Bradford-based Yorkshire Building Society said its balances increased by £3.6 billion to £45.6 billion in the six months to June 30, 2023, amid rising interest rates.

Statutory profit before tax for the period fell to £180.6 million from £243.4 million in the first half of 2022, while core operating profit rose to £246.4 million from £192.5 million.

“Greater returns on savings balances can go some way toward supporting consumers in an environment where financial challenges are so prevalent …” said the mutual.

“Within the savings market, the level of competition for acquiring savings balances intensified as 2023 progressed, with the market for fixed-rate products in particular driving more attractive customer rates.

“Individual Savings Accounts (ISAs) also increased in popularity this year, owing both to pricing as well as to their tax advantages as Personal Savings Allowances are exhausted at a faster rate than before.

“The Society achieved strong levels of growth in the first six months of 2023; shares balances increased by £3.6 billion to £45.6 billion in the period.

“The market disruption precipitated by the failure of a number of non-UK banking institutions had a minimal effect on our monthly savings flows.

“Our balance growth was supported by the performance of our ISA range, including the latest in our member loyalty programme: a Loyalty ISA, which offered a premium rate for our longer standing members. Our transformation investment also delivered behind-the-scenes efficiency improvements to customer journeys for ISA applications and transfers in the year.”

However, the society’s gross lending fell to £4.2 billion in the first half of the year, from £5.3 billion during the same period of 2022.

“The mortgage market in the first half of 2023 has been impacted by a number of factors, including affordability pressures, which led to periods of market volatility and an overall reduction in the level of activity compared to last year,” said Yorkshire.

“Against the backdrop of this downward trend in market activity, the Society achieved gross lending of £4.2 billion in the six months to June 2023 (2022 H1: £5.3 billion), and supported 23,000 people to have a place they can call home (2022 H1: 28,000).

“We expect conditions in our core markets, particularly that for mortgages, to remain challenging for the foreseeable future.

“This is set in the context of a likely reduction in market size compared to recent years as well as the broader economic impacts of the rising interest rate environment.”