2018 Financial Results

Yorkshire Building Society reported a strong performance for 2018, growing profit and savings balances, while delivering record mortgage lending and reducing costs.

In a competitive market, the mutual increased its pre-tax profit by 16% to £192.5m (2017: £165.8m) and improved its core operating profit by 13% to £180.8m (2017: £160.2m).

The Society supported tens of thousands of people to secure a place they can call home, financing more than 36,000 mortgages,[1] increasing gross lending by 10% to a record £8.9bn (2017: £8.1bn), and net lending by 60% to £1.6bn (2017: £1.0bn).

It helped members to save for the future, opening 197,000 new accounts and growing savings balances to £29.6bn (2017: £28.9bn). The mutual paid savings account holders £100m in additional interest because its average savings rates were 0.37% higher than the market average.[2]

Key 2018 highlights:

• Growing profit: Profit before tax increased by 16% to £192.5m (2017: £165.8m) and core operating profit increased by 13% to £180.8m (2017: £160.2m).
• Increasing financial strength and sustainability: Increased Common Tier Equity 1 ratio to 16.3% (2017: 15.8%). Liquid assets at £5.5bn (2017: £6.1bn), with a liquidity ratio of 13.9%(2017: 15.7%) remained above regulatory requirements.
• Increasing member value for money: Costs reduced by £29m to £311m (2017: £340m), with the cost to income ratio decreasing to 61.0% (2017: 63.4%).
• Helping people to buy homes: Gross mortgage lending increased 10% to a record £8.9bn (2017: £8.1bn) and net lending increased 60% to £1.6bn (2017: £1.0bn).
• Helping members build financial resilience through saving: Retail savings balances grew by £0.7bn to £29.6bn (2017: £28.9bn), a growth rate of 2.1% (2017: 0.9%), and 2.7m people now save with the Society.[3]
• Delivering long-term value for savers: Savings rates were on average 0.37% higher than the market2 (2017: 0.28%), which means the Society paid members more than £100m in additional interest through higher savings rates.   
• Providing excellent customer service: Customer satisfaction was maintained at well above the industry average, with our Net Promotor Score (NPS) remaining at +41, with an industry average of +5.[4]
• Supporting communities: The Society, members and colleagues raised £254,000 for charity partner End Youth Homelessness, bringing the total raised to £547,000. The money will help support homeless young people into rented homes.

Mike Regnier, Yorkshire Building Society Group’s Chief Executive, said:

Achieving sustainable financial performance

• Total capital ratio of 20.3% (2017: 20.1%).
• Liquid assets at £5.5bn (2017: £6.1bn) and liquidity ratio of 13.9% (2017: 15.3%), ahead of regulatory liquidity requirements.
• Cost:income ratio of 61.0% (2017: 63.4%) and management expense ratio of 0.73% (2017: 0.83%).
• Net interest margin of 1.11% (2017: 1.23%) and a net interest income of £471.7m (2017: £502.1m), in line with the Society’s strategic plan.
• Proportion of accounts in arrears by more than three months (including possessions) reduced to 0.50% (2017: 0.58%), against an industry average of 0.80%[5], reflecting the high quality of lending and the benign economic conditions.
• Completed three successful public bond issuances in the wholesale markets as part of a continued strategy to diversify funding, including a €500m Medium Term Note issue, a £300m Residential Mortgage Backed Security issue and a £500m 5-year issue in the Covered Bond market.

Providing real help with real life to our members

• Maintained an average Net Promoter Score of +41 (2017: +41), with an industry average of +5.4
• Provided good long-term value for savers, paying on average 0.37% higher rates than the average rate for the rest of the market2 (2017: 0.28%).
• Helped first-time buyers secure 6,960 mortgages.
• Won 22 awards, with 11 accolades for mortgages and customer service, including First-Time Mortgage Buyers’ Choice Award at the Moneyfacts Consumer Awards 2018 and Best Customer Service at the TMA Supernovas 2018.
• Simplified the way savings accounts are opened, reducing the time customers need to spend in a branch.
• Enabled 12,500 customers to apply for and complete their remortgages online, saving customers time and reducing paper.
• Introduced an innovative Help to Buy ISA mortgage, which offers preferential interest rates to first-time buyers who saved using a Help to Buy ISA account.
• Completed our brand consolidation programme, transferring more than 570,000 Norwich & Peterborough Building Society (N&P) savings customers to the Yorkshire Building Society brand, giving members access to a larger national high street network in more than 240 towns and cities.

Making a positive impact on colleagues and communities

• Named for the second year running as one of the top 30 UK employers for building flexible, family-friendly workplaces by charity Working Families.[6]
• Won two national awards for inclusivity and diversity, including UK’s Most Improved Organisation of the Year and UK Financial Services Company of the Year.[7]
• Increased apprentice numbers to 56 by recruiting 24 new apprentices for the Group’s award-winning scheme, which offers a permanent role on the same terms and conditions as other colleagues as well as the ability to gain relevant professional qualifications.
• Raised £254,000 for End Youth Homelessness, bringing total fundraising to £547,000 and helping to provide young people with a safe place to call home.
• Helped members to raise £309,000 for Yorkshire Building Society Charitable Foundation through the Small Change Big Difference™ scheme and made more than 312 donations totalling £439,000 to UK charities.
• Helped charities and good causes to benefit from 16,923 hours of volunteering by enabling colleagues to share their skills and experience through their annual 31 hours’ volunteering allowance.
• Delivered more than 560 financial education sessions to more than 17,000 young people through the innovative Money Minds programme, since its launch in 2015.

ENDS PRXX-18

Notes to Editors

About Yorkshire Building Society

Yorkshire Building Society has assets of £43.1 billion and has more than three million customers.

The YBS Group includes Yorkshire Building Society and its brands Chelsea Building Society and Norwich & Peterborough Building Society, and its subsidiary companies including Accord Mortgages Limited. 

For further media information please contact:

Press Office on 0345 1200 890
 

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

[2] YBS Group average savings rate compared to rest of market average rates based on savings stock from CACI’s Current Account and Savings Database (CSDB), covering 87% of the retail savings market (based on stock value). Data period January to November 2018.

[3] Figure includes customers who save through employer share save schemes administered by Yorkshire Building Society.

[4] KPMG Nunwood Customer Voice Programme, January to December 2018. Based on 14,556 completed interviews with customers. Net Promoter score and NPS are trademarks of Satmetrix Systems, Inc. Bains & Company, Inc., and Fred Reichheld.

[5] Council of Mortgage Lenders (CML), retail mortgages more than three months in arrears to 31 December, 2018.

[6] Working Families – Top 30 Employer for Working Families 2018 (2018).

[7] Winner of UK’s Most Improved Organisation of the Year and UK Financial Services Company of the Year at the National Centre for Diversity Grand Awards 2018.