Newcastle Building Society has announced its financial results for the first half of 2024, reporting continued good progress in its strategic delivery with increased Operating Profit before impairments of £20.1m [HY 2023: £17.9m], whilst underlining its commitment to Purpose and support for members and communities.
Mortgage lending continued to perform well over the first six months of the year, with the Society receiving record levels of mortgage applications totalling more than £1bn, whilst supporting more than 2,000 First Time Buyers onto the property ladder.
2024 Half Year highlights
[Note: financial results quoted are for the half-year to 30 June 2024 (and equivalent period in 2023, unless stated as Year End)]
- Increased Operating Profit before impairments of £20.1m [HY 2023: £17.9m]
- Underlying Profit of £15.6m [HY 2023: £15.0m]
- Profit before tax of £0.2m [HY 2023: £16.3m] reflecting the impact of decisions taken by the Society to offer voluntary financial support to members who are former customers of The Will Writing Company and have been impacted by the actions of Philips Trust Corporation.
- 12% growth in savings balances to £5.3bn [YE 2023: 5.0bn]
- Value for savers offering an average savings rate of 3.83% across the first five months of the year, which was 0.49% better than the market average, equating to £9.8m more interest for Members over the same period [source: CACI’s CSDB Stock Jan 24 – May 24]
- Gross residential lending of £584m (HY 2023: £660m), including support for more than 2,000 first time buyers.
- Value for borrowers with a Standard Variable Rate (SVR) for mortgages at the end of June of 6.94% against a market average of 8.18%, saving SVR borrowers around £1.4m in interest payments over the first half of 2024.
- Ongoing investment in infrastructure including technology renewal and development of the branch network.
- Opening of an innovative new community branch in North Shields, building on a long-term partnership with YMCA North Tyneside.
- Overall customer satisfaction of 91% (YE 2023: 95%)
- More than 685 days of colleague volunteering, supporting local good causes aligned to strategic community priorities.
The Society continued to provide good value for borrowers with a Standard Variable Rate (SVR) for mortgages at the end of June of 6.94% against a market average of 8.18%, saving its SVR borrowers around £1.4m in interest payments over the first half of 2024.
In a competitive interest rate environment, the Society also continued to offer good value to savers with an average savings rate of 3.83% across the first five months of the year, which was 0.49% better than the market average, equating to £9.8m more interest for Members over the same period.
Total savings balances grew by 12% to £5.3bn [HY 2023: £5.0bn] and membership numbers increased to more than 371,000, whilst the Society achieved an overall customer satisfaction score of 91% during the first six months of the year.
Reflecting the impact of decisions the Society took to offer voluntary support to members who are former customers of The Will Writing Company and have been impacted by the actions of Philips Trust Corporation, Profit before Tax for the Group was £0.2m [HY 2023: £16.3m], whilst Underlying Profit for the first half of 2024 was £15.6m [HY 2023: £15.0m].
Andrew Haigh, chief executive officer at Newcastle Building Society, said: “Events leading to the problems that customers have experienced as a result of the actions of Philips Trust Corporation are complex, the detail of which has only become clear over a long period. As that detail has emerged, we have been very concerned by, and sympathetic to, the difficult situation faced by members who have been affected by Philips Trust Corporation.
“Our members understand our commitment to Purpose and our support for the communities we serve. Therefore, with a strong underlying performance, although there was no obligation to do so, the Society chose to offer voluntary financial support to those members who were impacted.”
The Society has taken steps to further advance its commitment to high streets and the future of accessible, branch-based services and financial advice. A multi-year, multi-million-pound investment in its branch network saw the of opening an innovative new community branch in North Shields, extending a long-standing partnership with YMCA North Tyneside, and continued work on its new flagship branch in Newcastle city centre.
"Purpose is the starting point for everything we do as an organisation. As a mutual, our principal stakeholders are our Members and it is therefore important that we understand the multiple ways in which we create value on their behalf."
Andrew Haigh added: "Purpose is the starting point for everything we do as an organisation. As a mutual, our principal stakeholders are our Members and it is therefore important that we understand the multiple ways in which we create value on their behalf. Growth in membership is just one of the signs that more and more people are recognising the value that comes from being part of the mutual movement and choosing long term value and sustainability for their communities."
“The rate of bank branch closures across the UK continues to cause alarm, but we continue to buck that trend through our commitment to the provision of accessible face-to-face services and advice, and our ongoing investment in our branch network. We believe our flexible, innovative approach in adapting the size and configuration of branches based on what each community needs is one that creates a new foundation for the future of branches and can be replicated for long term success.
In 2024, the Society’s subsidiary Newcastle Strategic Solutions Limited, is marking 20 years of managing savings accounts for providers across the UK. Continued success in the first half of the year means the Solutions business now manages savings balances in excess of £50bn for 16 different banks and building societies, playing an important role in generating additional income for the wider organisation and the long term benefit of Members.
Andrew Haigh added: “We’ve made strong progress in our combined ambitions for growth and investment in the Society. At the heart of all that we do is our Purpose; ‘connecting our communities with a better financial future’ and delivering value for members. I’m looking forward to continuing that good progress in the months ahead.”
Read the full Stock Exchange Announcement – Half Year Results 2024 (PDF).