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Skipton BS and Connells’ profits fall but mortgage lending rises

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  • 26/02/2020
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Skipton BS and Connells’ profits fall but mortgage lending rises
Skipton Building Society’s gross mortgage lending rose by 13 per cent to £4.9bn in 2019, the mutual announced in its annual results.

 

Competition in the mortgage market for borrowers’ business drove down interest rates and kept them low, squeezing the society’s interest and profit margins.

This ‘intense competition’, said the society, reduced its group net interest margin from 1.09 per cent in 2018 to 0.98 per cent last year.

Total profit before tax for the group fell 19 per cent year on year from £188.7m to £153.2m.

In the mortgages and savings division, profit before tax declined by eight per cent from £113.2m to £103.9m. Skipton reported that a £3.1m reduction in net interest income and investment into its mortgage proposition and service costing £7.9m impacted profits in the division.

Mortgage balances grew by 10.3 per cent since last year compared to 10.0 per cent growth in 2018.

The lender added that its international business continued to make a strong contribution with mortgage balances increasing from £1.2bn to £1.4bn and profit before tax of £21.2m, up from £20m.

The decrease in total group profits includes a £3.4m loss in the value of Skipton’s equity release portfolio that it acquired through its merger with Scarborough Building Society. The value of the book at the end of 2019 was £410m.

The loss in value was driven by changes in market expectations of long-term interest rates, inflation and house price growth.

The group’s loan impairment charge on residential and commercial mortgages was £300,000, compared to £2.3m in 2018.

 

Connells Group

Connells Group, the estate agency and property services company owned by Skipton Group, reported a fall in underlying profits of £9.6m year on year to £50.1m which it said was due to a “subdued UK property market”.

Mortgage business completed through Connells’ mortgage services division increased by 0.1 per cent to £10.7bn last year.

The number of new homes it sold through The New Homes Group remained static at around 9,000 year on year. Income from the new homes division increased by 11 per cent and enquiries were up 12 per cent year on year.

Adrian Scott, Connells Group mortgage services director, said. “We are pleased to report another set of good results and further growth for our mortgage business, especially when operating for much of the year within a subdued marketplace.

“Our results demonstrate the strength in our business and, with over 700 mortgage consultants and dedicated phone-based advisors, we are well placed to build on this in 2020.”

Last year Connells integrated Twenty7Tec’s Source and Apply software into the group’s client relationship management system, and trialled the MBT Affordability from Mortgage Broker Tools.

Further investments in technology will be made during 2020.

 

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