Nottingham Building Society Nottingham Building Society Final Results (5889X)
23 Fevereiro 2017 - 4:30AM
UK Regulatory
TIDMNOTP
RNS Number : 5889X
Nottingham Building Society
23 February 2017
Nottingham Building Society
Results for the year ended 31 December 2016
Nottingham Building Society has today announced
its results for the year ended 31 December 2016.
Below are some of the key achievements and financial
highlights of 2016:
* Strong retail franchise growth - total branch savings
balances of GBP2bn, up 9% in the year and more than
doubled in the last five years;
* The Society has opened seven new branch locations in
2016 and welcomed 24,000 new customers;
* Achieved a Customer Net Promoter Score of 78%; up
from 74% in 2015;
* Gross mortgage lending of GBP798m, a record for
lending in one year;
* Redemption levels reduced by 3% in the year,
resulting in mortgage book growth of 8% overall;
* Total assets of GBP3.6billion;
* Net interest margin at 1.32%;
* Group pre-tax profit of GBP14.2m; down 29% in the
year as the Society consciously protected savers from
the full reduction in bank base rate in August;
* Arrears levels remain very low, below a quarter of
the industry average (2016: 0.16% v Industry at
average of 1.00%); representing 38 accounts out of a
total mortgage base of over 24,000 accounts; and
* Strong capital ratios with Common Equity Tier 1 at
14.7% and leverage of 4.6%.
Commenting David Marlow, Chief Executive said:
"2016 has been a year of twists and turns with
a number of unexpected outcomes in the UK and
globally; however, despite this, we at The Nottingham
have continued to focus on developing our strategy
to deliver a unique brand of advice, choice,
service and value 'all under one roof', which
continues to be well received by members across
our heartland.
We have worked hard in recent years to develop
services and products that are relevant to, and
valued by our members and customers, whether
they are looking to save for the future, search
the market for the most appropriate mortgage,
rent, buy, or sell a home, or plan and protect
their families' future.
As I have said consistently, our responsibility
is to differentiate ourselves against the big
banks using our mutual ethos to deliver a proposition
and service that is valued by our members and
is also attractive to potential new ones. One
area that truly marks us apart from the big banks
today is our approach to branches. As the UK
continues to see large scale closures - the UK's
largest bank reduced its branch network by 25%
in 2016 alone, we have continued to open new
branches, adding 7 new locations in the year,
with great success.
Without exception, existing members and new customers
have welcomed us to our new locations where in
the past 4 years we have already built savings
balances of more than GBP300m. However it is
not just our new locations that have proved so
popular with customers; over the same five year
period our total branch balances have more than
doubled from GBP946m at the beginning of 2012
to reach GBP2bn for the first time in 2016.
We believe that this is clear evidence that the
role of branches remains important in the eyes
of UK consumers and that new customers are attracted
to our unique advice and service mutual proposition."
Serving our Customers
* Our branches remain our focal point where our unique
'all under one roof' proposition is best experienced
by our customers. Unlike most banks and many building
societies, we have yet again increased the size of
the network this year. In 2016 we have opened in a
further seven new locations in Belper, Burton upon
Trent, Buxton, Scunthorpe, Uttoxeter and two in
Sheffield. In fact since the beginning of 2012, we
have increased the number of branches we have from 32
to 61, almost double;
* Due to the success of our branch network and
excellent mortgage performance we have continued to
grow our membership with approximately 24,000 new
customers joining the Group in the year;
* This is further underpinned by the continuing success
of our whole-of-market mortgage advice offering; with
the number of customers using this service increasing
by a further 31% in 2016. In fact we are now helping
73% more people find the right mortgage than in 2013,
the last year we advised purely on Nottingham
Building Society mortgages, demonstrating the
popularity of our unique approach.
* We remain focussed on delivering excellent service in
all that we do; with branches and customer service
teams receiving regular personalised service ratings
and updates on how our customers rate them. Their
hard work and focus on customers' feedback and
suggestions for improvement has resulted in a further
increase in our Net Promoter Score which in 2016 has
risen a further 4 percentage points to a new high of
78%. This places us at the very top of all
organisations and sets a standard that we will need
to work hard to maintain in 2017.
* It is vital, in this ultra-low interest environment
that we maintain an incentive to save. Historically
over a 20 year cycle, a building society would
typically expect average savings rates to be
equivalent to about base rate. We believe that we are
doing all we can for savers as reflected by the fact
that our average saving rate at the end of 2016 is
more than four times base rate; that over 50% of our
current savings accounts pay a rate higher than base
rate, with some regular savings accounts offering
between eight times and twelve times base rate.
Financial performance
* Whilst we were expecting a reduction in profit in
2016, as trailed at the beginning of the year, the
Board decided in response to the base rate cut that
it was acceptable to reduce the profit made by the
Society further in 2016. We are therefore reporting a
profit before tax of GBP14.2m, a reduction of 29% on
2015. However our profit after tax ratio of 0.32% per
GBP100 assets is a strong level of profitability in
historical terms and is more than sufficient to
ensure that we can continue to grow, strengthen and
develop the Society.
* Despite this reduction in profit, which was largely
driven by a conscious reduction in net interest
income, we have maintained our cost efficiency; so
whilst our overall costs have increased in 2016
reflecting our continuing investment in people,
technology and branches, our Group management
expenses ratio has remained at the same level as 2015
at 1.12%. The Group's reported cost income ratio also
reflects the reduction in net interest income,
increasing from 64.6% to 71.4%. Notwithstanding the
increase in the year the ratio remains within the
Board's target range. Management's focus will be to
gradually reduce both of these ratios in the years
ahead as the Society continues to grow.
* In terms of mortgage lending the Society has
delivered a strong performance in line with our plan.
Gross lending of GBP798m has been achieved in the
year, an increase of 23% on 2015 and a record for the
Society in a single year. We have also processed over
GBP1bn of applications in a year for the first time
in the Society's history.
* Once again we have been very pleased with the number
of mortgage customers electing to stay with us and
take another product at the end of their term - our
central mortgage team retained over GBP500m of
business in the year for the first time, an increase
of 16%. This excellent performance resulted in our
mortgage redemptions falling by 3% in 2016. All this
meant that we exceeded GBP3bn of mortgage balances
for the first time and have increased our assets by
8% in the year.
Quality & strength
* The Society continues to maintain its very high level
of financial strength. Our leverage ratio of 4.6%
ensures that we have significantly more high quality
capital available to us than is required by
regulation, providing additional cover and strength
in the event of significant losses or unexpected
events;
* Central to the ethos of a building society is the
prudence we demonstrate when lending our members'
money to those people we believe have the willingness
and capability to repay their loan. Whilst the
overall economic conditions remain relatively benign
and interest rates low, we are very proud that at
present we only have 38 accounts three or more months
in arrears out of a total of over 24,000 accounts.
Supporting local communities
* In 2016 we have continued to support our communities
through our Doing Good Together initiative. Our
fundraising for local charities has reached GBP20,000
for over 40 causes.
* Through our Grants for Good, we donated GBP40,000 to
fund 17 local projects to increase employability and
financial education and to aid and prevent
homelessness.
* Our work with charity partners has also continued -
50 rising sports stars have benefitted from support
via our partner, SportsAid. Through Young Enterprise
we have financially supported ten local schools to
complete the Company Programme and helped to deliver
employability skills workshops to more than 500
students. Our monetary donations to Framework have
continued to support their Skills Plus programme and
we are very proud to have sponsored a number of their
fundraising initiatives.
* Our work in the community has been recognised through
two awards during the year - Nottingham Post's
'Contribution to the Community' award and Money Age's
Best Charity Partnership (SportsAid).
Summary and outlook
As we move forward we do so from firm foundations
as we seek to further grow our membership by
continuing to differentiate strongly against
the big banks. Over recent years we have consistently
invested in the infrastructure and capability
of the Society, have reviewed and renewed our
governance and risk management framework and
during the first quarter of 2017 we will move
into our newly extended head office, where we
have increased our capacity by over 50% to take
account of rising demand.
2017 will bring challenges and uncertainty and
along with the ultra-low interest rate environment
it will be essential that we focus even more
strongly on how we build and reward loyal membership
of The Nottingham, through the provision of our
unique advice and service proposition, whilst
maintaining our financial strength and strong
mutual ethos.
We have a unique business model that is becoming
increasingly popular, one that seeks to build
long-term relationships through the consistent
delivery of advice, choice, service and value.
In 2017 we expect to continue to grow the Society,
continue to invest in improving our offering
and seek to maintain our world-class level of
service. We will seek to do this whilst continuing
to effectively balance the contrasting needs
of our savings and mortgage customers, finding
further ways to deliver value to our members.
Consolidated income statement
for the year ended 31 December
2016
2016 2015
GBPm GBPm
Interest receivable and similar
income 89.3 94.6
Interest payable and similar
charges (43.7) (46.6)
--------- -------
Net interest income 45.6 48.0
Fees and commissions receivable 9.8 9.9
Fees and commissions payable (1.2) (0.5)
Other income 0.3 -
Net (losses)/gains from derivative
financial instruments (0.9) 1.2
Total net income 53.6 58.6
Administrative expenses (35.4) (33.6)
Depreciation and amortisation (3.3) (3.3)
Finance cost (0.2) (0.2)
Impairment losses on loans
and advances - (0.2)
Provisions for liabilities
- FSCS levy and other (0.4) (1.4)
(Loss)/profit on disposal
of property, plant and equipment (0.1) 0.1
Profit before tax 14.2 20.0
Tax expense (3.2) (4.6)
--------- -------
Profit for the financial year 11.0 15.4
--------- -------
Consolidated statement of
comprehensive income
for the year ended 31 December
2016
2016 2015
GBPm GBPm
Profit for the financial year 11.0 15.4
Items that will not be re-classified
to the income statement
Remeasurements of the net
defined benefit obligation (4.5) 0.3
Tax on items that will not
be re-classified 0.7 (0.1)
Items that may subsequently be re-classified
to the income statement
Available-for-sale reserve
Valuation gains/(losses) taken
to reserves 0.2 (0.2)
Tax on items that may subsequently (0.1) -
be re-classified
Other comprehensive expense for the (3.7) -
period net of income tax
--------- -------
Total comprehensive income
for the year 7.3 15.4
--------- -------
Consolidated statement of financial
position
as at 31 December 2016
2016 2015
GBPm GBPm
Assets
Liquid assets 527.0 491.6
Derivative financial instruments 4.7 3.8
Loans and advances to customers 3,032.6 2,796.5
Fixed and other assets 27.1 26.5
-------- --------
Total assets 3,591.4 3,318.4
-------- --------
Liabilities
Shares 2,457.4 2,433.2
Borrowings 872.0 643.0
Derivative financial instruments 19.7 9.3
Other liabilities 16.3 14.2
Subscribed capital 26.2 26.2
-------- --------
Total liabilities 3,391.6 3,125.9
Reserves
General reserves 199.5 192.3
Available-for-sale reserves 0.3 0.2
-------- --------
Total reserves and liabilities 3,591.4 3,318.4
-------- --------
Consolidated statement of General Available-for-sale Total
changes in members' interests reserve reserve
as at 31 December 2016
GBPm GBPm GBPm
Balance as at 1 January
2016 192.3 0.2 192.5
Profit for the year 11.0 - 11.0
Other comprehensive income
for the period (net of tax)
Net gains from changes
in fair value - 0.1 0.1
Remeasurement of defined
benefit obligation (3.8) - (3.8)
--------- ------------------- ------
Total comprehensive income
for the period 7.2 0.1 7.3
--------- ------------------- ------
Balance as at 31 December
2016 199.5 0.3 199.8
--------- ------------------- ------
Balance as at 1 January
2015 176.7 0.4 177.1
Profit for the year 15.4 - 15.4
Other comprehensive income
for the period (net of tax)
Net losses from changes
in fair value - (0.2) (0.2)
Remeasurement of defined
benefit obligation 0.2 - 0.2
--------- ------------------- ------
Total comprehensive income/(expense)
for the period 15.6 (0.2) 15.4
--------- ------------------- ------
Balance as at 31 December
2015 192.3 0.2 192.5
--------- ------------------- ------
Consolidated cash flow statement
for the year ended 31 December 2016
2016 2015
GBPm GBPm
Cash flows from operating activities
Profit before tax 14.2 20.0
Depreciation and amortisation 3.3 3.3
Loss/(profit) on disposal of property,
plant and equipment 0.1 (0.1)
Interest on subscribed capital 2.0 2.0
Net (gains) on disposal and amortisation
of debt securities 0.8 (0.6)
Increase in impairment of loans and
advances - 0.2
20.4 24.8
Changes in operating assets and liabilities
(Increase)/decrease in other assets (2.3) 5.4
Increase/(decrease) in other liabilities 9.0 (7.0)
(Increase)/decrease in loans and
advances to credit institutions (15.7) 6.2
Increase/(decrease) in debt securities
in issue 89.7 5.5
(Increase) in loan and advances to
customers (236.1) (78.4)
Increase/(decrease) in shares 24.2 (142.2)
Increase in borrowings 139.3 180.6
Taxation paid (3.9) (3.6)
-------- --------
24.6 (8.7)
Capital expenditure and financial
investment 1.9 61.2
Financing activities (1.9) (1.9)
-------- --------
Increase in cash and cash equivalents 24.6 50.6
Cash and cash equivalents at beginning
of year 369.2 318.6
-------- --------
Cash and cash equivalents at end
of year 393.8 369.2
-------- --------
Summary ratios
2016 2015
% %
Common Equity Tier 1 ratio 14.7 15.3
Liquid assets as a percentage of shares and borrowings 15.83 15.98
Group profit for the year as a percentage of mean total
assets 0.32 0.47
Group management expenses as a percentage of mean total
assets 1.12 1.12
Society management expenses as a percentage of mean total
assets 0.91 0.90
Society interest margin as a percentage of mean assets 1.32 1.46
Notes
* The financial information set out above, which was
approved by the Board of Directors on 22 February
2017, does not constitute accounts within the meaning
of the Building Societies Act 1986.
* The financial information for the years ended 31
December 2016 and 31 December 2015 has been extracted
from the Accounts for those years and on which the
auditors have given an unqualified opinion.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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