Commenting on the results, Martin Ritchley, Chief Executive said:
"2002 proved to be an outstanding year for the Coventry. Not only did net savings receipts top £1 billion for the first time ever, we also achieved record levels of gross mortgage lending of £1.9 billion. At the same time, we enhanced our position as one of the most cost efficient lenders in the UK. These results reinforce the Coventry’s position as one of the country’s most successful building societies."
Highlights of the year
Reviewing 2002, Martin Ritchley continues:
"2002 was an excellent year for Coventry Building Society with record levels of savings receipts and gross lending. Further improvements in efficiency built upon our enviable position as one of the lowest cost operators within the sector, whilst the development of new channels of distribution, in particular, the internet, helped us to deliver our competitive product range to a much wider membership base.
"The Society’s total assets grew by 12.3% to £8,058 million, largely driven by a growth of £677 million in our mortgage book. Funding for this expansion came from a truly outstanding performance in the retail savings market and in 2002, savings receipts grew by over £1 billion, £416 million more than last year, which was itself a record.
"Over the past few years, we have consistently narrowed our interest margin (principally the difference between the interest we earn from borrowers and the interest we pay to savers) for the benefit of our members. 2002 was no exception and the Society’s net interest margin narrowed from 1.08% to 1.05% of average assets. This has enabled us to offer even more competitive mortgage and savings products. As a consequence, we advanced record gross lending in an intensely competitive mortgage market, as well as achieving record savings receipts.
"The Coventry’s net interest margin remains one of the narrowest in the industry and the fact that the Society can operate so effectively at this level underlines, not only the success we have achieved in managing our cost base over a number of years, but also the significant competitive advantages which we derive from our building society status. Quite simply, we have no dividends to pay to external shareholders, which means we can offer even more competitive rates to borrowers and savers alike.
"I have always stressed the importance of our low cost base. Despite additional expenditure invested in developing new channels of distribution, I am pleased to report a further fall from 0.67% to 0.65% in our ratio of management expenses to average assets – the seventh successive year of improvement. This cost efficiency, combined with further growth in non-interest related income, up from £16.7 million to £18.0 million, enabled the pre tax profit to increase by 7.6% to £45.3 million. This contributed to the Society maintaining its strong capital position. I am pleased to report that our financial strength and consistent record of success was recognised during the year by Moody’s, the international credit rating agency, which upgraded its assessment of the Coventry to A2/P1 (from A3/P2).
"Our arrears performance has further improved during the year; our arrears are well under half the industry average, thereby providing a further cost advantage to improve our competitive position. Low interest rates have undoubtedly helped in reducing arrears and just six properties were in possession at the year end.
"As always, our future plans are framed to meet the needs and aspirations of our members, both current and future. In an increasingly uncertain world, the demand for financial products and services, from a trusted source, will continue to grow. As a building society with a reputation for fair play and integrity, the Coventry is particularly well placed to build on the strong platform we have constructed over the past few years to meet these demands. I am sure we can look forward to the future with confidence."
