UK Building Societies Maintain Profitability Through Last Year

UK Building Societies Maintain Profitability Through Last Year

During the past twelve months more than 90% of UK’s building societies were profitable.  Only four societies reported a loss compared with six which reported a loss last year.  The conditions remain competitive within the lending market and are favorable to stay competitive for some time.  This is based on several factors.  The base rate is expected to remain at the historically low rate of 0.5% until at least the beginning of next year.  Lending criteria remain strict, requiring clean credit and a super-sized deposit.

Nationwide lead the way for the KPMG report, with assets totaling almost 189 billion pounds in the month of April.  The society held 62% of the total assets for the sector.  Total assets had only fallen 2.5 billion pounds compared with last year.

The size of most societies’ mortgage loan books shrunk due to lending constraints this past year, as retail funding had to become a priority.  Assets for the entire sector fell almost 5% to 306.2 billion pounds.

With the memories of the Halifax and Northern Rock problems far behind the market, the recovery for most of the societies has been slow but less painful.

KPMG partner, Simon Walker, commented on the profitability of the majority of the building societies over the past year, saying: "The sector has had no taxpayer support and all but four made a profit last year.  Building societies' reputation for looking after their own problems continues, with Yorkshire and Coventry each taking over multi-billion pound troubled societies."

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