Time is right for mutual-assured expansion – chief (From Bradford Telegraph and Argus)

Skipton Building Society reveals 94 per cent profit rise

9:00am Wednesday 23rd February 2011 in Business By Chris Holland

Skipton Building Society is preparing for future growth in a financial market which is still recoiling from the exploits of barmy bankers.

David Cutter, chief executive of Skipton Group, which has unveiled a 94 per cent surge in operating profits for 2010, believes mutuals – which are owned by their customers and not external shareholders – have a “rare opportunity” to meet people’s needs as distrust of banks remains strong While ministers have expressed a desire to see more diversity in financial services and some MPs are backing calls to re-mutualise the nationalised former building society turned failed bank Northern Rock, Bradford-born Mr Cutter said the climate offered “tremendous opportunities” for go-ahead mutuals.

He said: “It is widely recognised that mutuals like ourselves face a rare opportunity to meet consumers’ desire for greater competition, diversity and alternative solutions in financial services, in this immediate post-credit crunch environment.

“Consequently, we believe we are in a key phase of our history and are seizing the opportunity to commence a business transformation programme, focusing on everything from systems capability to the kinds of products and services we offer.”

Skipton Group raised profits from £18 million to £35 million as well as increasing its capital strength.

The building society, which merged with the Chesham, the UK’s oldest, raised the level of funding from savings to 82 per cent from 79 per cent previously.

Group lending rose by 18 per cent to £481 million compared with £407 million in 2009.

Skipton’s estate agency Connells contributed profits of £48 million in spite of the challenging housing market.

The society also cut arrears and possessions, resulting in a reduced charge for impairment losses of £15 million compared with £44 million in 2009.

As well as new products, including telephone and online accounts, the group expanded through 13 new building society sub-branches in its estate agencies.

Mr Cutter said: “Despite continued the impact of Government austerity measures on our still-fragile economy, the society has continued to underline its financial strength through prudent, cautious management coupled with a strategy to now grow the business while maintaining appropriate levels of capital and liquidity.

“We’ve held our margin steady at a low enough rate to give great value to members whilst being high enough to operate the business in a prudent manner.”