Skipton profit soars to £272m; balances at £20bn

Skipton Building Society announced that its 2021 profit before tax increased 129% to £271.8 million as it grew its membership to more than 1 million customers.

The UK’s fourth-largest building society said its savings balances rose by more than £1 billion to £19.8 billion.

Skipton’s Connells business completed the acquisition of Countrywide plc during the year, creating the UK’s largest estate agency.

The combined Connells group delivered dividends totalling £60 million to the mutually-owned Society and has already repaid £124.8 million of the £253 million which was lent to Connells as part of the acquisition deal.

Connells profit before tax increased by £59.5 million to £111.3 million.

“The strong housing market, supported by low interest rates and competitive mortgage products, boosted by Stamp Duty Land Tax (SDLT) relief, has driven increased sales across the enlarged Connells group, and led to record mortgage completions by the Society in excess of £5bn, including record lending to first time buyers,” said Skipton.

“This robust performance has seen Skipton achieve a mortgage portfolio of over £23bn …”

Skipton provided 30,282 mortgages in the year, including 7,893 to first time buyers.

However, Skipton said in its outlook: “Money markets are predicting further increases in Bank Base Rate, but strong competition in the mortgage market is expected to remain, putting pressure on interest margins.

“And while late 2020 / early 2021 saw strong housing market activity, supported by low interest rates and competitive mortgage products, it remains difficult for many first time buyers to get on the housing ladder.

“The housing market will likely moderate during 2022, and with Skipton’s end-to-end view of this market, thanks to the Society owning the UK’s largest estate agency network, it plans to do more to help people get the keys to their first home.

“The Society understands its customers’ concerns over rising costs of living, potential tax increases, together with uncertainty over how best to save for their and their family’s future.

“Skipton is well placed to respond to these challenges, by investing in the services it offers, how it offers them, and in its diverse and talented workforce – where providing the human touch to navigate such complexities matters to so many.

“The Society anticipates the current strong competition in the mortgage market to continue for the foreseeable future due to the major lenders holding very high levels of liquidity.

“At the time of writing, the Society is also alert to the increasing geopolitical uncertainty created by the events in Ukraine.

“However, Skipton’s financial strength, diversified portfolio of businesses, and focus on exceptional customer and colleague experiences puts it in a strong position to navigate the opportunities and challenges that lie ahead.”

Skipton’s outgoing group chief executive David Cutter said: “It’s incredibly pleasing to report these record profits.

“Today’s results are testament to the strength of the Skipton Group business model, high colleague engagement, a strong culture, and our ability to move at pace in spotting and seizing opportunities for the benefit of our customers and our purpose-driven organisation.

“Coupled with this has been growing economic confidence, together with an incredibly hot housing market during late 2020 into 2021.

“Today’s results present a significant improvement from 12 months ago, when despite reporting good profits, our results were a clear indication of the challenging times the UK faced in the midst of a global pandemic.

“As a building society, our consistency in always making decisions based on the long-term best interests of the business and our members, not shareholders, has seen us successfully prepare for and navigate those challenges.

“And it’s exciting that we can utilise these profits to invest in activities that align to our ambitions and further strengthen experiences for both customers and our colleagues.

“2021 was a remarkable year for Skipton as all of our people continued to support our customers at the moments that matter, regardless of what the ongoing pandemic threw at everyone.

“And while the UK adjusts to a post-pandemic future, with new social norms and consumer behaviours, our purpose remains the same – helping people have a home, save for their life ahead, and supporting their long-term financial wellbeing.”