Strong residential lending defies market slowdown, but profits dip amid margin pressure
Coventry Building Society reported growth in mortgage and savings balances in 2024, despite a decline in profits from the previous year.
The lender’s mortgage balances increased by £1.5 billion (3%) to £51.8 billion, despite a low-growth market. Residential lending rose by 4.8%, outperforming the wider sector, while its buy-to-let portfolio remained steady. Gross mortgage advances reached £6.7 billion, slightly below the previous year, supported by higher retention levels.
Savings balances grew by £1.8 billion (3.7%) to £49.3 billion. The society attributed this to offering competitive rates, particularly to first-time buyers, and paying a record £401 million premium to members, up from £342 million in the prior year.
Statutory profit before tax stood at £323 million, down from £474 million in 2023, which the society said was expected following an exceptional operating environment the previous year. Net interest margin declined to 1.07% from 1.26%, reflecting mortgage and savings repricing and base rate movements. Excluding £25.8 million in acquisition and integration costs, underlying profit before tax was £349 million, the mutual’s 2024 financial results showed.
The proportion of mortgages in arrears of more than three months remained low at 0.33%, compared to 0.26% in 2023. The leverage ratio rose to 5.7% (from 5.4%), with the Common Equity Tier 1 (CET1) ratio at 28.0%, maintaining a strong capital position ahead of the Co-operative Bank acquisition, which was finalised on January 1, 2025.
The acquisition resulted in a gain of £603 million, as the fair value of the bank’s net assets exceeded the purchase price. The deal expands Coventry’s presence in the mortgage and savings market while adding personal current accounts and business banking to its portfolio.
Steve Hughes (pictured), chief executive of Coventry Building Society, said the results reflect a “balanced and disciplined” approach to growth while maintaining strong financial performance.
“We remain absolutely focused on delivering the right outcomes for our members and customers as we continue our journey of building a brilliant, purpose-led organisation that will stand out in UK financial services,” Hughes said.
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