Profits fall at Yorkshire Building Society as boss predicts V-Shaped economic recovery
The head of Yorkshire Building Society has said the mutual anticipates a ‘V-shaped’ economic recovery as demand picks up in the mortgage market.
The Bradford-based society said that the greatest likelihood in terms of economic activity for the UK would be a sharp contraction followed by an equally sharp recovery as the Covid-19 lockdown continues to impose havoc on the planet.
For the first six months of the year the lockdown caused profits at YBS to decline by £9.2m to £67.3m from £76.5m last year.
Chief executive Mike Regnier told The Yorkshire Post that the society had needed to take out provisions to mitigate against potential future credit problems as well the impact upon margins of historically low rates of borrowing.
He said: “It is of course difficult to say what lies ahead.
“The most likely scenario is a V-shaped recovery - that is most likely.”
Despite many weeks of activity being lost due to lockdown the society still managed to complete 31,384 mortgages and advance the mortgages of 3,002 mortgages to first-time buyers.
Overall mortgage balances remained flat at £38bn
“A lot of people could not complete and many cases there would not be any contact for evaluations,” Mr Regnier said regarding lockdown.
“The market is now bouncing back very quickly. In June we had an equivalent period to last year. There is a lot of pent up demand.”
A big driver has been the relaxation of Stamp Duty which has made the house buying process more affordable for thousands of people.
Mr Regnier said that the biggest challenge now was keeping up with demand in a way that did not overburden his workforce.
More than 1,400 of YBS’s staff have been working from home during lockdown but a sizeable number of the society’s workforce have continued working in a frontline capacity, either in branches or at its offices in Bradford and Leeds.
The mutual has offered staff unlimited dependents and carers leave at full pay and anyone who is shielding, unwell or needs to self-isolate and cannot work from home qualifies for paid sick leave at their full salary.
It has not put any staff on furlough and all staff remain on full pay.
“Our front line staff have been amazing,” he said.
“We have needed to change our opening hours [in branches] but for 99.5 per cent of the times we have wanted to be open we have been open. We have had to contend with colleagues who have had the virus or have been self-isolating, or who are classed as vulnerable and have needed to shield. They have been absolutely superb, I am so proud of them.”
On the society’s financial performance, Mr Regnier made no pretence of a healthy climate but added that it had plenty of liquidity and capital.
“I’m pleased to report that our 2020 half-year performance illustrates that our prudent strategy over the longer term has enabled us to weather the challenging economic environment and impacts of Covid-19.
"Our balance sheet has stayed strong, our statutory and core profits remain healthy and we retain strong levels of capital and liquidity.”