Announcing Skipton Building Society’s annual results for 2006 today, chief executive John Goodfellow said: “As well as having an impressive year for growth, many other financial records, including mortgage lending and retail inflows, were broken in 2006. However, success has not been solely the preserve of the Society: the Skipton Group, with its 17 subsidiary companies, has also achieved some outstanding results.”
Financial highlights include:
At 31 December 2006
• Group assets up 15.0 per cent to £10.5bn
• Group pre-tax profit up 62.0 per cent to £147.7m (including a one-off gain of £15.7m)
• Group interest rate margin 1.02 per cent (2005: 1.08 per cent)
• Society assets up 14.6 per cent to £10.1bn
• Society pre-tax profit up 63.1 per cent to £91.0m
• Society interest rate margin 0.72 per cent (2005: 0.74 per cent)
• Society Management Expenses Ratio down from 60p to 57p per £100 assets
Year-on-year
• Group mortgage balances grew by 14.2 per cent
• Group retail investment balances grew by 17.5 per cent
Speaking about the Society’s performance, John commented, “The business has seen growth in all of its core areas; during 2006, retail balances grew by £914 million, ending the year at £6.1 billion. Particularly popular with savers was the Branch Access account, which appeared in 258 best buy tables in the national press. In addition, our range of one, two and three-year Pick ‘N’ Fix bonds, which offer savers a competitive, guaranteed rate of return continue to attract significant levels of funding.
“With regard to borrowers, rising interest rates have been fuelling speculation that repossession figures are set to rise. At Skipton, however, prudent lending – with applications assessed individually on their affordability merits – means this is not an issue; at 31 December 2006, the Society had only six properties in possession from a population of 73,000 loans.
“2006 has been another record year for Skipton’s lending, with 26,500 loan applications leading to advances to borrowers of over £2 billion – an increase of 21 per cent on 2005 – demonstrating the Society’s success in attracting new members and customers. With regard to commercial lending, £129 million of true commercial loans were completed in 2006, bringing the value of the commercial book to £364 million – an important part of the business.
“Underpinning all this is a residential Standard Variable Rate (SVR) which, currently at 6.64 per cent (after the January base rate increase), remains the lowest of any top 10 building society, ensuring that all borrowers coming to the end of their product life continue to be treated fairly.
“Looking to 2007, the challenge is to ensure that we treat both savers and borrowers fairly, whatever happens to the Bank of England’s base rate.”
Regarding the Skipton Group, John said, “Core areas such as savings and mortgages remain at the heart of the Group, illustrated by the fact that mortgage origination through the Society, Amber Homeloans, Pink Home Loans, Skipton Guernsey and the Connells Group totalled £11.5 billion last year.
“Mirroring the success of the Society, the Skipton Group has had a phenomenal year financially, with key achievements being the increase in its assets to £10.5 billion and the increase in pre-tax profits as a percentage of mean assets from 1.05 per cent to 1.50 per cent.
”Also, the Group grew in number with a new subsidiary joining in July – Sterling International Brokers – which provides a money broking service to banks, building societies, local authorities, public sector and commercial firms and has proven a very good fit within the Group. A number of our existing subsidiaries also strengthened their businesses during the year with acquisitions of their own.
“Some achievements of note from other subsidiaries include the continued domination of the mortgage servicing sector by Homeloan Management (which increased the value of the mortgage assets it manages by £9 billion to £42.7 billion) and the growth of the Connells estate agency group, including the Sequence brand and Sharman Quinney, which saw operating profits rise to over £70 million.
“Overall, Skipton has proven, time and again, that it is a formidable and innovative building society, with its strategy of diversification via the Group providing strength – whatever the economic climate. An added advantage is that considerable profits are channelled back into the business, as demonstrated by the payment of dividends of £61.1 million from the subsidiaries to the Society during the year. With the enthusiasm and dedication of our staff, I anticipate that 2007 will produce another strong result and that Skipton will remain the envy of its peers as the most profitable mutual in the sector.”
