New CEO as Leeds Building Society assets top £19bn

Richard Fearon

Leeds Building Society on Friday announced results for the first half of 2018, saying its total assets increased to £19.5 billion, up 13% since June 2017, “reflecting lending growth and higher liquidity.”

The UK’s fifth largest building society also announced that chief executive officer Peter Hill will retire in February 2019.

Subject to regulatory approval, Hill will hand over the CEO role to Richard Fearon, currently the society’s chief commercial officer. Fearon becomes Deputy CEO with immediate effect.

Profit before tax for the six months to June 2018 was £60.1 million, down from £63.2 million at the same stage last year after a one-off charge of £6.9 million resulting from the decision to dispose of the society’s Irish mortgages.

New residential mortgage lending in the period was £1.8 billion,  down from £2.1 billion to June 2017.

Leeds attracted 42,000 new savers, increasing its retail savings balances to £13.9 billion from £12.5 billion in June last year.

Leeds’ membership now stands at more than 809,000, up from 778,000 in June 2017 and the highest in the society’s history.

Hill said: “Our strategy to deliver sustainable growth and service improvements is focused on the long term benefits to all our members, whether borrowers or savers.

“We believe our success in attracting thousands more members is testament to this approach. In a competitive market and uncertain economic climate, they see the value in our products, services and our status as a member-owned business which is here for them for life …

“Refining and enhancing our lending criteria and processes complements our product offering to attract more borrowers, which has helped drive growth in line with our strategy. Net lending in the first half of 2018 was £0.5bn (June 2017: £1bn) …

“We’re proud of our financial strength and independence as a building society and, in addition to delivering sustainable growth, we need to maintain appropriate levels of capital and reserves.

“Receiving IRB permission is welcome recognition of the quality of our robust approach to managing and understanding risk.

“Our borrowers and mortgage brokers have already seen benefits – working towards obtaining permission helped us to cut the time taken to process mortgage applications, so borrowers can be in their homes sooner.

“IRB is an assurance to external organisations, including ratings agencies, and we retain strong investment grade long term credit ratings from Moody’s and Fitch of A3 and A- respectively.

“This also means our CET 1 ratio has risen to 29.5% and total capital ratio is 36.3%.

“Our residential arrears have fallen further to 0.63% (June 2017: 0.84%).

“Selling our Irish mortgages allows us to focus on our core domestic market. While a write down on the transfer has reduced our pre-tax profits for the first half of this year, it helps us consolidate our position as one of the strongest and most progressive mid-tier mortgage lenders.”