Leeds Building Society reports record-breaking results for 2016

Leeds Building Society has delivered record profits before tax for the fourth consecutive year as it helped more people than ever to save and have the home they want during 2016.

Chief Executive Officer at the time, Peter Hill reported key successes against the Society’s four strategic aims:

Supporting the aspirations of borrowers and savers:

  • Helped a record 53,700 more people have the home they want – record net mortgage lending of £1.9bn (£1.4bn 2015) took total mortgage balances above £13.2bn
  • Helped over 57,700 more people save, increasing savings balances by a record £1.3bn (£751m 2015) and taking total balances above £11.2bn
  • Increased total membership to over 756,000 (up from 719,000 2015), the highest in our history

Continuing financial security:

  • Record profit before tax of £116.6m (£108.5m 2015)
  • Gross lending exceeded £4bn, up by 28% (£3.1bn 2015)
  • Increased capital and reserves to a record £914m (£830m 2015)
  • Common Equity Tier 1 capital ratio of 15.2%

Delivering outstanding personal service:

  • Overall customer satisfaction improved to 92%i
  • Colleague engagement index increased to 78% in 2016
  • Retained our 1* Best Companiesii rating for a second year

Investing in the Society:

  • Created 120 more high quality roles in 2016, taking the total workforce to over 1,400
  • Launched Corporate Responsibility Framework and targets
  • Refurbished 24 branches as part of ongoing modernisation of our branch network


Peter said: “I’m proud to report we delivered on our mission as a member owned building society and helped more people than ever save and have the home they want.

“During 2016, we consistently provided security and value through attractive products and excellent service to meet the needs of our growing membership.

“As a result, the Society has more savers and borrowers than ever before, achieved record profits and our total assets now exceed £15.9bn (£13.5bn 2015).

Supporting the aspirations of borrowers and savers

“We have to balance the needs of all our members and, while the prevailing interest rate environment has benefitted borrowers, we’ve worked hard to help savers.

“We paid an average of 1.66% to savers, compared to the rest of market average of 0.97%iii, equating to an annual benefit to our savers of over £69m. Furthermore, we pay a minimum of 0.4% to all saving membersiv.

“Our consistent approach was recognised with the ‘Best Building Society Savings Provider’ award from independent comparison site Moneyfacts. In addition, we were named 'Best Regular Savings Account Provider 2016' for the second consecutive year by independent consumer advice website Savings Champion.

“In 2016, we increased savings market sharev and grew deposits by over £1bn for the first time. Our success in attracting funds meant we could keep growing our lending and we increased mortgage market share for the sixth consecutive year.

“This was achieved across a balanced product range. Alongside mainstream and Buy to Let lending, we remain focused on helping borrowers who are not well served by the wider market - first time buyers, Shared Ownership, Affordable Housing, Help to Buy and Interest Only.

“During the year, we lent more than £1.42bn in these key segments and helped over 17,500 people, including 12,500 first time buyers, who might otherwise have found it more difficult to have the home they want.

“Our support for borrowers was acknowledged with awards for ‘Innovation in Personal Finance’ from Moneyfacts, for our Interest Only proposition, and ‘Best Shared Ownership Mortgage Lender’ from What Mortgage magazine.

Continuing financial security

“Our strong mortgage growth over the past five years, combined with a reduction in impairment provisions, led to record profits of £116.6m, up more than 7% on 2015, which enabled us to maintain strong Common Equity Tier 1 and Leverage Ratios of 15.2% and 5.2% respectively and increase capital and reserves to a record £914m.

“Residential arrearsvi reduced to 1.02% in 2016 (from 1.43% in 2015) and we continued to manage down our commercial lending portfolio, with losses and charges reduced by £27.2m to £3.5m.

“Thanks to our strong financial performance the Society retained long term ‘A’ ratings from Moody’s and Fitch.

Delivering outstanding personal service

“Listening to and understanding our customers ensures we make the right decisions in the long-term best interests of current and future members.

“This includes more than 1,900 members actively participating in research and discussions on our online forum, TalkingPoint.

“Member feedback helped us redesign our emails and letters to be more straightforward and jargon-free and simplify the process to change account details.

“We’ve reduced the time between receipt of mortgage application and offer, so people can be in their home sooner, and 92% of customer instructions are processed the day they’re received.

“Great service comes from engaged colleagues - for the second year running we achieved accreditation from Best Companies, and were the first financial services organisation to secure Investors in Diversityvii status, further promoting the Society as an ‘employer of choice’.

Investing in the business

“To support our record growth we’ve continued to invest in talent, skills and infrastructure.

“During 2016, we created 120 new roles and now employ over 1,400 colleagues. We moved our North East operating centre to a new, energy-efficient building, with more room for our larger workforce.

“Branches are important in attracting the retail savings we need to grow. Our carefully considered and cost-effective network refurbishment programme will complete this year, creating a more comfortable environment for members. Incorporating more energy-efficient technology will significantly reduce our environmental impact too.

“We’ll continue to adapt so the way we serve our customers remains relevant and appropriate to meet their needs. We’re further developing our online functionality to ensure members can contact us how and when they want - whether in branch, online, by email, phone, or post.

“These investments increased our cost to income ratio to 43% (from 36% in 2015) but we maintained our cost to mean asset ratio at 0.62%. With our keen focus on cost control, we expect these ratios to remain among the best of the established players in our markets.


“Competition among mortgage lenders remained strong in 2016, resulting in downward pressure on our net interest margin, and we expect this to continue in 2017.

“Combined with Bank Base Rate at an historic low and uncertainty linked to the UK’s exit from the EU, these factors are likely to prove testing this year, both to us and the wider financial services sector.

“Despite this, our successful sustainable business model means we’re well-placed to withstand the challenges that may arise in 2017 and beyond.”


i Customer Satisfaction rating based on the views of 4,649 customers

ii Best Companies measures employee engagement levels, through extensive research into employee opinions and workplace concerns

iii CACI’s CSDB, Stock, January-November 2016. CACI is an independent company that provides financial services benchmarking data and covers 85% of the high street cash savings market

iv As long as the account is operated in line with the Terms and Conditions

v Leeds Building Society defines market share as follows:
Mortgages – Council of Mortgage Lenders market share statistics
Savings – Mutual sector net retail savings as published by the Building Societies Association

vi 1.5% or more of outstanding mortgage balances

vii Awarded by the National Centre for Diversity

A copy of the Society’s Group Results for the year ended 31 December 2016 follows.


Summary Consolidated Income Statement
  2016 (£M) 2015 (£M)
Interest receivable and similar income 406.3 402.7
Interest payable and similar charges (204.5) (195.2)
Net Interest receivable 201.8 207.5
Fees and commissions receivable 10.4 12.3
Fees and commissions payable (0.8) (1.0)
Fair value gains less losses from derivative financial instruments (1.3) (0.9)
Other operating income 1.9 1.0
Total income 212.0 218.9
Administrative expenses (88.7) (77.0)
Depreciation and amortisation (3.2) (2.7)
Impairment of loans and advances to customers 0.9 (18.5)
Provisions charge (3.9) (8.8)
Impairment losses on land and buildings (0.5) 0.0
Investment property fair value movement 0.0 (3.4)
Operating profit and profit before tax 116.6 108.5
Tax expense (30.6) (19.6)
Profit for the financial year 86.0 88.9

Summary Statement of Financial Position

  31 December 2016 (£M) 31 December 2015 (£M)
Liquid assets 1,904.0 1,676.7
Derivative financial instruments 263.1 104.9
Loans and advances to customers 13,477.7 11,544.3
Intangible assets 3.0 3.4
Property, plant and equipment 30.1 32.1
Deferred income tax assets 2.6 0.1
Retirement benefit surplus 0.0 5.1
Prepayments, accrued income and other assets 249.2 140.0
Total assets 15,929.7 13,506.6
  31 December 2016 (£M) 31 December 2015 (£M)
Shares 11,233.2 9,932.9
Derivative financial instruments 214.4 135.7
Deposits and securities 3,400.8 2,531.0
Current income tax liabilities 14.1 10.0
Deferred income tax liabilities 2.7 2.4
Provision for liabilities, accruals and deferred income 162.6 79.0
Retirement benefit obligations 2.6 0.0
Subscribed capital 25.0 25.0
Total equity attributable to members 874.3 790.6
Total liabilities and equity 15,929.7 13,506.6
Statement of Comprehensive Income
  31 December 2016 (£M) 31 December 2015 (£M)
Available for sale investment securities gain/(loss) 7.8 (3.5)
Actuarial (loss)/gain on retirement benefit obligations (9.5) 2.1
Revaluation loss on properties revalued (1.8) 0.0
Tax on items taken directly to equity 1.2 0.0
Other comprehensive income net of tax (2.3) (1.4)
Profit for the year 86.0 88.9
Total comprehensive income for the year 83.7 87.5
Summary Consolidated Cash Flow
  31 December 2016 (£M) 31 December 2015 (£M)
Net cash flows from operating activities (189.1) (608.1)
Net cash flows from investing activities 73.5 145.3
Net cash flows from financing activities 414.4 711.1
  298.8 248.3
Cash and cash equivalents at the beginning of the year 827.4 579.1
Cash and cash equivalents at the end of the year 1,126.2 827.4
Summary of key ratios
  31 December 2016 (£M) 31 December 2015 (£M)
Gross capital as a percentage of shares and borrowings 6.1% 6.6%
Liquid assets as a percentage of shares and borrowings 13.0% 13.5%
Profit for the financial year as a percentage of mean total assets 0.58% 0.69%
Management expenses as a percentage of mean total assets 0.62% 0.62%

Notes to the Financial Information

1. The financial information set out above, which was approved by the Board of directors on 21 February 2017, does not constitute accounts within the meaning of the Building Societies Act 1986.

Peter Hill is currently Chairman of the Council of Mortgage Lenders.

Leeds Building Society won the awards for Best Building Society Savings Provider and Innovation in Personal Finance (Part and part mortgages) at the 2016 Moneyfacts Awards.

Leeds Building Society operates throughout the UK, Gibraltar and Ireland and has assets of £15.9bn (at 31 December 2016). The Society’s head office has been based in the centre of Leeds since 1886.