Nottingham Building Society says soaring lending ‘aided by higher interest income’ boosted profits
The historic Nottingham Building Society reported strong pre-tax profits driven by a surge in mortgage lending last year.
Founded in 1849, the building society this morning announced group pre-tax profits of £18.9m, with underlying pre-tax profit of £15.2m.
Despite the downturn in the housing market in wake of the disastrous mini budget, it said in 2022 gross mortgage lending went up by 18 per cent to almost £660m, leading to it having assets of £3.8bn.
Saying it delivered strong profit during “turbulent economic conditions”, the lender admitted this was “aided by higher interest income and gains of derivatives”.
Amid the cost of living crisis, it said it’s “increased its provision for expected losses on loans to customers” adding that it recognises there is an “increasing risk of credit deteriorating in a recessionary environment.”
This comes after numerous reports have suggested the UK will swerve a recession, while house prices have plummeted in recent months, as sellers are forced to knock off £14,000 on average for their properties.
This week, Bank of England governor Andrew Bailey warned interest rates may have to remain high however to tame inflation which is still in double digits.
Looking ahead to 2023 in wake of a ‘strategic review’ at the end of last year, it said the society will try to be “looking after savers and helping people own their own homes”.
“Our financial performance has been achieved despite additional costs and increased provisions for expected future credit losses driven by the rising cost of living, and inflationary challenges that our borrowers face into 2023 and beyond”, said Sue Hayes, CEO of Nottingham Building Society.
“Increasing interest rates have supported the strong performance” she added, but insisted “we have made it a key priority to support our members through these difficult times by paying savers the best rates we could whilst strengthening the Society”