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Bath BS profits up 77%, but mortgage lending falls

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  • 09/03/2012
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Bath BS profits up 77%, but mortgage lending falls
Bath Building Society has reported pre-tax profits of £2.3m for 2011, up 77% on 2010’s £1.3m, but saw gross mortgage lending drop by 7.8%.

Gross mortgage lending was £22.6m for the year, down from £24.5m in 2010.

Nevertheless, it attributed its increase in profits to the strength of its mortgage business and long-term strategy, with its mortgage book growing to £183.9m from £179.5m in 2010.

It noted that the lack of mortgages pegged to the base rate had helped the society protect its earnings from the low interest rate environment and generate capital as a result.

The mutual said it would continue to lend cautiously, given the weak state of the market, and avoid high LTV loans. Its average LTV on new mortgage lending was 70% in 2011.

In addition, the Bath said that it results had benefited from not seeing a large increase in arrears despite economic pressures, with loans four or more months in arrears totalling just 19 compared to 16 at the end of 2010. It repossessed four properties over the year, down from six homes the previous year.

The Bath’s provision for bad and doubtful debt increased to £1.2m over the course of 2011, compared to £902,000 in 2010.

Chief executive of Bath Building Society Dick Jenkins said: “The strong performance of the society owes much to the mortgage side of our business. Our results show the benefits of our long-term strategy to lend to those good borrowers that for one reason or another fall foul of the big lenders’ one-size-fits-all lending policies.

“We’ve also done our bit to help to first-time buyers, in response to widespread reports of customers generally finding it hard to get mortgages. We have successfully increased our mortgage book over 2011 by introducing new innovative products specifically geared to helping first-time buyers get onto the property ladder.”

Products included its Income Plus mortgage, which allowed single borrowers to take into account rental income for letting out a room when assessing affordability, and its deals aimed at those with small deposits and parents willing to help.

Jenkins added: “Overall, I believe our traditional principle of getting to know our customers personally is really paying off and while we are still lending cautiously we are in a better position to take a more flexible approach with our customers than many of the larger providers.

“We continue to welcome enquires from borrowers and are keen to keep the upward momentum in our mortgage lending through 2012.”

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