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Newcastle Building Society announces 2022 half year results

Date published: 27 July 2022

Read time: 7 minutes read

Andrew Haigh, Chief Executive at Newcastle Building Society in one of our branches.

[Note: financial results quoted are for the half-year to 30 June 2022 (and equivalent period in 2021, unless stated as Full Year)]

Highlights:

  • Profit before taxation of £14.2m (2021: £15.9m)
  • Underlying operating profit of £14.2m (2021: 13.3m)
  • Gross mortgage lending of £448m (2021: £483m)
  • Net core residential lending for the first half of the year was £181m (2021: £220m)
  • Mortgage arrears remain at low levels at 0.38% (full year 2021: 0.42%)
  • Capital ratios remain robust with Total Capital Ratio (Solvency) at 14.4% (full year 2021 14.6%) Common Equity Tier 1 Ratio at 13.3% (full year 2021 13.3%) and Leverage Ratio at 4.5% (full year 2021 4.5%)
  • Robust Liquidity with liquidity as a percentage of shares, deposits and liabilities of 20.8% (full year 2021 21.4%)
  • Delivered £182,000 in community funding, including community grants from the Newcastle Building Society Community Fund at the Community Foundation, focusing on charities tackling employability, social isolation, food poverty, homelessness, debt management, and cancer care
  • Opened a brand new community branch in Knaresborough on 18th July 2022
  • Shared plans for a ground breaking pilot which aims to introduce OneBanks multi-bank transaction terminals in two branches
  • Launched a new employability partnership with Walking With The Wounded
  • Celebrated the official opening of NUCASTLE powered by Newcastle Building Society, a new community hub and home of Newcastle United Foundation

Newcastle Building Society has announced its financial results for the first half of 2022, reporting strong performance in the first half of the year, despite a difficult economic backdrop.

Highlighting opportunities to leverage its commercial resilience to extend support for Members and communities, the Society revealed operating profit before impairments and provisions of £13.9m for the six months ended 30 June 2022, compared to £14.7m for the six months ended 2021. Continued momentum across all areas of the business has contributed to sustained profitability, which the Society attributes to its purpose-led strategy in the face of new challenges.

Newcastle Building Society was one of the first savings providers to respond to the Bank of England’s decision to increase the base rate of interest, passing on the rise to the majority of variable rate savings products. The Society continues to offer Members saving interest rates that are significantly better than the UK average – paying an average rate of 0.85% compared to a whole of market average of 0.38% based on CACI’s independent financial benchmarking data.*

Although the rate of house price inflation has slowed, any rise makes it even more difficult for homebuyers to save for a deposit. The Society’s continued focus on supporting first time buyers and low deposit borrowers contributed to gross mortgage lending of £448m for the first half of the year.

Net core residential lending was £181m, compared to £220m delivered in the first half of 2021 and mortgage arrears remain at low levels at 0.38% demonstrating the consistent quality of the Society’s mortgage lending. 

In March, the Society announced plans to open a new branch in Knaresborough, North Yorkshire, working in partnership with North Yorkshire County Council and Harrogate Borough Council to establish a branch within the town’s library. Work at the new branch was recently completed and the branch opened its doors on 18th July, the latest step of an ongoing multi-million pound programme of investment which includes the completion of work at its newly refurbished branch in Bishop Auckland in January.

Bucking the national trend of branch closures, Newcastle Building Society’s investment into its high street presence is part of an ongoing commitment to maintain and enhance access to cash and face to face financial services, which has seen it deliver an innovative community branch concept in several locations. Plans continue in partnership with North Tyneside Council to deliver a further new branch within a refurbished Tynemouth Library building.

The Society’s financial advice subsidiary, Newcastle Financial Advisers, delivered a robust set of results in the first half of 2022. Evidenced by outstanding customer feedback, Newcastle Financial Advisers’ professional team have demonstrated the value to local people of providing face to face financial advice on the high street.

The Society’s market leading savings management outsourcing business, Newcastle Strategic Solutions, also reported a strong start to the year, extending the partnership with one of its major clients and celebrating multiple client successes in savings industry awards.

Newcastle Building Society chief executive officer, Andrew Haigh said:

“Whilst our lives and working patterns returned to a more normal pattern in 2022, the first six months also brought a new set of challenges and significant economic uncertainty. With a measure of care and caution we have been able to respond to those challenges and I am proud that we have delivered such a strong set of results against a difficult economic backdrop.

“The Society’s strength is in our purpose-led strategic approach, is more relevant than ever to our customers and communities as we face into ongoing challenges. That means maintaining a fair balance between savings and mortgage rates, whilst continuing to do all we can to help first time buyers and support those looking to save and plan their finances.”

The Society’s community grant-giving programme through the Community Foundation Tyne & Wear and Northumberland has continued to make a real difference across the North East, North Yorkshire and Cumbria. Community funding totalling £182,000 was delivered in the first half of the year, including £15,000 to seven charities tackling social isolation through Platinum Jubilee celebration events. Grant-giving was focused to help tackle issues around employability, social isolation, food poverty, homelessness, debt management, and cancer care.

Following the outbreak of conflict in Ukraine, a donation of £25,000 was made to the Disasters Emergency Committee to help those impacted.

In March, the Society also celebrated two milestones in its commitment to grow talent from within its region and support people to realise their potential and provide opportunities for those from underserved backgrounds. The announcement of a new five-year partnership with Walking With The Wounded, including an annual donation of £25,000 to support their employability programme, kick starts a collaboration which will create supported veteran employment opportunities across the Newcastle Building Society Group.

And the official opening of NUCASTLE powered by Newcastle Building Society provides Newcastle United Foundation with a new home as well as a state-of-the-art community facility for sports, education and wellbeing in the city. The partnership with the club’s official charity took a further step forward when the first cohort of apprentices joined the Society in full-time employment.

Andrew Haigh concluded:

“Being able to welcome five customer service apprentices to the Society through our partnership with Newcastle United Foundation provides a glimpse at what can be achieved when we commit to helping young people in our region build their skills and secure meaningful jobs. It gives me confidence that whilst the challenges we all face look set to continue, the strength of our organisation will help us during the months and years ahead as we strive to make as much progress as we can to deliver on our purpose, to connect our communities with a better financial future.”

-ENDS-

Read the full Stock Exchange Announcement here.

* CACI Current Account and Savings Database, Stock, including fixed and variable rates. CACI is an independent company that provides financial benchmarking data which covered 87% of the cash savings market in 2020. Data correct as at April 2022.