Leeds Building Society has revealed pre-tax profits of £42.2m today and says it plans to increase its mortgage lending by 25% in 2011 to £1.25bn.
The society increased new lending from £922m to £984m in 2010, an increase of 7%.
It says it continues to adopt a prudent approach to lending and its average LTV on new mortgages in 2010 was 53%. All of the society’s residential lending is funded entirely by retail savings.
During 2010 it successfully raised £250m of 10-year long-term funding through a Covered Bond issue. The society says this was the first money raised by any financial institution in the UK Sterling Covered Bond market since June 2007 and the first ever to use residential mortgages as security.
Also, it raised a further £250m of wholesale funding for periods of between three and five years and have now secured the vast majority of its long-term funding requirement for 2011.
Its residential arrears – 2.5% or more of outstanding mortgage balances, improved during the year to 2.16% from 2.24% at the end of 2009. The charge for impairment losses and provisions for commercial and residential property was £8.3m lower in 2010 at £44.2m, compared to £52.5m in 2009.
Ian Ward, chief executive of Leeds, says: “In 2011, we plan to increase our new lending by at least 25% to around £1.25bn. This will be welcomed by home buyers as we provide more capacity and choice to the UK mortgage market.
“Superior efficiency remains an integral part of our strategy and this is demonstrated by our cost income ratio. This improved further, reducing from 36% in 2009 to 34% in 2010, which is likely to be the most favourable of any major building society.
“We achieved our highest ever operating profit of £84.5m, which is £4.4m higher than last year’s record of £80.1m. After impairment losses and provisions, our pre-tax profit was £42.2m, an increase of 33% compared to 2009. We believe that this represents a superior performance in the context of the overall results of UK retail financial services organisations.
“The security of our members’savings remains very strong. As at the end of 2010, our reserves had increased by £27m to £505m, with total capital and reserves of £531m (£543m 2009). This figure is after the repayment of £39m of remunerated capital in the form of subordinated debt during 2010.
“Our capital and reserves class as Tier 1 capital and this ratio at the end of 2010 rose to 13.9%, from 12.7% in 2009, and is significantly ahead of regulatory requirements.
“Total assets were £9.5bn, including liquid assets of £1.9bn, representing 22% of total funds.”