Highlights of the year
* Record gross lending of almost £2.5 billion, up 32% on 2002
* Record net lending of £863 million, up 27% on 2002
* Increase in mortgage assets of 13.3%
* Net savings receipts of £244 million
* Total assets increased to almost £9 billion
* Interest margin narrowed to 1.03% of average assets, giving increased member benefits
* Administrative expenses ratio reduced to 0.63% of average assets
* Profit before tax increased by 4.4% to £47.3 million
* Mortgage arrears less than half industry average
Commenting on the results, Martin Ritchley, Chief Executive said:
"Our results for 2003 represent another success story for Coventry Building Society. We achieved record levels of gross mortgage lending of almost £2.5 billion, as well as record net lending of £863 million. For the eighth 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 one of the country’s most successful building societies."
Reviewing 2003, Martin Ritchley continues:
"The Society’s mortgage assets grew by 13.3%, enabling total assets to reach almost £9 billion by the year end. Savings balances grew by £244 million to a record £6,457 million.
"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 our members. Last year was no exception and the Society’s net interest margin narrowed in 2003 from 1.05% to 1.03% of average assets. This has enabled us to offer even more competitive mortgage and savings products.
"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 not only the success we have achieved in managing our cost base, but also 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.
"I have repeatedly emphasised the advantage we derive from our low cost base. Despite additional expenditure invested in our distribution channels and the construction of a further administrative building, I am pleased to report a further reduction in our ratio of administrative expenses from 0.65% to 0.63% of average assets — the eighth successive year of improvement.
"Although profit maximisation is not the ambition of a building society committed to delivering member value, our pre tax profit increased by 4.4% to £47.3 million. This contributed to the Society maintaining its strong capital position; at the year end total capital exceeded £478 million representing 5.67% of share and deposit balances.
"A key feature of our success over the years has been the quality of our mortgage book. Despite the recent increases in Bank of England base rate, the level of interest rates still remains historically low, underpinning the affordability of mortgage repayments.
"Consequently, our arrears’ performance has improved still further during the year, so that arrears at the year end are well under half the industry average and there were just six properties in possession.
"By any standards, our results are impressive. They demonstrate that, as a building society committed to putting its members first, we have a winning formula which year after year is delivering commercial success. Our achievements in 2003 provide the firm foundation upon which to grow our business, for the benefit of our saving and borrowing members."
