Announcing its annual results for the year to November 30 2011, Hinckley & Rugby Building Society said mortgage advances totalled £77 million, up from £35 million in the previous 12 months – a rise of 120 per cent.
Mortgage applications also more than doubled, up from £48 million in 2010 to £90 million in the past year. That rise meant the pipeline of business carried forward into 2012 was £28 million, compared to £15 million a year before.
Hinckley & Rugby Buiding Society has remained profitable against a backdrop of heightened tension in financial funding markets and a squeeze in household incomes and consumer spending, said chief executive Chris White:
“These factors affecting the supply of money and people’s appetite for taking major financial decisions such as house purchase meant activity in the wider mortgage market has been very subdued,” said Chris.
“However, the Society has grown market share by prime residential mortgage lending, principally funded from the retail markets. There has been an increase in the net interest margin and in total income, plus improved capital ratios with careful management of costs.”
The mortgage lending included a modest amount of buy to let business at low loan-to-value (LTV) ratios. At the year-end buy to let mortgages totalled six per cent of the Society’s total mortgage book. First time buyers have also been attracted, as the Society advanced residential loans at up to 90 per cent LTV. All lending in excess of 80 per cent LTV is backed by mortgage indemnity insurance, at the Society’s cost.
The Society’s 146th annual report and accounts show a small reduction in the size of its savings balances and total mortgage book (£423 million, down from £429 million). Chris White said:
“This reflects the wider trend of borrowers paying down their debts as the number of transactions remains stagnant.”
Arrears remain negligible, with just one case of a borrower in arrears for 12 months or more – the same position as at the end of 2010.
Administrative expenses, before exceptional items, were maintained at 2010’s total of £4.5 million – a level last seen in the 1990s. That is despite an increase in staff numbers as the Society processed the much larger volumes of business.
Chairman Nigel Frostick said:
“The Society’s administrative costs remain amongst the lowest for any building society of its size, but not at the expense of customer service. Our customer satisfaction surveys continue to produce tremendous results. The message keeps coming through loud and clear that customers dislike call centres and the anonymity of the larger banks and building societies.”
Pre-tax profit at the Society, which as a mutual pays no dividend, was £73,000 for 2011, down from £164,000 in 2010. As a mutual, the maximisation of profits is not paramount. Interest margin – the net interest receivable as a percentage of mean total assets – increased from 0.52 per cent to 0.68 per cent.
“Market conditions will remain challenging in 2012 and beyond,” said Nigel Frostick. “In particular, the low interest rate environment will continue to depress profit margins. However, we are confident the Society’s high quality balance sheet and robust capital ratios will continue to underpin its financial strength and place it is a strong position to trade through these conditions.”
The Society is holding its AGM at 10am on March 21 at its head office on Upper Bond Street, Hinckley. Members’ votes will raise money for the Rainbows Children’s Hospice – for each postal vote the Society will donate 20 pence and for each online vote 40 pence.
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