Building societies have reported a mixed bag of results for 2009, with Yorkshire Building Society seeing pre-tax losses of £12.5m.
The result represents a dramatic fall from the Yorkshire’s position in 2008 when it recorded a pre-tax profit of £8.3m. Provisions on mortgage losses went from £25m in 2008 to £59m 2009.
A statement from the society says the increase in mortgage loss provision is an appropriate step, taken in response to harsh economic conditions.
Gross mortgage lending at the mutual was just £900m for the year while mortgage assets fell by £1.3bn.
Chelsea Building Society, which is set to merge with the Yorkshire, also made a hefty pre-tax loss of £27.1m for the year.
But some mutuals have reported healthy figures, with Skipton Building Society seeing pre-tax profits of £63.5m for 2009 – up £41m on the previous year’s £22.5m.
Skipton now plans to merge with Chesham Building Society, the UK’s smallest mutual.
Chesham cites low interest rates and falling profits from mortgages as reasons for its decision to merge with Skipton.
It says it has been under signifi-cant pressure since the Bank of England lowered its base rate to 0.5% a year ago. This resulted in the society’s earnings from mortgages falling substantially during the period as many of its deals are linked to the base rate.
This, along with the fact that the cost of acquiring and retaining retail deposits has remained high, resulted in the need for the society to hold higher levels of short-term liquid assets.