Major acquisition expected to further boost its market presence
Coventry Building Society has reported solid growth in its mortgage portfolio during the first half of 2024, despite challenging market conditions.
The mutual saw its mortgage balances increase by £1.1 billion, a 2.2% rise, bringing the total to £51.4 billion.
Though profit before tax fell to £159 million from £269 million in the same period last year, Coventry said the decline was anticipated following an exceptional operating environment in 2023.
The net interest margin narrowed to 1.05%, compared to 1.34% in the first half of 2023, as base rates stabilised and competition in the retail savings market intensified. Additionally, more mortgage customers have transitioned to lower-margin products.
The building society reported low mortgage arrears, with just 0.31% of mortgages more than three months in arrears, compared to 0.26% at the end of 2023. This figure remains significantly below the industry average.
Today we’ve announced a strong half year performance for the Society, where we continued to grow savings and mortgages in a disciplined way, whilst delivering outstanding value and service to our members.
— Coventry Building Society (@CoventryBS) July 31, 2024
You can read them in full here 👉 https://t.co/mFN707gbAr pic.twitter.com/J2mCDVXO2B
In June, Coventry Building Society successfully issued £665 million in Additional Tier 1 capital, further strengthening its balance sheet ahead of the planned acquisition of The Co-operative Bank. The acquisition, for which a share purchase agreement was signed in May, is expected to be completed in the first quarter of 2025. The move is expected to enhance Coventry’s presence in the mortgage and savings markets and expand its offerings into personal current accounts and business banking.
The mutual’s leverage ratio improved to 5.6%, up from 5.4% at the end of 2023, bolstered by continued profitability. The common equity tier 1 (CET 1) ratio remained robust at 28.9%, slightly down from 29.1% in the previous year, but still well above regulatory requirements.
“We have grown mortgages and savings in a market where economic uncertainty persists and continued to offer great value products and exceptional service to our members,” Steve Hughes, chief executive of Coventry Building Society, commented on the half-year results.
“The society has recorded a strong financial performance in the first half of 2024 and further enhanced our capital position. We are making good progress to complete the acquisition of The Co-operative Bank in the first quarter of 2025.”
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