Chelsea Building Society made a loss before tax of £39.3m for 2008 as it emerges as the latest mutual to shoulder the costs of the Icelandic banking crisis.
The society had an exposure of £55m to two failed Icelandic banks and has made a provision of £10.2m for futures levies from the Financial Services Compensations Scheme.
These “exceptional credit crunch related items” have seen Chelsea’s results take a massive hit from a £63m pre-tax profit in 2007.
Total new lending for the year was £2.23bn, compared to £3.17bn in 2007.
Despite the losses, Chelsea attracted a record level of deposits with net receipts in excess of £830m.
Net mortgage lending was funded entirely from retail deposits.
Richard Hornbrook, chief executive and director at Chelsea, says: “Although our underlying profit remained solid at £41.1m, we have regrettably been impacted by a number of one-off exceptional items that mean we are reporting a loss for the year.
“This is clearly a disappointing outcome, made all the more so by the fact that it would not have happened but for the failure of a number of banks operating in the UK.”
But he adds that the Chelsea business model can withstand the current climate.
He says: “We have an established business model, based on efficient operations and low costs; we have robust levels of capital and liquidity; and we have strong savings operations to enable us to raise more funds from savers and so reduce our reliance on the unsecured money markets.
“I remain confident that, despite the difficulties of 2008 and the current adverse trading conditions, Chelsea will continue to adapt well and deliver value and service to its members.”