Manchester loses £2.5m due to Network Data collapse

30 March 2010 | By Natalie Thomas

During 2008, the society disposed of its loss making subsidiary, Mortgage Broking Service Limited, to Network Data Holdings in exchange for Network Data Holdings shares. 

But Network Data went into administration in early 2009, owing its appointed representatives over £2m.

Michael Prior, chairman of the society says the group’s trading performance during 2009 was “resilient” had it not been for the Network Data sale.

He says: “It is disappointing to report that the results for the year were impacted by the need to provide fully against its shareholding in Network Data Holdings plc. Unfortunately, NDH itself fell victim to the economic downturn and went into administration in early 2009.”

He adds: “Considerable strides were made during 2009 in reducing the level of wholesale funding that the society uses, with this now operating comfortably in the rage of 7.5-12.5% of total funding; at its highest point in 2007, this figure was 30%. 

“The society was able to attract an additional £68M of member deposits, representing an increase during the year of 10.2% and reflects a solid public endorsement generally of the building society sector in 2009.”

The society’s total income fell to £10.1m during the year, from £16.8m. Interest receivable dipped to £9.1m from £12m and other income fell to £1m from £4.8m.

Manchester also saw its mortgage arrears fall materially over the year at a time when other lenders are seeing these rise. 

Mortgage advances during the year were subdued, but in line with its targets and expectations and consequently a small reduction in both mortgage assets and total assets was reported for 2009.

Prior says: “In recognition of the economic outlook, the society undertook a programme of cost reduction during the year and its results may be seen in the lower level of administrative costs reported for 2009. 

“This exercise is now complete, having returned annualised savings of more than £1m.

“We are cautiously optimistic about prospects for 2010.  Clearly, increased profitability will only return when Bank of England base rates return to more normal levels, but the society is well positioned to operate viably for a prolonged period in the event that current interest rate levels are maintained in the medium term.”

If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat