Newcastle Building Society returns to profit

11 March 2010 | By Natalie Thomas

After tax the building society’s profit falls to zero, meaning the mutual has broken even for last year’s trading.

Impairment losses on customer lending were reduced to £8m, down from £12.1m in 2008.

The Newcastle holds a core tier 1 capital ratio of 8.7%, an increase from 7.8% in 2008.

The mutual says the level of its mortgages in arrears by more than three months is around a third of the Council of Mortgage Lenders’ industry average, which would put the Newcastle’s three-month arrears rate at 0.79%.

Colin Seccombe, chief executive of Newcastle Building Society, says: “It is pleasing to restore the society to a more stable position but we must recognise the continuing pressure on us especially as the high cost of securing funding, combined with the low interest rate environment, impacts the margin.

“There will remain many challenges in 2010, some will be testing, but I am confident the society will prosper under his leadership and thereby allow it to remain a strong
independent mutual.”

Seccombe will retire from his chief executive role with effect from tomorrow, with Jim Willens appointed to replace him.