Nottingham Building Society Nottingham's Half Year Results (1828M)
27 Julho 2017 - 3:30AM
UK Regulatory
TIDMNOTP
RNS Number : 1828M
Nottingham Building Society
27 July 2017
Nottingham Building Society
Results for the period ended 30 June 2017
The Nottingham is pleased to present its results
for the six months ended 30 June 2017. In what
was another period of good performance we continued
to develop our unique 'all under one roof' advice
and service proposition for members.
Key performance highlights include:
* Gross lending of GBP544m up 33% on the same period
last year and mortgage book growth of 7.1%;
* Strong retail franchise - 3.9% increase in branch
balances;
* Strong customer advocacy with a net promoter score of
78.4%;
* Net interest margin at 1.29%;
* Pre-tax profit of GBP7.6m, up 7%;
* Arrears levels remain at a historic low level; and
* Strong capital ratios with Common Equity Tier 1 ratio
of 14.4% and leverage ratio of 4.6%.
David Marlow, Chief Executive of The Nottingham,
commenting on the results said
"At the beginning of the year we undertook to
continue to grow the Society, invest in improving
our offering and service as well as look at how
we could build and reward loyal membership of
The Nottingham.
At the half year point we are pleased to report
good progress in all of these objectives. We
have continued to grow the balance sheet and
have delivered asset growth of 6.1% in the first
six months of the year.
We have achieved this whilst continuing to invest
heavily in the Society's capability both for
today and the future. Investment in our technology
infrastructure is key to both enhancing our offering
and developing our defences against the ever-increasing
threat of cyber crime. We are well advanced in
our project to house all of the Society's key
systems in state of the art dedicated data centres,
as well as announcing a partnership with globally
renowned technology and customer experience experts
Salesforce. This will enable us to provide members
with access to our unique advice and service
proposition in a manner of their choosing; seamlessly
combining phone, tablet, PC and face-to-face
advice and service in our growing branch network.
The scale of the investment required to achieve
these important improvements highlights the Society's
ambition, confidence and financial strength.
We were also delighted to launch our member rewards
programme in May. Central to our strategy is
to support and reward our loyal members for doing
the right thing to protect and plan for their
family's financial future, through providing
our unique combination of advice and service
all available under one roof.
Our member rewards programme is designed to reward
our loyal members for doing just that, through
a range of unique discounts and offers. Benefits
range from GBP500 off estate agency fees, to
discounted fees for making a will, free access
to whole-of-market mortgage advice against a
standard advice fee of GBP249 and access to enhanced
savings rates on special issues (Member Rewards
Issue 1 paying a fixed rate of 1.30%).
This is very much the beginning of an ongoing
programme to reward a growing membership for
their loyalty to The Nottingham but also rewarding
them for planning for their financial futures,
something which we believe perfectly demonstrates
our mutual ethos.
As the Group focuses on the delivery of its unique
strategy, it does so against a backdrop of good
financial performance.
This is highlighted by the continued growth of
our balance sheet driven by gross lending of
GBP544m, up 33% on the first six months of last
year. In fact we have exceeded half a billion
pounds of lending in a six month period for the
first time. This combined with continued strong
levels of existing customer retention has enabled
us to increase our mortgage assets by 7.1% in
the first half of the year.
We have also sought to continue to build and
develop our loyal savings base in branches, where
despite a record low UK savings ratio in the
first few months of 2017, our savings balances
from our 60 branches have continued to grow,
up by 3.9% over the period.
One of our principal responsibilities is to effectively
balance the conflicting needs of our savers and
borrowers, whilst maintaining sufficient surplus
to run the Society, meet our regulatory capital
requirements and continue to invest for the future.
In the face of continuing reductions in mortgage
market rates we feel we have achieved this balance
well; attracting good levels of new mortgage
lending whilst paying our savers an average rate
of 1.0% (four times base rate) and delivering
a margin of 1.29%, only a 0.03% point reduction
from the 2016 average.
Overall this has enabled us to deliver a surplus
before tax of GBP7.6m - just above what we achieved
in H1 2016. This outcome has resulted from an
overall increase in our income of 3.5% compared
to the first half of 2016, offset by a 9.8% increase
in costs, as the Society continues to invest
heavily as outlined.
The current level of profitability meets the
Board's requirements, which aligned with our
strategy and investment plans seeks to ensure
a strong, sustainable and independent future
for the Society and its membership.
Market and Outlook
As already highlighted, the current economic
and political picture remains very uncertain.
Inflation remains above 2%, whilst real wages
fall, personal indebtedness continues to increase,
and interest rates remain at ultra-low levels.
This picture overlaid with the uncertainty regarding
the potential outcome of Brexit means that we
must remain vigilant in how we manage the Society
and protect members' interests. This uncertainty
was also reflected by the Bank of England in
its latest financial stability report. We therefore
will seek to deliver a broadly consistent performance
in the second half of the year.
However, what is clear is that our members and
new customers across our heartland want to be
supported and rewarded for how they protect and
plan for their family's financial futures, by
a trusted local source. We were therefore pleased
to recently announce that following collaborative
discussions with the Yorkshire Building Society,
The Nottingham intends to open in a further seven
new locations in Bourne, Spalding, Stamford,
Huntingdon, Dereham, Fakenham and Thetford, following
the closure of the Norwich & Peterborough Society
branches in those locations. In doing so we will
be able to offer advice, choice, service and
value to the residents of those towns as well
as alternative employment opportunities for staff
being made redundant. The Nottingham believes
that this, in combination with the investment
in technology highlighted, underscores the strength
of our strategy and vibrancy of a regional building
society model to offer the residents of towns
across our heartland a strong, attractive alternative
to the big banks that will help them plan for
and protect their futures, whilst rewarding their
loyalty.
The Society remains strong with a clear strategy
for growing membership and a proposition which
is distinct and valued. Whilst headwinds and
uncertainties remain, the Board of The Nottingham
has confidence in its plans to continue to grow
the Society in a safe and secure way, through
differentiating strongly from the big banks and
continuing to support and reward our growing
membership."
David Marlow
Chief Executive
26 July 2017
Consolidated statement
of comprehensive income
for the six months ended
30 June 2017
Period Period Year ended
to 30 to 30 31 Dec
June June 2016
2017 2016
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Interest receivable and
similar income 40.9 46.2 89.3
Interest payable and similar
charges (17.0) (23.1) (43.7)
------------- ------------- -----------
Net interest income 23.9 23.1 45.6
Fees and commissions receivable 4.8 4.8 9.8
Fees and commissions payable (0.8) (0.6) (1.2)
-
Other income 0.6 - 0.3
-------------
Net gains/(losses) from
derivative financial instruments (0.6) (0.9)
-------------
Total net income 28.5 26.7 53.6
Administrative expenses (19.0) (17.3) (35.4)
Depreciation and amortisation (1.5) (1.8) (3.3)
Finance cost - - (0.2)
Impairment losses on loans - 0.1 -
and advances
Provisions for liabilities
- FSCS levy and other (0.4) (0.6) (0.4)
Loss on disposal of property,
plant and equipment - - (0.1)
Profit before tax 7.6 7.1 14.2
Tax expense (1.6) (1.6) (3.2)
------------- ------------- -----------
Profit after tax for the
financial period 6.0 5.5 11.0
------------- ------------- -----------
Other comprehensive income:
Items that will not be
re-classified to the income
statement
Remeasurement of defined
benefit obligation - - (4.5)
Tax on items that will
not be re-classified - - 0.7
Items that may subsequently
be re-classified to the
income statement
Available-for-sale reserve
Valuation (losses)/gains
taken to reserves (0.2) 0.2 0.2
Tax on items that may
subsequently be re-classified - - (0.1)
-------------
Other comprehensive (expense)/income
for the period net of
income tax (0.2) 0.2 (3.7)
------------- ------------- -----------
Total comprehensive income
for the period 5.8 5.7 7.3
------------- ------------- -----------
Consolidated statement of
financial position
as at 30 June 2017
30 June 30 June
2017 2016
(Unaudited) (Unaudited) 31 Dec
2016
(Audited)
GBPm GBPm GBPm
Assets
Liquid assets 536.1 477.3 527.0
Derivative financial instruments 5.9 4.2 4.7
Loans and advances to customers 3,239.2 2,944.4 3,032.6
Fixed and other assets 29.5 25.7 27.1
------------- ------------- ------------
Total assets 3,810.7 3,451.6 3,591.4
------------- ------------- ------------
Liabilities
Shares 2,608.3 2,568.4 2,457.4
Borrowings 940.2 616.7 872.0
Derivative financial instruments 14.7 28.7 19.7
Other liabilities 16.0 13.0 16.3
Subscribed capital 25.9 26.6 26.2
------------- ------------- ------------
Total liabilities 3,605.1 3,253.4 3,391.6
Reserves
General reserves 205.5 197.8 199.5
Available-for-sale reserves 0.1 0.4 0.3
------------- ------------- ------------
Total reserves and liabilities 3,810.7 3,451.6 3,591.4
------------- ------------- ------------
Consolidated statement of
changes in members' interests
as at 30 June 2017
Available-for-sale
General reserve
reserve Total
GBPm GBPm GBPm
Balance as at 1 January 2017
(Audited) 199.5 0.3 199.8
Profit for the period 6.0 - 6.0
Other comprehensive expense
for the period (net of tax)
Net losses from changes in
fair value - (0.2) (0.2)
---------- ------------------- --------
Total other comprehensive
expense - (0.2) (0.2)
---------- ------------------- --------
Total comprehensive income/(expense)
for the period 6.0 (0.2) 5.8
---------- ------------------- --------
Balance as at 30 June 2017
(Unaudited) 205.5 0.1 205.6
---------- ------------------- --------
Balance as at 1 January 2016
(Audited) 192.3 0.2 192.5
Profit for the period 5.5 - 5.5
Other comprehensive income
for the period (net of tax)
Net gains from changes in
fair value - 0.2 0.2
Total other comprehensive
income - 0.2 0.2
---------- ------------------- --------
Total comprehensive income
for the period 5.5 0.2 5.7
---------- ------------------- --------
Balance as at 30 June 2016
(Unaudited) 197.8 0.4 198.2
---------- ------------------- --------
Balance as at 1 January 2016
(Audited) 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 other comprehensive
(expense)/income (3.8) 0.1 (3.7)
---------- ------------------- --------
Total comprehensive income
for the period 7.2 0.1 7.3
---------- ------------------- --------
Balance as at 31 December
2016 (Audited) 199.5 0.3 199.8
---------- ------------------- --------
Consolidated cash flow statement
for the period ended 30 June
2017
30 June 30 June 31 Dec
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Cash flows from operating
activities
Profit before tax 7.6 7.1 14.2
Depreciation and amortisation 1.5 1.8 3.3
Loss on disposal of property,
plant and equipment - - 0.1
Interest on subscribed capital 1.0 1.0 2.0
Net gains on disposal and
amortisation of debt securities 0.3 (0.4) 0.8
(Decrease)/increase in impairment - (0.1) -
of loans and advances
-------------
10.4 9.4 20.4
Changes in operating assets
and liabilities
Increase in other assets (1.7) (0.8) (2.3)
(Decrease)/increase in other
liabilities (6.0) 19.8 9.0
Increase in loans and advances
to credit institutions (1.1) (20.7) (15.7)
(Decrease)/increase in debt
securities in issue (17.0) (1.0) 89.7
Increase in loan and advances
to customers (206.6) (147.8) (236.1)
Increase in shares 150.9 135.2 24.2
Increase/(decrease) in borrowings 85.2 (25.3) 139.3
Taxation paid (1.4) (2.1) (3.9)
------------- ------------- -----------
12.7 (33.3) 24.6
Capital expenditure and financial
investment 2.1 (9.1) 1.9
Financing activities (1.0) (1.0) (1.9)
------------- ------------- -----------
Increase/(decrease) in cash
and cash equivalents 13.8 (43.4) 24.6
Cash and cash equivalents
at beginning of year 393.8 369.2 369.2
------------- ------------- -----------
Cash and cash equivalents
at end of year 407.6 325.8 393.8
------------- ------------- -----------
Summary ratios
30 June 30 June 31 Dec
2017 2016 2016
% % %
Common Equity Tier 1 capital
ratio 14.4 15.2 14.7
Liquid assets as a percentage
of shares and borrowings 15.11 14.99 15.83
Group profit for the year
as a percentage of mean total
assets 0.32 0.32 0.32
Group management expenses
as a percentage of mean total
assets 1.11 1.13 1.12
Group interest margin as a
percentage of mean assets 1.29 1.36 1.32
Notes
* The financial information set out above, which was
approved by the Board of Directors on 26 July 2017,
does not constitute accounts within the meaning of
the Building Societies Act 1986.
* The financial information for the year ended 31
December 2016 has been extracted from the Accounts
for the year 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
IR EADXKADXXEFF
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