TIDMNBSR
RNS Number : 1692E
Newcastle Building Society
26 February 2020
NEWCASTLE BUILDING SOCIETY ANNOUNCES 2019 FINANCIAL RESULTS
Key Highlights
* Operating profit increased by 11% to GBP16.3m
compared to GBP14.7m for 2018
* Total operating income of GBP74.9m compared to
GBP64.5m for 2018
* 12% net growth in customers
* Gross mortgage lending of GBP931m, a 79% increase
over 2018 (GBP520m)
* Net core residential lending GBP575m, more than 3.5
times higher than 2018 (GBP160m)
* Robust liquidity and capital ratios - liquidity ratio
of 15.8% (2018: 14.6%), Common Equity Tier 1 ratio of
13.9% (2018: 15.7%) and Leverage ratio of 4.7%
(2018:5.4%)
* Net interest margin increased to 0.95% compared to
0.92% in 2018
* Our multi-million pound branch investment programme
continued with the addition of four new branch
locations in Barnard Castle and Bishop Auckland,
including two new community branches in Wooler and
Hawes
* Newcastle Building Society Community Fund grew to
GBP2m and awarded over GBP400,000 in grants to 86
charities across our heartland during the year
* Low levels of arrears maintained with the number of
mortgages in 3 months arrears or more at 0.34% (2018:
0.30%)
* Industry awards including for the third year "What
Mortgage Awards 2019" Winner for Best Regional
Building Society
* Our ongoing commitment has now seen over 2,000
Dementia friends trained by the Society's Dementia
Friends champion
* Continued investment in developing talent across the
region through our apprentice and graduate programmes
and our Prince's Trust partnership
* We created over 150 new jobs during the year
Chief Executive's Statement
2019 was a year of hard work and challenge, along with many
'firsts' and real progress, as we have continued in our endeavour
to make a genuine, positive difference in our region and
beyond.
Financial Performance
Group profit before tax improved, increasing by 11% to GBP14.7m
for the year ended 31 December 2019, compared to GBP13.3m for 2018.
Operating profit before impairments and provisions improved by 11%
to GBP16.3m (GBP14.7m in 2018).
Total operating income increased by 16% to GBP74.9m in 2019
(GBP64.5m in 2018). This was offset by overall management expenses
including business administration costs and depreciation expenses,
both of which increased to a cumulative GBP58.6m from GBP49.8m in
2018, reflecting significant levels of investment in colleagues,
the branch network, and information technology resilience and data
security.
The Society's net interest margin improved to 0.95% from 0.92%
in 2018. Net interest income increased by GBP4.4m to GBP38.6m,
reflecting an increase in our mortgage lending and the impact of
rises in LIBOR alongside reduced funding costs.
The Group's capital ratios remain robust with Common Equity Tier
1 ratio reducing slightly to 13.9% from 15.7% and Tier 1 ratio
reducing to 14.3% from 16.3%. Both reductions were primarily as a
result of increased lending. The Group complied with Individual
Capital Guidance plus capital buffers, as notified by the
Prudential Regulation Authority, throughout 2019.
The Society continued its focus on core residential lending
while winding down legacy portfolios. The net increase in customer
loans and advances was GBP523m overall in 2019 and included a
GBP575m net increase in core residential, of which GBP94m was in
buy to let.
The percentage of mortgages in arrears by three months or more
remain at low levels for 2019. Overall number of loans arrears have
seen a slight increase (0.04%) to 0.34%. This remains lower than
the industry average.
The Group's liquidity, excluding encumbered assets, ended the
year at 15.8% compared to 14.6% in 2018. This is comfortably in
excess of the Society's minimum operating level.
Summary 2019
I am very pleased to have welcomed over 40,000 additional
customers to our Society. This is an important indicator that our
purpose - 'to connect our communities with a better financial
future' - which in turn drives our strategy, is delivering impact
for the people we aim to serve. Alongside a 12% net growth in
customers, I am also pleased to report an increase in profit,
strong capital ratios, good liquidity and low credit risk across
our mortgage book - all key measures of how we are building a long
term, sustainable business.
Some of our key highlights include:
-- Completion of 10 more branch launches as part of our
multi-million pound branch refurbishment or relocation
programme;
-- First organisation in the UK to roll out a Slow Shopping environment across a branch network;
-- Introduction of two new community branches in Hawes and
Wooler - to serve rural populations that the banks have left
behind;
-- Record mortgage lending supported by strong retail funding through our branches;
-- A robust financial performance with Group profit before tax
and Group operating profit before impairments and provisions
increased by 11%, to GBP14.7m and GBP16.3m respectively;
-- Maintaining colleague engagement scores considerably higher
than the financial services sector average;
-- Welcoming 7 graduates and 15 new apprentices to develop their
careers in our business and become our future leaders, including
two young people from the Prince's Trust programme;
-- 27 savings awards won by Newcastle Strategic Solutions' clients;
-- The acquisition by our subsidiary, Newcastle Financial
Advisers Limited, of a financial advice business;
-- Launch of our new LISA Mortgage Booster in response to our
customers' feedback to help with a deposit on a new home; and
-- Surpassing GBP2m in the value of our Newcastle Building
Society Community Fund at the Community Foundation.
Our regional view
As the North East's largest building society with assets now in
excess of GBP4.4bn, we are committed to supporting and developing
the potential of our heartland, which includes the North East,
Cumbria, and North Yorkshire.
Our towns are facing many challenges, and like many regions in
the UK we've witnessed the withdrawal of banks and financial
institutions from our high streets. This creates concern as we
witness closed premises, visible decline, and the reduction in the
availability of local financial services. But at the same time it
creates opportunity for a Building Society committed to the region
and whose strategy is to be part of the solution. In our view,
something has got to change and it is time for some new and
innovative thinking.
Our strategy is expressed through our commitment: to a presence
on our region's high streets; to work in partnership to support our
communities; to making financial information and advice accessible
to all. Work undertaken in 2019 in these areas will we believe,
make a tangible difference in 2020 to our ability to support the
communities in our region, including those which have been
previously abandoned by financial services.
Strategy and purpose
We continue to place our purpose front and centre of our
strategy.
Our strategy is powered by four key themes that include being
purpose led; building our reputation and brand through the
communities we serve; recognising that appropriately growing the
scale of the business, while maintaining a sharp focus on
efficiency are essential features of our long term sustainability;
and that if we do all of these things well, our customers will
value and support us, making mutual advocacy a key part of our
ongoing success. Put more simply, as a purpose led, Member owned
organisation, we recognise that our success will be determined by
the reputation we build in, and what we deliver for, the
communities we serve across our region.
We occupy a unique and privileged position as a Member owned
organisation, based in the North East, with a powerful connection
for our colleagues both to their roles, and to the customers they
serve. Our colleagues know that they are personally making a real
and positive difference to the people and places that are important
to them.
Our performance
Our strategy is delivering results. We grew our customer numbers
by 40,000 in 2019. We increased our branch savings balances by 23%,
a net movement of GBP400m. Our overall net savings growth grew by
25% to GBP687m and since launching our Lifetime ISA, in 2018, we
now have more than 40,000 Lifetime ISA customers.
Strong retail savings balances provide a solid foundation for
our record net residential mortgage lending of GBP575m, an increase
of GBP415m on 2018. This lending has been achieved within margin
forecasts and in the context of a flat mortgage market.
In addition to this positive progress, we continued our ongoing
programme of investment into the resources and capabilities of the
business, enabled by a continued improvement in our operating
profits.
Building authentic, lasting relationships
With our customers
Nowhere is our success better measured than through our customer
satisfaction scores. In 2019 we achieved a score of 96 per
cent.
Our net promoter score measures the loyalty of our customer
relationships and is driven by the quality and value our colleagues
deliver to our customers. In 2019 our NPS score was 84 - a high
score that puts us near the top of the spectrum, as NPS scores
range from -100 to +100.
We have also introduced a new tool, Customer Voice, which
measures real time customer satisfaction across all our channels
including telephone, digital and face to face.
On our high streets
Our friendly and helpful colleagues are at the centre of
excellent scores such as these, but they deliver an impressive
level of service and satisfaction. Almost all colleagues across our
business and all those in our branches are Dementia Friends. Our
active commitment to promoting awareness of dementia has created
more than 2,000 Dementia Friends in our region and beyond. This has
driven other innovations, including an initial pilot and full roll
out of 'Slow Shopping' across our branch network.
The Slow Shopping movement was pioneered by Katherine Vero in
Gosforth and enlists shops and businesses on the high street to
provide both a sympathetic environment and a deeper level of
customer understanding to create a welcoming environment for people
living with conditions like dementia and autism. The inclusive
nature of Slow Shopping means that more people can feel at home on
our high streets, reducing isolation and improving quality of life.
We are the first institution in the UK to deliver this across a
full network of branches.
We believe in the role of the high street at the heart of our
communities. Our multi-million pound branch refurbishment and
relocation programme this year delivered ten, new look, modern
branches. Combining the best in personal face to face service with
a spacious and open environment, our customers have been highly
supportive of our changes. Where space allows, we have also
introduced community rooms, which are provided free of charge for
use by local community groups. Eleven of our branches have
community rooms in which groups meet up in for education and
reading groups, craft groups or to socialise and share cultures. We
expect to add more community rooms to our branch network in
2020.
Our commitment to maintaining our presence on the high street
has seen the Society increase its network to 31 branches in 2019,
with the addition of four new branches. In Teesdale, we have
transformed our Barnard Castle presence from an agency to a full
branch. In Bishop Auckland our new branch was welcomed in such
numbers by locals that we made the decision to begin trading there
ahead of refurbishing the old bank premises we took over.
We're no less thrilled to be adding to our branch network
through community partnerships and have introduced two new
community branches, to Wooler in Northumberland and Hawes in the
Yorkshire Dales. Both towns were abandoned by the banks. It has
been inspiring to witness the work of the Glendale Gateway Trust in
Wooler and the Upper Dales Community Partnership in Hawes, both
highly proactive local community trusts seeking to improve the
lives of local people. We're proud to play our part by bringing
local financial services back to these towns.
Providing accessible financial advice is another of our
commitments and 2019 saw our subsidiary, Newcastle Financial
Advisers, deliver approximately 6,500 advice sessions to customers.
The team enjoy customer satisfaction levels of 98 per cent, and
achieve a 93 per cent net promoter score. With a strategy for
growth, in 2019 Newcastle Financial Advisers purchased the advice
firm, Fidelis Financial Solutions, based in the bustling market
town of Pickering in North Yorkshire. Newcastle Financial Advisers
also runs an Academy training programme in association with
Openwork to recruit and skill the next generation of professional
advisers. Six new trainees joined in 2019. The subsidiary
experienced its best ever year for the volume of new
investments.
With our communities
Creating a long term, sustainable, charitable funding legacy to
support our region is another key priority and 2019 saw us
celebrate surpassing GBP2m value in our Newcastle Building Society
Community Fund at the Community Foundation, Tyne & Wear and
Northumberland.
Our Society was the first to sign up to the Alternative Scheme
operated by Reclaim Fund Limited, which enables smaller building
societies and banks to utilise qualifying dormant accounts to
support their local charities. This saw a substantial donation to
the Community Fund of GBP943,000.
The Newcastle Building Society Community Fund made GBP403,000 in
community grants across the North East and Cumbria during the year.
The Fund doubled the value of Building Improvement Grants to
provide up to GBP100,000 for maintaining or improving community
buildings. Organisations that benefited included Barnabas Safe and
Sound, which provides support and services for young and vulnerable
people; Earsdon & Wellfield Community Association which
welcomes around 500 people across all age ranges every week to its
building; and East End Youth and Community Centre.
We supported 86 community projects and causes in 2019 including
the Sir Bobby Robson Foundation and the Prince's Trust. Six grants
were made to foodbanks in our region.
Our colleague fundraising is key to continuing to add momentum
to the Fund's value and support and colleague fundraising surpassed
a record GBP28,500 in the year. Meanwhile, 42 per cent of
colleagues used their volunteering days to support community
ventures.
We have a tradition of partnering with our region's libraries
which began with our Yarm Library branch opened in 2016.
Understanding that these valued public spaces are under financial
pressure, the Society has committed to work with Whickham Library
in Gateshead and Stokesley Library as part of a three year
programme of financial support which will be used towards any
funding gaps, and further enhance the library facility and
community activities.
In partnership with the North East England Chamber of Commerce,
and following the Chamber's High Street Report in 2018, we are
piloting delivery of a programme of free information events for
high street retailers in North Shields. Hosted largely by the
Society, sessions are delivered by established businesses and share
valuable knowhow, experience, and tips to help smaller independents
make the most of their businesses. The programme may be extended
across the North East if it proves successful.
With our broker partners
The majority of our mortgage lending is done through UK wide
networks of brokers and this channel of distribution has been
significant in driving our record levels of mortgage lending. We
actively listen to our brokers to better understand their needs and
during the course of 2019 we increased our broker intermediaries
team and introduced a product transfer facility and an online
selection tool. We were pleased to maintain our FT Adviser four
star rating for service, as voted for by brokers.
With our colleagues
We created and filled over 150 new jobs in the region in 2019
and were thrilled to achieve second place in the North East's 'Best
100 Places to Work' awards.
While we have maintained colleague engagement scores that are
considerably higher than the sector average, we recognise we have
more to do. Colleague feedback includes a requirement to improve
our working environment; creating break out spaces for
collaborative working and making our workspaces better and more
creative places to be.
We continue to invest in our Early Talent programme and in 2019
we were placed in the top 100 employers with 'Rate My
Apprenticeship'. We also saw one of our apprentices winning the
'Rising Star Award' for the North East region at the national
apprenticeship awards.
Our Prince's Trust partnership was recognised at the end of its
first year in 2019 with 'Highly Commended for the Best New
Partnership' for our contribution in helping young people to live,
learn and earn. In delivery of our partnership we welcomed five
Prince's Trust students to our Society for a two week work
experience programme which resulted in two young people being
offered permanent roles with us throughout apprentice
programme.
As part of our investment in being a great place to work, in
2019 all managers attended our 'Manager as Coach' programme to help
build a coaching culture and empower colleagues to take ownership
of their performance and development.
All colleagues attended a Forum Theatre immersive learning
experience to inform and empower their adoption of a new approach
to performance management, incorporating a conversation rich,
future focussed, colleague led approach. We also continued our
investment in business leaders and launched a talent management
framework.
Performance related pay was rolled out across the Group to
enable recognition of colleagues for their development within their
individual role and their contribution to our Society's
success.
We launched a new 'Colleague Voice' platform, which
provides-insight driven feedback via a continuous conversation. Our
focus on colleague wellbeing included the introduction of wellbeing
advocates, mental health first aiders and a number of successful
awareness campaigns across the year. This resulted in a Bronze
'Better Health at Work' award.
We kicked off 2020 with all colleague Vision & Strategy
events to outline our strategic ambition, progress to date and gain
colleague feedback. Our colleague belief and energy is key to
driving the organisation on to achieve greater success and our
commitment to these two days across our Group was an important
investment.
Innovating
Scale and efficiency
We are delighted that the UK's leading provider of third party
online savings management services is based in the heart of the
North East. A shining example of building society innovation, our
subsidiary, Newcastle Strategic Solutions continues to strengthen
its reputation as a fintech leader and influencer, and to provide
valuable career opportunities in the region for those who want to
develop a career in technology, service or related business support
areas.
Employing more than 620 talented colleagues, Solutions has added
to its growing roster of clients having welcomed B-North and
Recognise on board, both developing new challenger banks to the
market, focusing on the needs of small to medium sized
businesses.
We made changes last year to our business structure to merge two
subsidiaries, Newcastle Strategic Solutions Ltd and Newcastle
Systems Management Ltd under a single Solutions brand. This has
created a more streamlined and efficient approach to planning,
operating and reporting for the benefit of both our clients and our
Group.
Solutions has an important role to play in delivering our
purpose and strategy. It drives technological innovation across our
Group, provides great career opportunity for local talent,
contributes to Group profitability and enables us to build scale
and resulting efficiencies. I'm pleased to see that it is
continuing to grow its contribution to the Group and its reputation
and opportunities.
Products, services, recognition
Against a backdrop of record mortgage lending and attracting
similarly high levels of retail savings through our branches, we
have continued to develop and innovate our product range.
We launched Custom Build and Advance Payment Self-build
propositions alongside launching Buy to Let in Scotland. When we
talked to our Lifetime ISA customers they told us that while they
could afford monthly mortgage payments the time it was taking to
save a deposit was the big challenge. As a result, we launched an
innovative LISA deposit booster mortgage providing a GBP2,000 boost
to a mortgage deposit.
We became the first building society in the UK to introduce a
digital debt help service using integrated Open Banking technology
for mortgage customers facing financial difficulty or those needing
extra support to understand their financial position. This led to
the Society winning 'Best Debt and Arrears Management Strategy' at
the Mortgage Finance Gazette Awards.
Other accolades during the year included: third time winner in a
row of What Mortgage 'Best Regional Building Society'; second time
winner of L&G's 'Best Smaller Lender'; and 'Best Self Build
Lender' in the Personal Finance Awards.
Summary and Look Ahead
The combination of visible progress against our purpose led
strategy; significant growth; substantial investment; and improved
financial performance against a challenging and uncertain economic
and political backdrop was very encouraging in 2019 and sets a
positive tone for 2020 and beyond.
However, we need to be mindful that the outlook for business in
a post Brexit world is far from settled, interest rates are likely
to remain low and given so many uncertainties, we can expect
continued and appropriate caution from regulators with regard to
capital requirements for all financial institutions. We also plan
to continue our investment programme into infrastructure,
technology and resources across the business - with a view to
growth, continued strengthening of our business model and improved
efficiency and financial performance for the long term.
We have been pleased by the positive response to our activities
- in supporting our communities, encouraging people to save,
helping them own their own home and plan their finances. We are
genuinely committed to supporting our high streets and finding new
ways to ensure an authentic, face-to-face service, delivered
locally can be part of our core offer to communities for the years
ahead, while also investing in what the best of modern technology
can offer. We are also proud of the achievements of Newcastle
Strategic Solutions and the difference that subsidiary makes:
bringing further diversification to the financial services market
place; creating jobs in our region and delivering income back to
the Group for the benefit of our Members.
I have no doubt that the year ahead will be full of both
familiar and entirely new challenges. However, I believe we have a
clarity of purpose and strategy that will enable us to continue to
be relevant to the needs of our region, to make a genuine positive
difference and to flourish. As ever, this only possible with the
support of our wonderful colleagues across the Group, whom I thank
for their tireless efforts and the many other partner organisations
and advocates who have given us so much positive feedback over the
last year. I must also recognise the support of our Board and most
of all, our Members, as we look forward to a further year of
progress in 2020 in 'Connecting Our Communities with a Better
Financial Future'.
Andrew Haigh
Chief Executive
25(th) February 2020
NEWCASTLE BUILDING SOCIETY
PRELIMINARY ANNOUNCEMENT
for the year ended 31 December 2019
SUMMARY CONSOLIDATED INCOME STATEMENTS
2019 2018
GBPm GBPm
Interest receivable and similar income
Interest income calculated using effective interest rate 106.1 96.4
Other interest income (18.8) (21.2)
Total Interest receivable and similar income 87.3 75.2
Interest payable and similar charges (48.7) (41.0)
Net interest income 38.6 34.2
Other income and charges 35.8 30.2
Gains less losses on financial instruments and hedge accounting 0.5 0.1
Administrative expenses (54.4) (46.9)
Depreciation (4.2) (2.9)
Operating profit before impairments and provisions 16.3 14.7
Impairment charges on loans and advances to customers (1.5) (1.5)
Provisions for liabilities and charges (0.1) 0.1
Profit for the year before taxation 14.7 13.3
Taxation expense (3.3) (2.5)
Profit after taxation for the financial year 11.4 10.8
================ =========
SUMMARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2019 2018
GBPm GBPm
Profit for the financial year 11.4 10.8
------- ---------
Other comprehensive income/(expense):
Items that may be reclassified to income statement
Movement on fair value through other comprehensive
income 0.9 (1.7)
Income tax on items that may be reclassified to
income statement (0.1) 0.3
Total items that may be reclassified to income statement 0.8 (1.4)
------- ---------
Items that will not be reclassified to income statement
Actuarial remeasurements on retirement benefit obligations - -
Income tax on items that will not be reclassified
to income statement - -
De-recognition of pensions surplus (0.8) (1.1)
------- ---------
Total items that will not be reclassified to income
statement (0.8) (1.1)
------- ---------
Total comprehensive income for the financial year 11.4 8.3
======= =========
SUMMARY CONSOLIDATED BALANCE SHEETS
2019 2018
ASSETS GBPm GBPm
Liquid assets 862.5 692.4
Derivative financial instruments 0.1 3.5
Loans and advances to customers 3,295.1 2,772.2
Fair value adjustments for hedged risk 186.6 175.9
Property, plant and equipment 48.7 38.8
Other assets 19.1 15.0
TOTAL ASSETS 4,412.1 3,697.8
================ ==========
LIABILITIES
Shares 3,400.9 2,713.7
Fair value adjustments for hedged risk - 0.4
Deposits and debt securities 579.4 552.4
Derivative financial instruments 185.9 178.3
Other liabilities 20.1 11.8
Subordinated liabilities - 25.0
Subscribed capital 20.0 20.0
Reserves 205.8 195.3
TOTAL LIABILITIES 4,412.1 3,697.8
================ ==========
SUMMARY CONSOLIDATED CASH FLOW STATEMENTS
2019 2018
GBPm GBPm
Net cash inflows/(outflows) from operating activities 186.8 (50.6)
Payment into defined benefit pension scheme (0.8) (1.5)
---------- -------
Cash inflows/(outflows) from operating activities 186.0 (52.1)
---------- -------
Cash (outflows)/inflows from investing activities
Purchase of property, plant and equipment (8.6) (2.9)
Sale of property, plant and equipment 0.4 -
Purchase of investment securities (213.5) (72.5)
Sale and maturity of investment securities 127.2 121.2
---------- -------
Net cash (outflows)/inflows from investing activities (94.5) 45.8
---------- -------
Cash outflows from financing activities
Interest paid on subordinated liabilities (0.8) (0.8)
Interest paid on subscribed capital (2.3) (3.5)
Repayment of subordinated liabilities (25.0) -
Repayment of subscribed capital - (10.0)
Net cash outflows from financing activities (28.1) (14.3)
---------- -------
Net increase/(decrease) in cash 63.4 (20.6)
Cash and cash equivalents at start of year 163.0 183.6
---------- -------
Cash and cash equivalents at end of year 226.4 163.0
========== =======
Summary of key financial ratios 2019 2018
% %
Gross capital as a percentage of shares and borrowings 5.67 7.37
Liquid assets as a percentage of shares and borrowings 21.7 21.2
Profit for the year as a percentage of mean total assets 0.28 0.29
Management expenses for the year as a percentage of mean total assets 1.45 1.33
Notes
1. The financial information set out above, which was approved
by the Board of Directors on 25 February 2020, does not constitute
accounts within the meaning of the Building Societies Act 1986.
2. The financial information for the years ended 31 December
2019 and 31 December 2018 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 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 SEUSMMESSEIE
(END) Dow Jones Newswires
February 26, 2020 02:03 ET (07:03 GMT)
Newcastle 125/8 (LSE:NBSR)
Gráfico Histórico do Ativo
De Jan 2025 até Fev 2025
Newcastle 125/8 (LSE:NBSR)
Gráfico Histórico do Ativo
De Fev 2024 até Fev 2025
