TIDMWBS
RNS Number : 5128A
West Bromwich Building Society
29 May 2019
West Bromwich Building Society
Preliminary results announcement for the year ended 31 March
2019
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 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 2019
The West Brom today announces its results for the financial year
ended 31 March 2019, reporting pre-tax profits of GBP10.5m and
continued support for people who want to buy their own home.
Key highlights of the 2018/19 financial year include:
-- Despite intensified competition, particularly in the second
half of the year, GBP691m of new mortgage lending (2017/18:
GBP837m) across an extended product range, continuing to support
home ownership and enabling more than 2,700 borrowers (2017/18:
more than 3,100) to purchase their first home.
-- Delivering savers a significant increase in the average rate
earned on their savings compared with the market average(1) ;
during the year, on average, we paid savers some 45% more than the
market average (2017/18: 26% above).
-- Sustained high levels of customer satisfaction of 94%
(2017/18: 94%) and higher customer service Net Promoter Score(R)(2)
of +72 (2017/18: +65) which compares favourably with the Financial
Services Benchmark of +50 (2017/18: +45).
-- Profit before tax of GBP10.5m (2017/18: GBP8.8m),
representing a 19% increase year on year which, along with the
successful modernisation of the Society's capital structure through
a liability management exercise (announced in March 2018 and
completed in April 2018), resulted in a 14.5% increase in members'
general reserves and further strengthening of the Society's capital
position. The Common Equity Tier 1 ratio increased to 16.0% from
14.8%.
-- Enhanced stakeholder engagement, following the establishment
of Member and Employee Councils and the sector first of a binding
vote on Executive Director Remuneration Policy in July 2018.
-- Continued success in rebalancing the lending portfolio: a 9%
reduction in the non-core commercial loan book (2017/18: 17%) and
5% (2017/18: 13%) increase in prime owner occupied balances.
(1) Average market rates sourced from Bank of England Bankstats
table A6.1
(2) Net Promoter Score and NPS are trademarks of Satmetrix
Systems, Inc., Bain & Company, Inc., and Fred Reichheld.
Jonathan Westhoff, Chief Executive, commented:
The provision of good quality products and services, plus our
long-term strategies to reduce legacy risk and keep control of
costs, have helped the Society to deliver significant benefits to
members, maintain excellent levels of customer service and achieve
a 19% increase in pre-tax profits to help strengthen further our
members' capital.
The increases we made to our savers' rates, following the
increase in Bank Rate in August, saw the level we pay above the
average increase significantly. With our mortgage borrowers having
benefited now for over a decade from ultra-low interest rates, a
position which continued throughout the year, this improvement for
our savers represents our commitment to striving to balance the
needs of both borrowing and saving members.
Guided by the Society's purpose of supporting home ownership, we
have shown a particular strength in helping the next generation of
homeowners to secure their first property. We are proud to say
that, over the last 12 months, first-time buyers accounted for 43%
(2017/18: 34%) of all the new mortgage borrowers we welcomed to the
Society.
The year on year reduction in overall lending volumes reflects a
strategic decision to focus only on those market segments where
sustainable returns can be evidenced, once again demonstrating how
we always act in the best interests of our members, as we will not
look to existing members to subsidise uneconomic lending
segments.
We are working hard to extend our lending proposition to support
more diverse groups of borrowers who are less well served by
mainstream mortgage providers. Successful examples include
mortgages where a sponsor assists with monthly repayments, mortgage
funding for self-build projects, remortgaging an existing Help to
Buy property and a selection of products for portfolio landlords
operating in the private rented sector.
In the second half of the year we launched a market-leading easy
access account, which subsequently attracted more than 3,000 new
savers to the West Brom. Over the year as a whole, we grew savings
balances in our branch network by 3%.
We know our members value having use of local branches and
recently unveiled new flagship premises in our hometown of West
Bromwich within the vibrant New Square Shopping Centre. Our
investment in digital solutions and system enhancements also
continues apace to ensure the full spectrum of members'
expectations and service requirements is being addressed.
Last month the West Brom celebrated a major milestone when we
reached our 170(th) anniversary. The values and objectives that
first inspired 20 local citizens to form our building society back
then remain unchanged and will continue to guide us, and the way we
support our 425,000 members, long into the future.
29 May 2019
ENQUIRIES:
The West Brom 0121 796 7785
Ashraf Piranie
Group Finance & Operations Director
Chief Executive's Review
I'm pleased to report that the Society has had another
successful year supporting the financial wellbeing of our members
through the delivery of safe, good value products and services.
During the year we have continued to support first-time buyers to
own their own home, launched a market-leading easy access savings
account and paid on average a 45% higher rate to our savers than
the market average rate(1) , all of which have been achieved in a
fiercely competitive market environment. This year's achievements,
coupled with our long-term strategies to reduce legacy risk and
keep control of costs have helped support a 19% increase in profits
before tax and improved capital ratios, which provide a robust base
for future investments as we celebrate our 170(th) year.
Balancing the benefits of savers and borrowers in a highly
competitive marketplace
The forces of change in mainstream financial services have
perhaps never been greater with economic forces, consumer
behaviour, technology and regulation all combining to drive a
challenging agenda. Within this environment it's important the
Society remains true to its mutual purpose and continues to balance
the needs of savers and borrowers appropriately.
With market growth in gross residential lending moderated at
3.0%, HPI remaining relatively flat, the withdrawal of the Bank of
England's Term Funding Scheme package and the increased lending
capacity of both ring-fenced and challenger banks, in the second
half of this year we took the decision to reduce our lending in
those markets where, put simply, the rates we would be charging to
our new borrowers would, in some cases, be uneconomic. Indeed,
while the Bank of England increased the Bank Rate in August by
0.25%, the average rate paid by the market on new mortgages reduced
relative to Bank Rate, which meant that there was a risk of an
imbalance between the value distributed to our saving and borrowing
members.
At GBP691m (2017/18: GBP837m) our level of gross residential
lending has achieved an appropriate balance and therefore
represents a responsible decision to reposition ourselves and
strengthen our lending proposition in markets that allow us to
offer safe, secure returns to saving members.
Refining our focus on purpose
It gives me great pride that 43% (2017/18: 34%) of all new
borrowers welcomed to the Society have been first-time buyers,
evidencing further the Society's commitment to help the next
generation of home owners. Throughout the year we have worked hard
to extend our lending proposition to support borrowers who align to
our traditional building society purpose but are potentially lesser
served by mainstream lenders. What we like to call
'new-traditional' lending. Increasingly, we are now able to support
a diverse range of borrower needs: whether that be those looking to
buy their first home with the help of a sponsor, build a home using
a self-build mortgage, remortgage an existing Help to Buy property
or support the private rented sector as a portfolio landlord. In
the forthcoming financial year we will continue to extend our
product range further whilst also introducing online functionality
to our existing customers and our intermediary partners looking to
change products at the end of their initial incentive periods.
Safe, good returns for savers
Our savers provide balances that support 84% (2017/18: 84%) of
all our mortgage lending and are very much fundamental to the
continued success of our mutual model. I'm pleased to say that
following the decision of the Bank of England to increase Bank Rate
we rewarded our savers by increasing the average rate of interest
from 0.78% in 2017/18 to 0.94%. The rate we pay is 45% (2017/18:
26%) above the average rate paid across the rest of the market of
0.65% (2017/18: 0.62%)(1) which, in simple terms, means that the
Society has paid GBP11.4m (2017/18: GBP6.5m) in mutual benefit to
savers.
While the trajectory of Bank Rate remains somewhat uncertain, in
the short term at least, our savings proposition will continue to
offer members safe, good value products that complement a range of
needs, allowing us to support sustainable levels of residential
lending.
(1) Average market rates sourced from Bank of England Bankstats
table A6.1
Commitment to outstanding service
With price competition remaining intense, we recognise the
decision of many of our members to borrow or save with us will be
based as much on service as it is on price. To this end we set
ourselves ambitious targets to maintain outstanding levels of
service that meet the principles of our customer proposition;
offering products and services that reflect individual customer
needs, are easy to use and understand and help our members trust us
with their financial wellbeing. Over the year the Society's Net
Promoter Score(R)(2) was an impressive +72 (2017/18: +65) and
customer satisfaction was maintained at 94%.
As a regional building society which lends across the country
the service offered by our mortgage intermediary partners really is
something the Society values. We also recognise that maintaining
this relationship is a two-way endeavour with the Society striving
to extend products and services that are as accessible as possible.
During the year our service standards to intermediary partners were
independently recognised at the 2018 Financial Adviser Service
Awards, where the Society received the highest accolade, a coveted
five star rating for its quality of service. Further extensions of
both our product and service offerings are planned for our
intermediary partners in the coming year.
(2) Net Promoter Score and NPS are trademarks of Satmetrix
Systems, Inc., Bain & Company, Inc., and Fred Reichheld.
Presence in our heartland
With many main banks reducing their presence on the high street,
it's also pleasing that our high-street proposition has continued
to prove attractive with branch balances growing by 3% (GBP85m).
While it's important to acknowledge that the branch network is
expensive to run and is being used less year on year, we also
recognise that the value of our branches extends beyond being an
important source of funding, contributing 69% of all retail funding
balances (2017/18: 66%), with the network seen by many of our
members as an essential part of the West Brom's regional identity.
This was a view confirmed by our Member Council.
Over the last year we have maintained our commitment to the
network by taking an opportunity to secure a new flagship premises
right in the heart of West Bromwich. We had been actively engaged
in the search for a new West Bromwich position for a number of
years so securing a position in the vibrant New Square shopping
area really is something to be celebrated, offering members a brand
new branch right in the heart of our home town. The opening of this
new site has also provided the opportunity to consolidate the two
existing, poorly located, West Bromwich positions (Dartmouth Square
and High Street) into one central location. We encourage our
members to visit the new branch and will continue to seek
opportunities to deliver a more efficient network that adds value
to the membership as a whole.
Responsible approach to risk
The impressive strides the Society has made to reduce exposure
to those areas of lending that do not fit our mutual purpose have
remained a consistent theme for the last 10 years. The scale of the
progress we have made here should not be underestimated with
non-core commercial exposures now reduced to just 26% of their peak
position. This long-term progress to shift materially the
composition and riskiness of the Society's lending activities has
not however reduced our focus on pursuing opportunities to exit
individual positions where these make economic sense for members.
Indeed over the course of the last 12 months we have reduced
non-core commercial assets by a further 9% with total remaining
exposures now below GBP450m, which when combined with the growth in
residential lending has once again supported a reduction in balance
sheet risk and an improved capital position.
Our responsible approach to risk is also evidenced in the
performance of new lending that has been originated in the last
five years with only 2 new mortgage members in arrears of three
months or more. When you consider across that period we have
welcomed some 35,000 new mortgage members to the Society this
figure goes to evidence the responsible safeguards we put in place
to ensure new borrowers can afford their mortgages both now and at
interest rates much higher than they are today. Moreover when
borrowers do struggle to meet their payments the West Brom prides
itself on taking an individual approach that also meets our
responsibility as a mutual lender.
Welcoming our Member and Employee Councils
As a building society the interests of our members guide the
decisions we make and, as a member of the Society's Board, I
frequently receive questions on how we make these decisions and how
much consideration is given to other people's views. Following last
year's introduction of a binding vote on Directors' Remuneration
Policy, a position unique within the building society sector, this
year we have taken our commitment to stakeholder engagement as a
key principle of good, mutual corporate governance further through
the creation of two consultative groups, the Member and Employee
Councils.
We've formed these bodies to include as diverse a range of views
as possible to ensure the views expressed are a representative
cross-section of the diversity we observe, celebrate and promote in
both our membership and our employee populations. Crucially the
purpose of the Councils extends beyond feedback with members able
to articulate stakeholder views back to the Society's Board and
senior leadership team on particular matters of strategic
importance. Agendas have included a variety of topics, from
Directors' remuneration to the boundaries between comply or explain
under the Corporate Governance Code, and a proposition to grow home
ownership from the rented sector. Each meeting has been chaired by
myself, or the chair of the Remuneration Committee where the
subject matter has required, with representation from senior
managers and Non-Executive Directors where appropriate.
I would like to take this opportunity to thank formally all
members and employees who have helped create this pioneering
initiative, setting a new standard amongst other mutuals in terms
of stakeholder engagement. I would also encourage members who feel
they can contribute to register their interest via our website or
in person to support future recruitment to the panel.
Our people and communities
The Society takes its role as a regional building society
seriously both as an employer and as a community partner. During
the year we have supported another 22 members of staff to study for
professional qualifications, including a Masters in Strategic
Leadership in partnership with Loughborough University and the
Building Societies Association. We have promoted the government's
apprenticeship agenda, with 23 apprentices now working towards
qualifications with the support of the Society, and continued an
active programme of both in-house and external training.
Diversity of viewpoint is an essential ingredient of good
decision-making. The Society has again made strides to support the
Women in Finance Charter with women now occupying 33% and 29% of
positions on the Board and senior management respectively. We have
also encouraged diversity and inclusion through the formation of
the 'Connect' group which provides a staff diversity forum to
discuss and share ideas, experiences and challenges with activities
held around key cultural celebrations such as Vaisakhi, Eid, Diwali
and Christmas.
We also recognise that our responsibility to support financial
wellbeing extends beyond the products and services we offer to
members and into the wider community. This is perhaps no better
evidenced than through our 'Money Go Round' education initiative
which aims to give the next generation of savers and borrowers an
early insight into the value of money and impact of good financial
management. Throughout the year this initiative led to delivery of
presentations to schools within our heartland, involving circa
2,000 students, supporting the development of financial literacy
and the key role this plays in how confident people feel in
managing their finances.
The Society takes pride in its wider community work and
encourages all staff to partake in 2 days volunteering per year.
This has provided some 750 hours of work to our charity partners in
support of much needed regional causes. This year we have partnered
with Black Country Women's Aid as our charity of the year with
activities throughout the year raising over GBP30,000 to help the
much-needed work they do supporting the victims of domestic abuse,
violence and exploitation. I would like to take this opportunity to
thank everyone associated with the charity for their work during
this relationship which has been a privilege for the Society.
Continuity, change and investment
The resilience of our mutual model throughout our 170 year
history has been based on our ability to deliver both continuity
and change. While the core of what the Society offers to members,
both borrowers and savers, remains very much unchanged, the way in
which we deliver products and services has changed beyond
recognition. We now operate in an environment where our members
expect us to be on the high street, on the telephone, accessible
via post, on the internet and accessible by mobile and/or tablet.
With this in mind it's important that we do not take our 170 year
history for granted but continue to invest in the Society's core
systems so we can continue to meet the product, service and
security expectations of both current and future members long into
the future.
As we look into the future, putting the immediate uncertainty of
Brexit to one side, it remains likely that competition within core
mortgage and savings markets will continue for some time. By way of
response, the Society will, as it has done in the past 12 months,
continue to take responsible decisions to encourage lending growth
only in those markets where sustainable returns can be evidenced,
whilst seeking all available opportunities to run our Society as
efficiently as possible for the benefits of our members. In this
sense our approach will remain allied fundamentally to our core
building society purpose.
As a building society the West Brom exists for its members,
bringing those who want to borrow and those who want to save
together to achieve a common purpose - financial wellbeing. For us
this purpose remains as relevant today as when the Society was
founded and as we complete our 170th year, I'm confident that our
delivery will remain resolute as we adapt to support further
new-traditional methods of home ownership and embrace the
opportunities created by digital innovation.
Jonathan Westhoff
Chief Executive
29 May 2019
Income Statement
for the year ended 31 March 2019 Group Group
2019 2018*
GBPm GBPm
Interest receivable and similar income
Calculated using the effective interest
method 118.5 113.3
On instruments measured at fair value
through profit or loss (6.9) (16.0)
-------------------------------------------------- ---------------------- --------------
Total interest receivable and similar
income 111.6 97.3
Interest expense and similar charges (53.1) (41.8)
-------------------------------------------------- ---------------------- --------------
Net interest receivable 58.5 55.5
Fees and commissions receivable 2.6 2.7
Other operating income 4.0 3.8
Fair value (losses)/gains on financial
instruments (4.4) 2.5
-------------------------------------------------- ---------------------- --------------
Total income 60.7 64.5
Administrative expenses (42.6) (43.5)
Depreciation and amortisation (6.9) (7.2)
-------------------------------------------------- ---------------------- --------------
Operating profit before revaluation gains,
impairment and provisions 11.2 13.8
Gains on investment properties 2.6 3.8
Impairment on loans and advances (3.0) (7.9)
Provisions for liabilities (0.3) (0.9)
-------------------------------------------------- ---------------------- --------------
Profit before tax 10.5 8.8
Taxation (1.4) (0.9)
--------------------------------------------------
Profit for the financial year 9.1 7.9
================================================== ====================== ==============
Statement of Comprehensive Income
for the year ended 31 March 2019 Group Group
2019 2018*
GBPm GBPm
Profit for the financial year 9.1 7.9
-------------------------------------------------- ---------------------- --------------
Other comprehensive income
Items that may subsequently be reclassified
to profit or loss
Available for sale investments
Valuation losses taken to equity - (1.1)
Fair value through other comprehensive
income investments
Valuation losses taken to equity (1.1) -
Cash flow hedge gains taken to equity - 0.8
Taxation 0.2 0.1
Items that will not subsequently be reclassified
to profit or loss
Actuarial losses on defined benefit obligations (2.5) (1.6)
Taxation 0.5 0.4
-------------------------------------------------- ---------------------- --------------
Other comprehensive income for the financial
year, net of tax (2.9) (1.4)
-------------------------------------------------- ----------------------
Total comprehensive income for the financial
year 6.2 6.5
================================================== ====================== ==============
* The Group has adopted IFRS 9 'Financial Instruments' with
effect from 1 April 2018 and comparatives have not been restated.
The Income Statement and Statement of Comprehensive Income are
therefore presented on an IFRS 9 basis for the financial year ended
31 March 2019 and an IAS 39 basis for the year ended 31 March
2018.
Statement of Financial Position
at 31 March 2019 Group Group
2019 2018*
GBPm GBPm
Assets
Cash and balances with the Bank of England 182.5 324.7
Loans and advances to credit institutions 106.7 120.6
Investment securities 309.3 311.9
Derivative financial instruments 6.5 19.5
Loans and advances to customers 4,746.7 4,805.4
Deferred tax assets 18.9 15.3
Trade and other receivables 3.7 6.4
Intangible assets 16.5 15.3
Investment properties 134.7 132.2
Property, plant and equipment 28.4 30.2
Total assets 5,553.9 5,781.5
=================================================== ====================== =================
Liabilities
Shares 3,991.2 4,051.4
Amounts due to credit institutions 667.3 571.3
Amounts due to other customers 77.7 133.1
Derivative financial instruments 39.3 38.7
Debt securities in issue 344.1 493.3
Current tax liabilities 1.1 -
Deferred tax liabilities 5.8 4.5
Trade and other payables 12.1 12.0
Provisions for liabilities 1.4 2.1
Retirement benefit obligations 4.9 5.1
Subordinated liabilities 22.8 -
Total liabilities 5,167.7 5,311.5
Members' interests and equity
Profit participating deferred shares - 175.0
Core capital deferred shares 127.0 -
Subscribed capital 8.9 75.0
General reserves 247.1 215.8
Revaluation reserve 3.3 3.4
Available for sale reserve - 0.8
Fair value reserve (0.1) -
--------------------------------------------------- ---------------------- -----------------
Total members' interests and equity 386.2 470.0
Total members' interests, equity and liabilities 5,553.9 5,781.5
=================================================== ====================== =================
*The Group has adopted IFRS 9 'Financial Instruments' with
effect from 1 April 2018 and comparatives have not been restated.
The Statement of Financial Position is therefore presented on an
IFRS 9 basis at 31 March 2019 and an IAS 39 basis at 31 March
2018.
Statement of Changes in Members' Interests and Equity
for the year ended 31 March 2019
Profit Core Available
participating capital for Fair
deferred deferred Subscribed General Revaluation sale value
shares shares capital reserves reserve reserve reserve Total
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2018 175.0 - 75.0 215.8 3.4 0.8 - 470.0
Changes on
initial
application of
IFRS 9* - - - (27.8) - (0.8) 0.8 (27.8)
---------------- -------------- ----------- ----------- ------------ ------------ ---------- --------- -------
At 1 April 2018
including
impact of IFRS
9 adoption 175.0 - 75.0 188.0 3.4 - 0.8 442.2
Profit for the
financial year - - - 9.1 - - - 9.1
Other
comprehensive
income for the
period (net of
tax)
Retirement
benefit
obligations - - - (2.0) - - - (2.0)
Realisation of
previous
revaluation
gains - - - 0.1 (0.1) - - -
Fair value
through other
comprehensive
income
investments - - - - - - (0.9) (0.9)
Total other
comprehensive
income - - - (1.9) (0.1) - (0.9) (2.9)
---------------- -------------- ----------- ----------- ------------ ------------ ---------- --------- -------
Total
comprehensive
income for the
year - - - 7.2 (0.1) - (0.9) 6.2
Capital
restructuring (175.0) 127.0 (66.1) 51.9 - - - (62.2)
---------------- -------------- ----------- ----------- ------------ ------------ ---------- --------- -------
At 31 March
2019 - 127.0 8.9 247.1 3.3 - (0.1) 386.2
================ ============== =========== =========== ============ ============ ========== ========= =======
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 2017 173.0 75.0 211.0 3.5 1.7 (0.7) 463.5
Profit for the
financial year 2.0 - 5.9 - - - 7.9
Other
comprehensive
income for the
period (net of
tax)
Available for
sale
investments - - - - (0.9) - (0.9)
Retirement
benefit
obligations - - (1.2) - - - (1.2)
Realisation of
previous
revaluation
gains - - 0.1 (0.1) - - -
Cash flow hedge
gains - - - - - 0.7 0.7
Total other
comprehensive
income - - (1.1) (0.1) (0.9) 0.7 (1.4)
---------------- -------------- ----------- ----------- ------------ ------------ ---------- ---------
Total
comprehensive
income for the
year 2.0 - 4.8 (0.1) (0.9) 0.7 6.5
---------------- -------------- ----------- ----------- ------------ ------------ ---------- ---------
At 31 March
2018 175.0 75.0 215.8 3.4 0.8 - 470.0
================ ============== =========== =========== ============ ============ ========== =========
*The Group has adopted IFRS 9 'Financial Instruments' with
effect from 1 April 2018 and comparatives have not been restated.
The Statement of Changes in Members' Interests and Equity is
therefore presented on an IFRS 9 basis for the financial year ended
31 March 2019 and an IAS 39 basis for the year ended 31 March
2018.
Statement of Cash Flows
for the year ended 31 March 2019 Group Group
2019 2018
GBPm GBPm
Net cash inflow/(outflow) from operating activities (below) 30.7 (323.4)
-------------------------------------------------------------------------------- ---------- ---------
Cash flows from investing activities
Purchase of investment securities (120.1) (155.6)
Proceeds from disposal of investment securities 87.8 267.7
Proceeds from disposal of investment properties 0.1 0.5
Purchase of property, plant and equipment and intangible assets (6.7) (7.1)
Net cash flows from investing activities (38.9) 105.5
-------------------------------------------------------------------------------- ---------- ---------
Cash flows from financing activities
Issue of debt securities 1.0 348.5
Repayment of debt securities (149.2) (113.4)
Capital restructuring (36.2) -
Interest paid on subordinated liabilities (1.2) -
-------------------------------------------------------------------------------- ---------- ---------
Net cash flows from financing activities (185.6) 235.1
-------------------------------------------------------------------------------- ---------- ---------
Net (decrease)/increase in cash (193.8) 17.2
Cash and cash equivalents at beginning of year 492.5 475.3
Cash and cash equivalents at end of year 298.7 492.5
================================================================================ ========== =========
For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following
balances with less than 90 days maturity:
Group Group
2019 2018
GBPm GBPm
Analysis of cash and cash equivalents
Cash in hand (including Bank of England Reserve account) 172.0 318.1
Loans and advances to credit institutions 106.7 120.6
Investment securities 20.0 53.8
298.7 492.5
================================================================================ ========== =========
The Group is required to maintain certain mandatory balances
with the Bank of England which, at 31 March 2019, amounted to
GBP10.5m (2017/18: GBP6.6m). The movement in these balances is
included within cash flows from operating activities.
Group Group
2019 2018*
GBPm GBPm
Cash flows from operating activities
Profit before tax 10.5 8.8
Adjustments for non-cash items included
in profit before tax
Impairment on loans and advances 3.0 7.9
Depreciation and amortisation 6.9 7.2
Revaluations of investment properties (2.6) (3.8)
Changes in provisions for liabilities (0.7) (1.0)
Interest on subordinated liabilities 2.4 -
Fair value losses on equity release portfolio 1.7 -
Other non-cash movements (12.3) 24.1
-----------------------------------------------
8.9 43.2
Changes in operating assets and liabilities
Loans and advances to customers 30.0 (69.5)
Loans and advances to credit institutions (3.9) 0.6
Derivative financial instruments 13.6 (43.5)
Shares (59.9) (373.2)
Deposits and other borrowings 42.0 123.1
Trade and other receivables 2.4 (2.9)
Trade and other payables 0.3 1.7
Retirement benefit obligations (2.7) (3.0)
Tax received - 0.1
Net cash inflow/(outflow) from operating
activities 30.7 (323.4)
=============================================== ======= ========
*Comparatives have been recategorised, where applicable, to
align to the current period presentation of cash flows from
operating activities.
Ratios
for the year ended 31 March 2019 Group Statutory
2019 limit
% %
Lending limit 9.7 25.0
Funding limit 15.8 50.0
------------------------------------------- ------ ----------
Group Group
2019 2018
% %
As a percentage of shares and borrowings:
Gross capital 8.05 8.95
Free capital 4.52 5.88
Liquid assets 11.78 14.43
As a percentage of mean total assets:
Profit for the financial year 0.16 0.14
Management expenses 0.87 0.87
------------------------------------------- ------ ----------
Group Group
2019 2018
% %
Common Equity Tier 1 capital ratio 16.0 14.8
------------------------------------------- ------ ----------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEAFLUFUSEFI
(END) Dow Jones Newswires
May 29, 2019 10:21 ET (14:21 GMT)
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