Newcastle Building Society 2017 Year End Figures & Review

28th February 2018

Key Highlights 2017

  • Mortgage lending up 8% to £535m (gross) £220m (net)
  • North East exclusive mortgages launched
  • Charitable giving of 6% of profit before tax (£770,000)
  • Customer satisfaction up to 96%, from 93%
  • Profit before tax up by 62% to £13.1m, from £8.1m

Despite an increasingly competitive market and ongoing economic uncertainty, 2017 was a year of continued, solid growth across mortgage lending, savings and financial advice for Newcastle Building Society. 

Customers reported an increased level of satisfaction (96%) as the Society continued investment in enhancing its service delivery via online, telephone and its 27 strong branch network across the North East and Cumbria.

Gross residential mortgage lending increased by 8% (up from £496m to £535m) while net residential mortgage lending was also up 11% (from £195m to £220m).  The increase in lending reflects the investment made in distribution, product range, and online systems capability for brokers. The Society was recognised with the ‘What Mortgage’ award for Best Regional Building Society 2017.

Helping people own their own home is central to Newcastle Building Society’s purpose and 2017 marked a first with the launch of an exclusive range of mortgages to help local people buy their own home in the North East, proving particularly popular with borrowers requiring a 95% loan to value mortgage.

The Society helped over 1,000 first time buyers take their initial step onto the property ladder in 2017, a 33 per cent increase on the previous year,  more than a quarter of these choosing to buy in the North East.  Mindful of the growing army of self-employed workers, the Society helped over 500 self-employed borrowers buy their home.

Whilst Newcastle Building Society’s lending increased, the level of mortgage arrears reduced further in 2017. This is well below UK Finance-reported averages and at a record low for the Society, reflecting the excellent credit quality of the mortgage book and the Society’s sensible approach to lending.

Against a national backdrop of falling individual savings levels, the Society launched a range of regular savings products which included Help to Buy ISA and children’s savings accounts, with this range set to be expanded further in 2018 to encourage people in the region to get into the regular savings habit.

The provision of accessible face to face financial advice is core to the Society’s purpose in its North East heartland.  Through a combination of its community outreach programme, and its Newcastle Financial Advisers subsidiary which operates out of local branches, more than 7,900 people in the region received information and advice to help them plan their financial futures.

Profit before tax increased by £5m to £13.1m in 2017 (from £8.1m for 2016), an increase of 62%.  This reflects a fall in impairment charges and the Financial Services Compensation Levy, together with a one-off credit of £2.2m arising on the purchase of its Cobalt offices in the first half of the year.  The purchase of the flagship premises demonstrated commitment to North Tyneside and to the continued growth of Newcastle Strategic Solutions, its subsidiary business which provides award winning third party savings management solutions for UK financial institutions.

Operating profit before provisions and one-off gains increased by £0.2m to £12.1m in 2017 (2016: £11.9m). Whilst overall income was up by 6%this was offset by significant ongoing investment into the business including IT systems and enhanced operational resilience.

Over £770,000 was given to local causes in 2017.  Support for the Sir Bobby Robson Foundation combined with contributions to the Community Foundation to build the endowment for the Newcastle Building Society Community Fund at the Community Foundation, saw total charitable giving equating to 6% of profit before tax.

Chief executive, Andrew Haigh commented: “We’re very pleased with such a strong set of results which are the foundation for delivering our role as the North East’s building society.  We are not just about encouraging people to save and plan their finances, and helping them to own their home, we believe it is also vitally important to support our communities in making positive changes, providing varied and meaningful career opportunities, and a great place to work for people across our region.”

The Society, which was awarded Gold Investors In People status in 2017, continued to create new jobs in the region and now employs more than 1,000 people across its head office, branch network and subsidiary businesses. 

During 2017 Newcastle Building Society invested in the relocation and refurbishment of branches in Darlington and Durham, maintains 27 branch outlets and runs a financial advice and information programme accessible across its branch network.

Andrew continued, “We can see the effects of a lack of financial understanding in the rising levels of debt in the UK, while pension changes have left many bewildered.  The withdrawal of many banks from financial advice provision and continued branch closures are not helpful to people who need access to financial advice and information, from the basics to the more complex. We continue to focus on the provision of friendly, accessible financial advice and branch services across our North East and Cumbria heartland.  We are committed to maintaining a strong branch network, supporting the High Street in towns and cities across the region. ”