Newcastle reports strong results

Other key highlights of the results are:

· 14.4% year-on-year increase in assets.

· 100 new jobs created in the first half of the year.

· Strong growth in other income generating activities.

Commenting on the results, chief executive Colin Seccombe said: "I am very pleased to report that we have seen a marked improvement in the performance of the Society, as compared to the corresponding period last year, with operating profits having increased by 91.8%, from £4.9 million to £9.4 million."

Newcastle said there were several reasons for this upturn:

• It has concentrated on improving its interest margin through changing the mix of its lending, in a risk-controlled manner, and by also refocusing on generating retail funding. As a consequence, the reported net interest margin has improved from 80p at 30 June 2006 to 96p at 30 June 2007.
• It has benefited from the merger with the Universal Building Society, effective on 31 December 2006, through cost savings and increased financial services income.
• Other income generation has been strong as the benefits of its new partnership with Legal & General on general insurance begin to emerge; and the growth in financial advice consultants has resulted in a notable improvement in the performance of our financial services subsidiary.
• Its outsourced savings management offering to third parties is developing well with funds under administration increasing from £6 billion at the end of 2006 to almost £10 billion at this half-year end.
• On prepaid cards, it now operates the most Mastercard approved card programmes in the UK and were awarded ‘Best Multi-Channel Marketing Programme’ at their recent European conference.

Seccombe said: "With this progress has come job creation. There were no redundancies as a result of the merger with the Universal, and the Society also created an additional 100 new jobs in the first half of 2007.

"What is more, I am further encouraged by events since the end of June – our net lending for July was strong, we have launched another savings management contract, commenced development work on our first major mortgage processing contract and we have benefited still further from our relationship with BMW Financial Services.

"I am especially pleased that this improvement in performance is so broadly based across the whole of our business rather than resulting from exceptional performance in one particular area."