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Leeds reports £31.7m pre-tax profit

Leeds Building Society, the UK’s sixth largest society, has reported a pre-tax profit of £31.7m for 2009, up from £20.3m in 2008 – a 56% increase.

Its operating profit before impairment losses and provisions increased to a record £80.1m, compared to 2008 £68.6m.

However, its new mortgage lending was down and totalled £922m in 2009, compared to £1.28bn in 2008.

The society says this reflects the much smaller UK market with net mortgage lending, which declined to less than £12bn, only around a quarter of the 2008 volume.

The charge for impairment losses and provisions for commercial and residential property rose to £52.5m in 2009, from £32.1m 2008.

And as of December 31 its arrears percentage had risen to 2.25%, up from 1.26% in 2008, but this started to stabilise in the summer and is now starting to reduce.

Capital and reserves have increased to a record level of £543m, compared to £526m in 2008.

With savings balances also rising by £225m to a record level of £6.8bn, with 71,000 new members attracted taking total membership to over 680,000.

The society also reduced its cost ratio to 45p per £100 of assets from 48p in 2008.

Quality of lending remains good at the society with the average LTV on 2009 advances being just 50%, the same LTV as on our total residential mortgages.

With its wholesale funding ratio reducing to 23%, from 29% in 2008.

Ian Ward, chief executive of Leeds, says: “Throughout the year, we offered a wide range of mortgage products enabling many customers to remortgage or buy their first home. All of the Society’s residential mortgage lending is funded entirely by retail savings.

“Our lending policies continue to be very prudent and this is demonstrated by our average LTV on new lending in 2009 being just 50%, the same LTV as on our total residential mortgages.

“We attach great importance to our superior efficiency, as demonstrated by our favourable cost ratios.

“Our cost income ratio, the lowest of any building society in 2008, improved further to 36% and we again expect this to be the most favourable in our sector. The cost asset ratio reduced to 45p per £100 of assets compared to 48p a year earlier.”

He adds: “Leeds Building Society has delivered a sound performance in 2009, with rising retail balances, increased profitability and even stronger reserves further underlining its successful, sustainable business model.

“This, combined with our prudent approach to lending, keen cost control and strong levels of capital means that we are in an excellent position to deal with the challenging economic outlook for 2010 and beyond.”

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