Leeds Building Society sees profits decline amid challenging backdrop

The nation's fifth largest building society delivered £32.6m in profits during the first six months of the year, as compared with £49.4m last year.

The business acted to reduce excess liquidity while still ensuring a secure position well above regulatory requirements during the period.

The dip in profits comes after LBS made provisions made against the deteriorating economic backdrop, made efforts to protect rates for savings members and an accounting variation associated with its legacy portfolio.

It made a fair value charge of £9.3m against its legacy equity release portfolio and other mortgage assets[i] and a £9.6m increase in impairment provision charges.

Chief Executive Officer Richard Fearon said he was both “proud and humbled” by his colleagues’ professional response to the pandemic and their dedication to the service of the mutual’s members, such as the swift creation of mortgage payment holiday capability for borrowers facing financial difficulty, a process since automated, extended and improved, helping some 26,000 customers.

“When I reported our 2019 results in February for my first full year as CEO, none of us could have imagined how soon we would feel the personal, national and global impacts of coronavirus,” said Richard.

“The response from our colleagues has made me feel both proud and humbled as they’ve stepped up to continue serving our members diligently and look after, and out for, each other.

“They’ve focused on those members most in need of our help as their lives and finances have been disrupted, and have worked hard to ensure the Society stays financially secure in the long term for our membership as a whole. We’ve neither laid off nor furloughed any of our workforce, a decision I’m happy we were able to make.

“In the face of their own personal challenges, colleagues have demonstrated resilience, innovation and teamwork at pace to overcome each practical and logistical test as it’s arisen, from making all our premises COVID Secure to enabling a greater proportion of office-based colleagues to work from home.

“Multiple specialists worked together to swiftly create a new mortgage payment holiday process and self-service online functionality, backed by increased capacity in Robotic Process Automation (RPA).

“Meanwhile branch teams maintained essential financial services on the high street and also joined colleagues from across the business to staff up a “virtual” contact centre dealing with soaring call numbers from members worried about the effects of the pandemic.”

Leeds Building Society retains its strong capital position and its cost to income and cost to mean asset ratios of 52.5% and 0.47% respectively remain among the best in the sector.