The society also increased residential mortgage balances by 4.4 per cent to £16.5bn, compared to £15.8bn at the end of December 2018.
Despite the recently introduced retirement interest-only (RIO) mortgage under-performing across the whole market, CEO Richard Fearon said the society would be building on the launch of the proposition as it had seen “rising demand”.
Leeds Building Society was quick to enter the RIO market in July 2018, with Fearon insisting that the product had seen an 83 per cent monthly increase in applications with 70 per cent of applicants seeking a fixed-term of at least five years.
He said: “The last 12 months bears this out and Leeds Building Society will keep its product offering and lending criteria under review so it can support more borrowers wanting to make use of this type of mortgage to have the home they want.”
The business also said it would shift its focus to maintaining margins while it made a “conscious choice” to moderate increases in mortgage and savings balances.
Its statement said: “Sustained pressure on mortgage pricing and high levels of refinancing has translated into lower mortgage income and, without an equivalent reduction in funding costs, has suppressed net interest income.”
Intense mortgage competition
Fearon continued to say that the moderation related to “growth following planned high levels of growth over several years” as he added: “We’re operating in a historically low interest rate environment combined with intense competition in the mortgage market, which is good for borrowers.
In what it described as a “robust” financial year, the society reported a profit of £49.4m, down from last June’s £60.1m.
“As expected, increased competition and the effects of slowing economic growth have had an impact on our profit levels. Similarly, we knew our ongoing investment in member value and our digital capabilities would affect profits – while these have reduced this year they remain at a healthy level,” Fearon said.
“We’ll continue to pursue our strategy of supporting borrowers who are not well-served by the wider market – such as through shared ownership, interest-only and buy to let – as we keep looking for new ways to respond to the evolving needs of our members.”
Its chief operating officer Karen Wint has also advised the board that she plans to retire next year.