YORKSHIRE Building Society Group has today announced a year-on-year drop in profits.

The UK's second largest building society posted a 2016 before tax profit of £152million - down from £173million in 2015 - and a core operating profit of £128million, down from £185million in 2015.

YBS said the drop was because "the Society chose to forgo some of its potential profit in order to enhance rates offered to savers in a year when the Bank Rate reduced to an unprecedented low".

YBS chief executive Mike Regnier said: "Against the backdrop of an extremely competitive market, I am very pleased we have once again delivered robust and sustainable growth in line with our plans.

"As a mutual organisation, we’ve successfully achieved our primary responsibility of generating a sustainable level of profit and maintaining our financial security through strengthened capital, leverage and liquidity positions.

"With no external shareholders to satisfy, all of our profits are retained or reinvested to provide our members with better rates and services. This gives us flexibility to allocate resources in ways that benefit our customers. In an extraordinarily difficult market for savers, we have therefore chosen to forgo potential profits to protect savings rates as far as possible, while continuing to offer market-leading mortgages.

"I’m proud that we’ve helped first-time buyers to take their first steps on to the property ladder 6,400 times this year, and we increased gross mortgage lending overall.

“Throughout 2016, we’ve continued to invest in the business to improve the service and value we provide to our customers. This has included helping borrowers who may find it less straight-forward to access a traditional mortgage, including self-employed customers and single parents, by taking a principle-based, common-sense approach to lending.

"These improvements have also helped support our intermediary lending through Accord Mortgages, which achieved significant enhancements in service including reducing average application to offer times by five days. This has resulted in materially increased broker satisfaction.

"As a mutual organisation, it’s paramount that we are delivering good long-term value to our members, who are also our customers, while providing the services they want and need. The market is evolving, with our customers increasingly wanting to transact with us digitally, rather than branches. Last year, only 23% of our customers transacted in one of our branches.

"We’ve recently announced a number of changes which reflect our customers’ evolving needs and will ensure we continue to operate efficiently and sustainably for the future. As we realise the benefits of the initiatives we’ve put in place to improve value and service for customers we expect to see a reduction in costs.

"The uncertainty caused by Brexit has impacted confidence and makes economic forecasting for the next five to ten years even more difficult than usual. As a UK-focused business, we believe the UK’s withdrawal from the European Union should not materially affect our core mortgages and savings activities, aside from any impact on the wider economy and regulatory environment.

"We expect the market to remain increasingly competitive this year but we are in an excellent position to make the most of the opportunities presented by this environment. Our strategy is to continue to prioritise delivering good long-term value to our membership and maintaining a strong and sustainable business for the future. We will do this by focusing on our core business areas of helping people save for their futures and supporting them in buying a home of their own."