The UK’s fifth-largest building society delivered net mortgage lending of almost £1 billion, a rise of 6% on 2018. This helped it to grow its total mortgage balances at almost twice the rate of the rest of the market, which is 3.1%. Gross lending was £3.5 billion.
Richard Fearon, who completed his first year as chief executive officer, said: “We are very pleased with the year we have had in what has been a challenging market, particularly growing our net lending at 6% – twice the market rate.
“We have been moving into new segments such as retirement interest-only mortgages. We have hit our planned target for RIOs and have a leading position in that market; perhaps we had a first mover advantage, but I think the RIO market will increase.”
Leeds paid an average of 1.38% to savers in 2019 compared to the rest of market average of 0.75%, which equates to an annual benefit to savers of £88.5 million. Savings balances increased by 4% to £14.5 billion.
Profit before tax was £88 million in 2019 compared with £116.9 million in 2018, a reduction primarily due to a fair value charge of £19.7 million under international accounting rules.
This is an accounting adjustment under International Financial Reporting Standards (IFRS), which will typically unwind in future as mortgages mature and includes a legacy equity release portfolio that Leeds acquired 15 years ago.
Fearon said: “A reduction in our profit before tax was anticipated and, while we expect profits in the short to medium term to remain at lower levels than in recent years, they’ll be at the right level to support planned, sustainable growth, and add to our reserves.”
Leeds has made significant progress on its future-proofing investment programme – upgrading IT systems and fitting out its new head office in central Leeds – progressing to plan and on budget.
The new head office will offer substantial environmental benefits and flexible space and will be ready to move into in the second quarter of 2021.
The IT improvements include a new mortgage platform to be phased in from the second half of 2020. This Mortgage Hub, which is powered by Iress, will simplify the application process end-to-end, saving the society‘s intermediary partners time and effort, and enabling borrowers to be in their homes sooner.
