: 27,229), including 7,011 (2016: 6,398) to first-time buyers[ii]
• Maintained good value savings rates, paying on average 0.28% higher rates than the rest of market average[iii]
• Common Equity Tier 1 ratio of 15.8% (2016: 14.9%).
• Liquidity at £6.1bn (2016: £4.7bn) and liquidity ratio of 15.7% (2016: 12.8%), ahead of regulatory liquidity requirements

Mike Regnier, Chief Executive of Yorkshire Building Society, said:

2017 results highlights:

Achieving sustainable performance and real financial security through mutuality

• Total capital ratio of 20.1% (2016: 17.3%)
• Liquidity at £6.1bn (2016: £4.7bn) and liquidity ratio of 15.7% (2016: 12.8%), ahead of regulatory liquidity requirements
• Net interest margin of 1.23% (2016: 1.22%) and a net interest income of £502.1m (2016: £475.6m), in line with our strategic plan and supporting investment in the business
• Cost:income ratio of 63.4% (2016: 67.2%) and management expense ratio of 0.83% (2016: 0.89%)
• Proportion of accounts in arrears by more than three months (including possessions) reduced to 0.56% (2016: 0.76%), against an industry average of 0.88%[iv], reflecting the high quality of lending and the benign economic conditions
• Completed three bond issuances as part of our continued wholesale funding strategy, demonstrating market confidence in the Group
• Long-term local and foreign currency senior unsecured debt rating with Moody’s Investors Service upgraded to A3 in September 2017

Delivering a simply brilliant customer experience

• Average Net Promoter Score of +41, a seven-point improvement (2016: +34)[i]
• Maintained good value savings rates, paying on average 0.28% higher rates than the rest of market average[iii]
• Invested in changes to our online service which will enable mortgage customers to carry out product transfers at an earlier date and more efficiently
• Digitalised our ISA transfer process to ensure it is quicker and simpler for members
• Won 25 industry awards, with accolades for mortgages, digital experience, customer service transformation, process improvement and charitable support, including Best First Time Buyer Mortgage Provider (Moneynet Personal Finance Awards), Best Business Improvement Project Under 90 Days (Process Network Excellence Awards), and  Financial Service E-commerce Website of the Year (Northern E-commerce Awards)

Providing real help with real life to our members

• Helped first time buyers get on to the property ladder more than 7,000 times
• Opened 193,000 new savings accounts and increased savings balances to £28.9bn (2016: £28.7bn)
• Ensured our savings members benefited from the first Bank Rate rise in a decade by passing on the full 0.25% increase to all our existing and new variable rate savers
• Created an innovative scheme to help employers improve the financial wellbeing of their employees by working with Salary Finance to provide an easy-to-use, direct-from-salary regular savings account
• Expanded the availability of mortgages for people with non-standard incomes, including those who are self-employed, through our intermediary arm, Accord Mortgages
• Became the first lender to work with Age Partnership to give customers coming to the end of an interest-only mortgage access to full-market free advice
• Increased mortgage flexibility by offering an interest-only option for new borrowers, through Accord

Making a positive impact on colleagues and communities

• Raised £293,352 for End Youth Homelessness in the first 12 months of a three-year partnership, helping to provide young people with a safe place to call home
• Yorkshire Building Society Charitable Foundation, which is largely funded by members taking part in the Small Change Big Difference™ scheme, made more than 200 donations totalling £234,684 to UK charities
• Helped 56% of colleagues to share their skills and experience with charities and good causes by making use of their annual 31 hours’ volunteering allowance
• Delivered financial education to more than 7,000 young people in more than 70 schools through our innovative Money Minds programme
• Contributed 3,800 hours of volunteering support to charities committed to ending youth homelessness
• Ranked amongst UK’s Best Large Workplaces and a top 30 employer for working families
• Doubled the annual intake on our award-winning apprenticeship scheme, which offers young people a permanent role on the same terms and conditions as other colleagues as well as the chance to complete relevant professional qualifications
• Introduced a wellbeing programme to help colleagues maintain good mental and physical health, and support them in times of ill-health, which was accessed by 1,200 colleagues in 2017
• Reduced our gas and electricity consumption by 9% year-on-year, and helped 500 colleagues to car share and more than 260 to take part in the Cycle to Work scheme

[i] KPMG Nunwood Customer Voice Programme, January to December 2017.  Based on 25,107 completed interviews with customers. Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.

[ii] Excludes further advances and buy-to-let.

[iii] Average rates are based on savings stock from CACI’s Current Account & Savings Database (CSDB) which covers 86% of the retail savings market (based on stock value). Data period January to October 2017, Yorkshire Building Society average rate 0.98% against a rest of market average of 0.70%.

[iv] UK Finance (December 2017).