Newcastle Building Society Year End Results 2018

Release Date: 27 February

Key highlights:

  • Operating profit of £14.7m compared to £12.1m for 2017
  • Charitable giving of 6% of profit before tax at £797,000
  • Growth in income of £6.6m against growth in investment costs of £3.9m
  • Helped 1,100 first time buyers own their own home
  • Ongoing commitment to branches across the region will see the entire network refurbished by the end of 2019.

In a ‘very positive’ year, Newcastle Building Society saw continued growth in residential lending, increasing membership numbers, increased levels of financial advice business, and strong growth in its market leading outsourced savings management subsidiary, Newcastle Strategic Solutions.

Putting customers first and delivering benefits to its communities are integral to the Society’s strategy and its purpose of ‘connecting communities across the North East with a better financial future.’ This approach has driven positive financial progress that has seen increased operating profit, alongside strong capital and liquidity ratios.

Profit before tax improved to £13.3m, compared to £13.1m for 2017.  Whereas 2017 profit before tax included a one-off credit of over £2m relating to the purchase of its Cobalt office in North Tyneside, the 2018 figure represents an operating profit of £2.2m, reflecting an enhanced business performance.  Operating profit before provisions and exceptional items increased by £2.6m to £14.7m (from £12.1m in 2017).

The Society delivered an overall growth in income to £6.6m (total operating income £64.5m in 2018, compared to £57.9m in 2017).  This was offset by an increase in costs of £3.9m.  

The Group’s capital ratios remain robust. Common Equity Tier 1 ratio improved from 15.3% to 15.7%, and Tier 1 capital ratio reduced slightly from 16.6% to 16.3%.  The Group’s overall capital ratio (Solvency ratio) also reduced to 17.7% from 18.9% in 2017. Both reductions were as a result of a planned repayment of £10m of the Group’s Permanent Interest Bearing Shares (PIBs) during the year.

Despite a very competitive mortgage market and weak mortgage market growth, gross residential mortgage lending was maintained at a healthy £520m (£535m 2017) and net residential lending at £160m (£220m 2017).  Newcastle Building Society helped more than 1,100 first time buyers onto the housing ladder during the year.

Against a backdrop of extensive bank branch closures, the Society’s multi million pound branch refurbishment programme gathered pace in 2018, as part of a commitment to the high street and transformation of its entire branch network by the end of 2019.  New branch concepts were launched in Durham, Gosforth and Carlisle locations.

Continued support for the Newcastle Building Society Community Fund at the Community Foundation saw a Society donation of £797,000, equivalent to 6% of the Group’s pre-tax profits. This is a long term fund to be used for the benefit of communities in the North East, which in 2018 made over 60 grants to local charities and community groups, including a £50,000 ‘Building Improvement Grant’ to Springfield Community Centre and funded the first year of a £100,000 four-year partnership with The Prince’s Trust, to support programmes which seek to invest in young talent and improve employability in the region.

An ongoing commitment to Dementia Friends has to date delivered dementia awareness sessions to over 1,500 colleagues, customers and businesses on local high streets.

2018 saw the Society awarded four national awards, for Best Regional Building Society (What Mortgage) Best Smaller Lender (Legal & General Mortgage Club), Best Self Build Lender (Built It) and its HR team won the North East HR&D CIPD Award for Excellence in Resourcing and Talent Management.

Continued demand for face to face financial advice across its high street branch network delivered by Newcastle Financial Advisers Ltd, saw the creation of more professional training and development opportunities for financial adviser positions.  The subsidiary manages a significant level of funds for people in the region, and enjoys consistent and high levels of customer satisfaction.

Newcastle Strategic Solutions, the Group’s market leading provider of outsourced savings management services enjoyed strong growth throughout 2018, whilst driving a number of customer service award wins for its clients for the quality of service provided to customers.

Chief executive, Andrew Haigh said:

“2018 has been a significant year of change and progress for Newcastle Building Society.  We have seen our highest growth in income compared to recent years, increasing profitability and growth in our member base.

“Whilst economic uncertainties may continue, we will maintain our focus on investing in our business, our colleagues and our communities to build a strong regional building society that is recognised for making a genuine difference to people and communities across the North East.”