Operating profit up 29%
The Cumberland Building Society has announced robust financial results, with mortgage lending increasing from £2.37 billion to £2.59 billion in the year to March 2024.
The Carlisle-based mutual, Cumbria’s largest financial institution, saw its pre-tax profit fall from £26.6 million to £9.6 million, mainly due to the unwinding of interest-rate swaps that protected the society when rates surged in 2022. However, operating profit rose by 29% to £27.4 million, while its balance sheet reached a record high of £3.2 billion.
In the building society’s annual report, chair John Hooper (pictured left) noted the challenges posed by repeated increases in the Bank of England’s base rates, which reached levels not seen since early 2008.
“That spike in rates brought relief for savers but pain for borrowers, and it dampened demand in the housing market,” he said.
As a member-owned building society, Cumberland said it prioritises member interests, raising savings rates quickly in response to rising interest rates but was slower to pass on increases to borrowers. It did not pass on the last 1% of base rate increases to its variable rate owner-occupier mortgage borrowers, and recently cut rates on fixed rate mortgages in anticipation of future rate cuts.
While continuing to invest in its technology transformation program, the mutual said technology would not replace human interaction, remaining committed to its branch network at a time when many banks are closing branches.
“We are the last financial institution standing in 16 locations throughout our region,” said Des Moore (pictured right), chief executive of Cumberland Building Society. “We’ve retained our branches because a significant number of customers prefer face-to-face contact.”
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