TIDMWBS
RNS Number : 3265Z
West Bromwich Building Society
25 May 2016
West Bromwich Building Society
Preliminary results announcement for the year ended 31 March
2016
Forward Looking Statements
Statements in this document are forward looking with respect to
plans, goals and expectations relating to the future financial
position, business performance and results of the West Brom.
Although the West Brom believes that the expectations reflected in
these forward looking statements are reasonable, we can give no
assurance that these expectations will prove to be an accurate
reflection of actual results. By their nature, all forward looking
statements involve risk and uncertainty because they relate to
future events and circumstances that are beyond the control of the
West Brom including, amongst other things, UK domestic and global
economic and business conditions, market related risks such as
fluctuation in interest rates and exchange rates,
inflation/deflation, the impact of competition, changes in customer
preferences, risks concerning borrower credit quality, delays in
implementing proposals, the timing, impact and other uncertainties
of future acquisitions or other combinations within relevant
industries, the policies and actions of regulatory authorities, the
impact of tax or other legislation and other regulations in the
jurisdictions in which the West Brom operates. As a result, the
West Brom's actual future financial condition, business performance
and results may differ materially from the plans, goals and
expectations expressed or implied in these forward looking
statements. Due to such risks and uncertainties the West Brom
cautions readers not to place undue reliance on such forward
looking statements. We undertake no obligation to update any
forward looking statements whether as a result of new information,
future events or otherwise.
WEST BROMWICH BUILDING SOCIETY
Preliminary results announcement
for the year ended 31 March 2016
The West Brom today announces its results for the financial year
ended 31 March 2016, reporting pre-tax profits of GBP13.5m and a
substantial increase in residential mortgage lending.
Key highlights include:
- A substantial increase in gross residential mortgage lending
to GBP673m representing 51% growth (2014/15: GBP446m).
- Net residential lending of GBP351m (2014/15: GBP196m).
- Savings balances grew by 10% to GBP4.4bn (2014/15: GBP4.0bn),
driven by strong growth in ISA and web-based products.
- A 9% growth in pre-tax profits to GBP13.5m (2014/15: GBP12.4m).
- Growth in total assets to GBP5.8bn (2014/15: GBP5.6bn), with
the increase in the residential mortgage book more than offsetting
the reduction in non-core commercial loan balances.
- An increase in the Group's strong Common Equity Tier 1 capital
ratio to 14.6% (2014/15: 14.4%).
- Successful relocation to new, purpose-built head office
premises at Providence Place in West Bromwich town centre, ensuring
capacity for future growth.
Jonathan Westhoff, Chief Executive, commented:
The West Brom can be very satisfied with these results, which
reflect a strong performance on all fronts.
Most notably we have delivered another year of exceptional
growth in terms of residential mortgage lending, confirming the
Society as a major player in the market. We are committed to
helping people achieve their aspirations for home ownership,
offering mortgages locally via our branch network and nationally in
England and Wales through our telephone advisers and intermediary
partners.
Our growth in lending, which has resulted in the Society
increasing total assets for the first time since the onset of the
financial crisis in 2008, has been entirely funded by an increase
in retail savings deposits.
Seeing our customers saving more is obviously a positive trend
that reflects well on the Society's proposition and choice of
products. Whilst we remain concerned at the impact ultra-low
interest rates is having on the income of many savers, we are
encouraged by and are supportive of, efforts to improve this
situation through initiatives such as the Personal Savings
Allowance and planned Lifetime ISA.
A key focus for the West Brom is customer service and
specifically giving customers a variety of methods to interact with
their Society and share feedback. We carry out regular satisfaction
surveys, with both our branch network and telephoned-based customer
services centre averaging an impressive 9 out of 10 for the
year.
Service is also one of the driving forces behind the Society's
decision to relocate to new head office premises at Providence
Place in West Bromwich, which was successfully completed last
month. It provides us with the space we need for future expansion
and has the facilities and functionality to improve operational
efficiency, thereby ensuring better overall experiences for our
customers.
With another successful year of increased mortgage lending and
sound profit performance completed, the West Brom is positioned as
a well capitalised, efficient and modern building society, built on
the traditional principles of supporting homeowners, providing a
safe home for savers and delivering excellent customer service and
satisfaction.
25 May 2016
ENQUIRIES:
The West Brom 0121 796 7785
Mark Gibbard
Group Finance & Operations Director
Chief Executive's Review
Performance
I am pleased to report another year of progress in every
respect; a strong growth in new mortgages advanced to home owners,
an increase in savings balances that funded the growth in total
mortgage balances and an increasing level of profitability which
supported a further strengthening of our capital position.
The West Brom is now positioned as a well capitalised, efficient
and modern Society, built on the traditional principles of
supporting homeowners, providing a safe home for savers and
delivering excellent customer service and satisfaction.
Profit before tax was 9% ahead of last year at GBP13.5m
(2014/15: GBP12.4m), a sound and sustainable performance.
Gross prime residential mortgage lending increased by 51% to
GBP673m (2014/15: GBP446m) and residential lending balances
increased by GBP213m (2014/15: GBP73m). This growth was funded
entirely by an increase in retail savings deposits which increased
by GBP397m (2014/15 GBP248m reduction). This meant that the
Society's total assets grew from GBP5.6bn to GBP5.8bn, the first
increase since 2008 when the Society undertook a strategic
repositioning with a focus on reducing its non-core activities,
primarily commercial lending. For the year to 31 March 2016 we have
seen a strong residential lending performance resulting in an
increase in loan balances which outstrips the reduction in
commercial loans.
Importantly, this does not mean that progress is slowing on our
carefully managed run down of the non-core commercial property
loans. Total balances outstanding reduced a further 19% in the year
to GBP0.68bn.
It is, however, satisfying to report that whilst delivering
growth, the Society has continued to improve its Common Equity Tier
1 capital ratio, the key measure of capital strength, to 14.6%
(2014/15: 14.4%).
Strategic investment
In the Spring of 2016 our Head Office and central operations
relocated to Providence Place in West Bromwich. The Society's
former High Street premises served as our home for nearly 40 years,
but had neither the physical space nor facilities to support our
aspirations for growth. Our new Head Office is considerably larger,
modern, well-equipped and has an open plan layout that supports
collaborative working between key departments, thereby improving
our operational efficiency. It represents an exciting new era for
the Society and, together with continual investment in core
infrastructure, enables us to provide members with the level of
service they deserve.
Serving our members
The core, traditional building society principle of mutuality
remains our cornerstone. As a mutual organisation, the delivery of
long-term member value informs all of our decision making.
The West Brom looks after the interests of its members by
offering prime residential mortgages for homeowners, competitive
retail savings and a range of ancillary products and services
designed to meet individual financial needs.
As I have previously reported, a rate adjustment has been
applied to certain buy to let loans in the Society's subsidiary
West Bromwich Mortgage Company Ltd. Legal proceedings have been
ongoing and following our successful defence of this challenge in
the High Court an appeal was heard in April 2016, the outcome of
which is not yet known.
The continuation of the low rate environment is generally good
news for homeowner borrowers but conversely, it is not such good
news for our savers. In 2015/16, we offered our savings members a
range of products, many of which have featured regularly in the
Best Buy tables. These are available through a variety of channels
- branch, post and online - to suit the individual customer's
preference.
Listening to our members
The West Brom is run in the interests of its members and so it
is important we provide opportunities for people to share their
views and opinions.
A regular feature in the calendar are our Members' ViewPoint
feedback events, which we host in venues located around the
Society's branch network and use to capture suggestions for how we
can improve our products and services. They also enable members to
spend time with representatives from the senior management team in
an informal environment and raise any queries or concerns.
To help monitor satisfaction levels we carry out occasional
surveys and invite members to rate our service after a transaction
in a branch or a telephone enquiry. Branches also now include
feedback facilities, where members can conveniently access a
web-based facility via their smartphone or mobile device.
The West Brom's Customer Panel continues to grow, with more than
2,000 registered users. During the year we have used the panel to
gauge members' opinions on a variety of important topics, including
taking out a mortgage and children's savings accounts. It is input
such as this that helps us to design products which are properly in
tune with members' needs.
Outlook
The Society has grown both its mortgage lending and total assets
in the year. This growth has been on the back of a sound profit
performance and increased capital, underpinning our financial
strength.
This means that we are well placed to continue with our
programme of investment in 2016/17 and we expect to see further
growth.
Looking forward, Mark Gibbard our Group Finance & Operations
Director has informed the Board of his intention to retire at the
end of the 2016/17 financial year. The recruitment of his successor
has commenced.
The progress that the Society has made in 2015/16 also means
that we can look forward to sustained profitability and further
strengthening of our capital base, giving us an optimistic outlook
notwithstanding the continued challenge of the low interest rate
environment and political uncertainties.
Jonathan Westhoff
Chief Executive
25 May 2016
Income Statement
for the year ended 31 March 2016 Group Group
2016 2015
GBPm GBPm
Interest receivable and similar income 126.7 136.9
Interest expense and similar charges (66.7) (72.2)
-------------------------------------------------- -------- --------
Net interest receivable 60.0 64.7
Fees and commissions receivable 3.7 4.2
Other operating income 3.9 3.8
-------------------------------------------------- -------- --------
Total operating income 67.6 72.7
Fair value losses on financial instruments (1.0) (16.3)
Net realised profits 0.6 0.1
-------------------------------------------------- -------- --------
Total income 67.2 56.5
Administrative expenses (42.0) (40.6)
Depreciation and amortisation (5.1) (5.4)
-------------------------------------------------- -------- --------
Operating profit before revaluation gains,
impairment and provisions 20.1 10.5
Gains on investment properties 5.5 5.5
Impairment on loans and advances (8.1) (0.2)
Provisions for liabilities (4.0) (3.4)
-------------------------------------------------- -------- --------
Profit before tax 13.5 12.4
Taxation (4.1) (3.2)
--------------------------------------------------
Profit for the financial year 9.4 9.2
================================================== ======== ========
Statement of Comprehensive Income
for the year ended 31 March 2016 Group Group
2016 2015
GBPm GBPm
Profit for the financial year 9.4 9.2
-------------------------------------------------- -------- --------
Other comprehensive income
Items that may subsequently be reclassified
to profit or loss
Available for sale investments
Valuation loss taken to equity (2.2) (1.0)
Amounts transferred to Income Statement (0.6) (0.1)
Cash flow hedge losses taken to equity (0.2) (0.3)
Taxation 0.2 0.2
Items that will not subsequently be reclassified
to profit or loss
Actuarial losses on defined benefit obligations (0.9) (10.7)
Taxation 0.1 2.1
-------------------------------------------------- -------- --------
Other comprehensive income for the financial
year, net of tax (3.6) (9.8)
-------------------------------------------------- --------
Total comprehensive income for the financial
year 5.8 (0.6)
================================================== ======== ========
Statement of Financial Position
at 31 March 2016 Group Group
2016 2015
GBPm GBPm
Assets
Cash and balances with the Bank of England 215.4 260.8
Loans and advances to credit institutions 204.0 186.5
Investment securities 410.1 274.3
Derivative financial instruments 8.9 19.0
Loans and advances to customers 4,739.0 4,677.4
Deferred tax assets 20.4 23.9
Trade and other receivables 2.7 2.7
Intangible assets 8.2 7.0
Investment properties 123.7 118.6
Property, plant and equipment 33.9 30.2
Retirement benefit assets 0.8 -
Total assets 5,767.1 5,600.4
================================================== ======== ========
Liabilities
Shares 4,385.1 3,988.0
Amounts due to credit institutions 259.0 393.3
Amounts due to other customers 157.0 152.4
Derivative financial instruments 77.1 80.8
Debt securities in issue 368.6 467.1
Deferred tax liabilities 4.7 4.5
Trade and other payables 15.2 12.7
Provisions for liabilities 2.7 2.2
Retirement benefit obligations - 7.5
-------------------------------------------------- --------
Total liabilities 5,269.4 5,108.5
Equity
Profit participating deferred shares 179.5 177.1
Subscribed capital 74.9 74.9
General reserves 239.3 233.1
Revaluation reserve 3.4 3.4
Available for sale reserve 0.9 3.5
Cash flow hedging reserve (0.3) (0.1)
-------------------------------------------------- -------- --------
Total equity attributable to members 497.7 491.9
Total liabilities and equity 5,767.1 5,600.4
================================================== ======== ========
Statement of Changes
in Members' Interest
for the year ended
31 March 2016
Profit Available Cash
participating for flow
deferred Subscribed General Revaluation sale hedging
shares capital reserves reserve reserve reserve Total
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2015 177.1 74.9 233.1 3.4 3.5 (0.1) 491.9
Profit for the financial
year 2.4 - 7.0 - - - 9.4
Other comprehensive
income for the period
Available for sale
investments: current
year movement net
of tax - - - - (2.6) - (2.6)
Actuarial losses
on defined benefit
obligations - - (0.8) - - - (0.8)
Cash flow hedge losses - - - - - (0.2) (0.2)
Total other comprehensive
income - - (0.8) - (2.6) (0.2) (3.6)
--------------------------- --------------- ----------- ---------- ------------ ---------- --------- ------
Total comprehensive
income for the year 2.4 - 6.2 - (2.6) (0.2) 5.8
---------------------------
At 31 March 2016 179.5 74.9 239.3 3.4 0.9 (0.3) 497.7
=========================== =============== =========== ========== ============ ========== ========= ======
Profit Cash
participating Available flow
deferred Subscribed General Revaluation for sale hedging
shares capital reserves reserve reserve reserve Total
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2014 174.7 74.9 234.9 3.4 4.4 0.2 492.5
Profit for the financial
year 2.4 - 6.8 - - - 9.2
Other comprehensive
income for the period
Available for sale
investments: current
year movement net
of tax - - - - (0.9) - (0.9)
Actuarial losses
on defined benefit
obligations - - (8.6) - - - (8.6)
Cash flow hedge losses - - - - - (0.3) (0.3)
Total other comprehensive
income - - (8.6) - (0.9) (0.3) (9.8)
--------------------------- --------------- ----------- ---------- ------------ ---------- --------- ------
Total comprehensive
income for the year 2.4 - (1.8) - (0.9) (0.3) (0.6)
--------------------------- --------------- ----------- ---------- ------------ ---------- --------- ------
At 31 March 2015 177.1 74.9 233.1 3.4 3.5 (0.1) 491.9
=========================== =============== =========== ========== ============ ========== ========= ======
Statement of Cash Flows
for the year ended 31 March 2016 Group Group
2016 2015
GBPm GBPm
Net cash inflow from operating activities
(below) 220.3 103.9
-------------------------------------------------- -------------------- ---------------
Cash flows from investing activities
Purchase of investment securities (386.7) (187.9)
Proceeds from disposal of investment securities 298.0 305.6
Proceeds from disposal of investment properties 0.4 2.1
Purchase of property, plant and equipment
and intangible assets (8.8) (16.8)
Net cash flows from investing activities (97.1) 103.0
-------------------------------------------------- -------------------- ---------------
Cash flows from financing activities
Repayment of mortgage backed loan notes (98.5) (134.1)
Net cash flows from financing activities (98.5) (134.1)
-------------------------------------------------- -------------------- ---------------
Net increase in cash 24.7 72.8
Cash and cash equivalents at beginning
of year 444.1 371.3
Cash and cash equivalents at end of year 468.8 444.1
================================================== ==================== ===============
Group Group
2016 2015
GBPm GBPm
Analysis of cash and cash equivalents
Cash in hand (including Bank of England
Reserve account) 208.7 253.6
Loans and advances to credit institutions 204.0 186.5
Investment securities 56.1 4.0
468.8 444.1
================================================== ==================== ===============
Group Group
2016 2015
GBPm GBPm
Cash flows from operating activities
Profit on ordinary activities before tax
from continuing activities 13.5 12.4
Movement in prepayments and accrued income (0.2) 0.3
Movement in accruals and deferred income (0.4) -
Impairment on loans and advances 8.1 0.2
Depreciation and amortisation 5.1 5.4
Revaluations of investment properties (5.5) (5.5)
Movement in provisions for liabilities 0.5 (2.9)
Movement in derivative financial instruments 6.4 33.6
Movement in fair value adjustments (2.3) (14.0)
Change in retirement benefit obligations (9.2) (4.6)
-------------------------------------------------- -------------------- ---------------
Cash flows from operating activities before
changes in operating assets and liabilities 16.0 24.9
Movement in loans and advances to customers (72.4) 13.2
Movement in loans and advances to credit
institutions 0.6 1.0
Movement in shares 407.1 (242.3)
Movement in deposits and other borrowings (129.7) 308.5
Movement in trade and other receivables 2.4 (0.2)
Movement in trade and other payables (3.7) 0.3
Tax paid - (1.5)
Net cash inflow from operating activities 220.3 103.9
================================================== ==================== ===============
Ratios
for the year ended 31 March 2016 Group Statutory
2016 limit
% %
Lending limit 13.7 25.0
Funding limit 8.7 50.0
-------------------------------------------------- -------------------- ---------------
Group Group
2016 2015
% %
As a percentage of shares and borrowings:
Gross capital 10.37 10.85
Free capital 7.29 7.78
Liquid assets 17.28 15.92
As a percentage of mean total assets:
Profit for the financial year 0.17 0.16
Management expenses 0.83 0.82
-------------------------------------------------- -------------------- ---------------
Group Group
2016 2015
% %
Common Equity Tier 1 capital ratio 14.6 14.4
-------------------------------------------------- -------------------- ---------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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