Profit falls at Yorkshire Building Society but lender has record demand for savings products
Profits slid at Yorkshire Building Society as a result of higher costs linked to inflation but the lender saw record demand for its savings products.
Pretax profit fell to £450m from just over £500m last year, despite interest income rising by over £60m.
The fall in statutory profit came as the building society faced higher costs linked to inflation and “purposeful investment in change activities”.
However, the lender said that core operating profit, which excluded a £75m fair value gain recorded in 2022 from a volatile interest rate environment, increased year-on-year. Core operating profit rose to £425.6m to £449.9m last year.
A number of lenders have been the beneficiaries of poor savings rates on offer at the high street banks and Yorkshire Building Society reported that a record 693,000 savings accounts were opened last year, up from 537,000 in 2022.
Overall, savings rates provided around 1.01 percentage points higher than the market average over 2023.
Mortgage lending also increased slightly year-on-year even though the wider market saw mortgage lending drop by around 30 per cent.
“Over 2023, we provided savings rates that were consistently above the market average, and continued to support new and existing mortgage borrowers, all while achieving an increase in customer advocacy,” Susan Allen, chief executive said.
The number of accounts more than three months in arrears in December picked up slightly to 0.5 per cent, but the building society said this was below the industry average of 0.87 per cent.
Looking into the new year, Yorkshire warned that lenders may face compressed margins. “Economic volatility continues to result from world events and increasing levels of competition are compressing net interest margin across the industry,” it said.