Highlights
* Gross lending of £2.2 billion
* Net lending of £409 million
* Net savings’ balances increased by £101 million
* Growth in total assets of 5.7% to over £9.4 billion
* Interest margin narrowed to 0.95% of average assets, giving increased member benefits
* Administrative expenses ratio reduced to 0.60% of average assets — lowest of any major building society
* Profit before tax increased by 7.2% to a record £50.7 million
* Just three properties in possession - mortgage arrears significantly better than industry average
Commenting on the results, Martin Ritchley, Chief Executive said:
"Our results for 2004 represent another successful year for Coventry Building Society. In a highly competitive market, we achieved gross mortgage lending of almost £2.2 billion, the second best total in our history, as well as net lending of £409 million. Our assets grew by over £500 million to total over £9.4 billion. For the ninth successive year, we have improved our cost ratio, maintaining our position as the most cost efficient major building society in the UK. These results reinforce the Coventry’s position as, not only the fifth largest, but also one of the country’s most successful building societies."
Reviewing 2004, Martin Ritchley continues:
"Our lending has been achieved in a housing market which has lost some of its momentum, reflecting the competitiveness of our mortgage products, for which we were awarded no less than six accolades.
"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 members. Last year was no exception and the Society’s net interest margin narrowed in 2004 from 1.03% to 0.95% of average assets.
"The Coventry’s net interest margin is still one of the narrowest in the industry and the fact that the Society can operate so effectively at this level underlines the significant competitive advantage which we derive from our building society status. Quite simply, we have no dividends to pay to external shareholders, which means we can offer more competitive rates to borrowers and savers alike.
"Despite the narrower interest margin, we still achieved a record profit of £50.7 million, enabling us to improve our gross capital ratio to 6.12%. An important feature of this success was our ability to contain costs, whilst making the necessary investment to achieve compliance with mortgage and general insurance regulation. Although we achieved asset growth of almost 6%, our costs increased by only 2% - less than the rate of inflation. This means we have made savings in real terms, with our administrative expenses to average assets ratio reducing again from 0.63% to 0.60% of average assets — the ninth successive year of improvement. This maintains our position as the most cost efficient major building society. We have also maintained the quality of our mortgage book. Our arrears’ performance was already better than the industry average, but in 2004 we have improved still further, with just three properties in possession at the year end.
"Savings’ balances increased by £101 million, to a record £6,558 million. Since the year end, our innovative Family 1st Account, designed to encourage savings from families in receipt of child benefit, has achieved widespread acclaim, as well as a significant response from both new and existing customers.
"As a building society committed to putting members first, our results in 2004 reflect yet again that we have a formula to deliver commercial success. Our results provide the firm foundation upon which to grow our business for the benefit of our saving and borrowing members."
