Cumberland balance sheet £3bn amid ‘strategic options’

Cumberland Building Society CEO Des Moore

Carlisle-based Cumberland Building Society said its mortgage lending increased from £2.2 billion to £2.37 billion as the society’s balance sheet topped £3 billion for the first time in the year ended March 31, 2023.

The Cumberland said its “strategic options are currently being evaluated” in order to “secure a more sustainable future for the society.”

Deposit balances also grew, from £2.44 billion to £2.61 billion, while profit before tax rose to £26.6 million.

“More than half of those profits were the result of interest rate swaps that the society took out to protect itself against a sudden and unexpected rise in interest rates,” said Cumberland.

“Operating profit also rose to £12.3m. This means, despite such an unpredictable year, the society remains safe, resilient, and is well positioned to meet future challenges.”

Cumberland chair John Hooper said: “Looking ahead, we face multiple challenges that are likely to squeeze profits over the next two or three years.

“Higher inflation, at levels we haven’t seen since the 1970s, is impacting everyone and like everyone our costs are increasing.

“There are also signs that the housing market is slowing, which will inevitably affect the level of mortgage lending.”

Cumberland CEO Des Moore said that higher interest rates presented an opportunity for the society to live up to its slogan of “kinder banking.”

Moore said: “To reassure borrowers, we’ve pledged to give those coming to the end of fixed-rate terms preferential deals on new products and we’re on hand with specialist advisers if any of our borrowers experience financial difficulty.”

The Cumberland is a specialist lender to the hospitality sector. “Lending here increased too, driven by businesses switching loans from other lenders to benefit from The Cumberland’s relationship banking model,” said Cumberland.

“Borderway Finance, the society’s specialist vehicle finance subsidiary, performed strongly contributing almost £1m to pre-tax profits.”

The society donated £205,000 to charitable causes in 2022-23.