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Skipton BS ups bad loan reserve by 98 per cent to prepare for more economic gloom

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  • 24/02/2021
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Skipton BS ups bad loan reserve by 98 per cent to prepare for more economic gloom
Skipton Building Society's 2020 profits took a hit as the lender upped the pot of money set aside for future bad debts by 98 per cent from £0.5m to £25.7m as the mutual reported it was bracing itself for a “worsening economic outlook”.

 

The soaring loan impairment charge caused the building society’s total profit before tax to fall by 22.5 per cent from £153.2m to £118.8m.

The building society’s gross mortgage lending was £4.5bn in 2020, a fall of 8 per cent on the previous year according to its annual results.

Meanwhile, the growth of its mortgage book slowed to 8.6 per cent, from 10.3 per cent in 2019.

During the pandemic, Skipton arranged more than 25,000 mortgage payment deferrals as part of the government’s package of coronavirus financial support measures.

Covid-19 has affected every part of the group’s operations, the society reported, as lockdown measures were implemented in the UK, Guernsey and New Zealand.

David Cutter, Skipton group chief executive, said: “Without a doubt 2020 was one of the most challenging years we have ever faced but, despite this, in 2020 Skipton helped 24,557 homeowners to purchase or remortgage their properties, including 5,424 first-time buyers and 5,955 buy-to-let borrowers.”

He added: “Whilst we still reported good group profits for the year, our financial results reflect a challenging period. Our mortgages and savings division has been heavily impacted by increased impairment charges and our estate agency division, Connells, saw all of its UK branches forced to close for two months.

“However, the resilience of Skipton’s business model has allowed the society to maintain strong capital ratios throughout and we look to the future with confidence.”

Connells announced in December that it had reached an agreement with the Countrywide board and its major shareholders to acquire the rival estate agency business.

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