Societies’ profits hit by FSCS levy

Building society’s profits have taken a hit because of the heavy Financial Services Compensation Scheme levys they are being made to pay.

Skipton revealed pre-tax profits of £22.5m for 2008, a staggering fall from its £163.9m profit in 2007.

Group profits were heavily reduced because of its £11m exposure to the Icelandic banking system.

It also provided £16.3m for its share towards the next three years’ levy to be imposed by the Financial Services Compensation Scheme in relation to the rescue of savers in Bradford & Bingley and other banks.

Skipton, the parent of Pink Home Loans and HML says its 2008 profits are almost half what they would have been had the FSCS provision not been required.

It’s group assets were up 8.9% to £13.6bn, while group mortgage assets were up 1.7%, compared to a 15.9% increase in 2007.

Skipton’s major subsidiary Connells saw its operating profits fall from £59.7m to £10.4m.

Leeds also reported a pre-tax profit of £20.3m after paying its FSCS levy.
The society saw a pre-tax profit before the levy of £30m, compared to £63.2m in 2007,

Operating profit before impairment provisions was £68.6m (2007 £69.4m).
For the third successive year, its growth in lending has been entirely funded by retail investments.

Britannia saw pre-tax profits of £23.8m for 2008, compared to £114.6m in 2007.

Its profits would have been £100.4m if it was not for exceptional items of £57.4m relating to exposure to two failed banks and a £19.8m provision for the FSCS levy.

Business at the group’s broker lender Platform reduced by 73% in 2008 compared with 2007 from £2.6bn to £0.7bn.

Platform has realigned its business by moving further into prime broker lending through an arrangement with Axa broker network, Thinc.

The society, which last month announced plans to create a new super-mutual by merging with Co-operative Financial Services, says it focused on maintaining liquidity and capital strength while consolidating its high-quality mortgage book and attracting more than 154,000 new members.