Skipton’s group pre-tax profit in 2008 was £22.5m, down by 87 per cent on 2007’s £163.9m. It blames its £11m exposure to Icelandic banks and its £16.3m FSCS bill for the severe year-on-year profit drop.
Chief executive David Cutter says: “Whilst we acknowledge the importance of a national safety net for savers and the part it plays in giving them confidence in the UK’s financial stability, we believe it unjust that the building society sector is bearing a disproportionate cost for the troubles of some banks which had far riskier models.”
N&P reported a pre-tax profit of £5.9m, down by nearly 20 per cent on 2007’s profits, due to a FSCS levy of £5.5m.
Total income for the mutual was down 11 per cent to £74.4m, while N&P assets were up by over 15 per cent to £4,985m.Its total mortgage assets increased by 9.5 per cent to £3,522m and retail savings balances grew by 10.8 per cent to £3,126m.
At the end of the year, only 0.56 per cent of its mortgage accounts were in serious arrears.
Skipton revealed group total assets of £13.6bn, up 8.9 per cent; this was made up of mortgage assets, which were up 1.7 per cent and retail share funding of £8.1bn, which was up 12.9 per cent.
The society’s gross lending was down a third from £2.2bn to £1.3bn. Its arrears figures increased during the year to 0.38 per cent. At a group level, the figure increased from 0.41 per cent to 1.14 per cent.
Cutter says Skipton’s strong base is down to its diversity: the Skipton group includes HML, Connells and Pink and also Scarborough building society.
He adds: “Skipton has a substantial and stable retail funding base. We also have high levels of capital and liquidity, which make us strong in the current climate. However, unlike other building societies, we also have a diversified Group of subsidiary investments, which generate profits, even in this difficult economic climate.”
This said, Connells saw its operating profits plummet from £59.7m to £10.4m; Skipton says this result is a remarkable achievement in the worst housing market in living memory where property sales were down 40 per cent from 2007 volumes.
Cutter adds: “The Government’s hopes of kick-starting the lending and money markets through rate cuts and a variety of funding schemes have not yet worked. We also find it perverse that UK savers, who are the bedrock for the funding of mortgages, are being penalised to help correct the fundamental imbalances in the economy.”
N&P chief executive Matthew Bullock says: “We have sought to build an organisation with enduring values that provides a personal financial service that members can trust in these very difficult times.
“We aim to put our members at the heart of what we do and our staff tell us that ‘making a real difference to their customers’ lives’ drives what they do more than anything else.”