Leeds reports £20bn assets, ‘robust’ £80m profit

Leeds Building Society CEO Richard Fearon

Leeds Building Society said on Friday it made profit before tax of £80.7 million in 2020 compared to £88 million in 2019 in a “robust” performance that enabled the mutual to further increase its capital and reserves to £1.35 billion from £1.3 billion in 2019, well above the regulatory requirement.

The UK’s fifth-largest mutual had assets of £20.6 billion at December 31, 2020, compared to £20.8 billion a year earlier.

“The Society began the year with very strong liquidity and, in navigating a cautious and steady course through the pandemic, chose to reduce excess liquidity while retaining a secure position well above regulatory requirements,” said Leeds.

“Having tempered levels of growth and tightened risk appetite, appropriate provision charges (£14.6m; £2.8m 2019) were made to reflect tougher economic conditions ahead.

“It also booked a fair value measurement reduction of £16.8m (£19.7m 2019) against its legacy equity release portfolio and other mortgage assets, due to continued market rate volatility …

“A robust housing market recovery in H2, combined with low cost of funds, had a positive impact on net interest margin and the Society stuck to its successful strategy to meet the needs of customers less well- served by the wider market, whether later life borrowers, affordable housing purchasers or first time buyers, 8,000 of whom it helped onto the property ladder in 2020 …

“Market savings rates continued to deteriorate in 2020, as two Bank of England cuts took base rate to a new historic low and external economic factors exacerbated market volatility.

“Leeds Building Society worked hard all year to keep its variable rates as high as possible for as long as possible and continued to pay above the market average – using the most recent data, this equates to an annual benefit to its savings members of almost £83 million …”

Leeds Building Society CEO Richard Fearon said: “The strength and security of our business was the foundation we could build on to respond to the immediate pressures the pandemic caused, while retaining our longer term view and continuing progress towards our strategic goals.”