16 March 2009
Saffron Building Society Reports Creditable 2008 Results
Saffron Building Society today announces a strong set of annual results. In 2008, Saffron acquired 1,415 new mortgage customers and opened 15,670 new savings accounts.
In total, Saffron Building Society ended 2008 with 8,153 mortgage customers (an increase of 415 on 2007) and 107,975 savings accounts (an increase of 5,392 on 2007). The society's savings balance grew by more than £41m to a record level of £684m and its assets also increased by £69m to stand at £853m. Saffron’s operating profit was a £3.6M, up £0.2M on the previous year
Andy Golding, Saffron Building Society chief executive, said "We are quietly optimistic about the future, despite the UK recession. We delivered a good set of 2008 results and the start of this year has been really strong with new accounts and member figures far exceeding those of previous years. This demonstrates the level of engagement and trust that consumers feel for the simpler building society business model.
"It is clearly harder for mortgage and savings providers to make profits in a very low interest rate environment, but with our commitment to other sources of income, such as our IFA and Insurance businesses, we expect to deliver a healthy set of results again in 2009. We will celebrate our 160th Birthday in 2009, and will mark that with a series of events and products that I am sure our members will enjoy, such as our new Goal Based Savings system. We are also poised to launch some very attractive new mortgage deals to put some more much needed funding into the housing market".
Saffron also pledges to work hard with existing mortgage borrowers who find themselves in difficulty. At the end of 2008 the percentage of its total mortgage balances in arrears had reduced to 0.28% from 0.62% at the end of 2007 which shows the fair and quality approach they have been taking in this area.
Saffron opted to take the £1.1M three-year cost for bailing out failed banks in one lump sum and has increased its mortgage provisions by £1.4m to anticipate a rise in the number of borrowers defaulting on their repayments. This demonstrates a further measure of prudence and a desire to ensure that future profitability remains strong.
Pre-tax profits after the increased mortgage provisions and FSCS levy were £1.1M and with the levy hopefully accounted for the next three years, the society expects to follow its regular trends and see annual profits increase in 2009.
Andy Golding continues, "Saffron Building Society has had a strong year but members and staff are extremely disappointed by the level of the Financial Services Compensation Scheme levy. As a mutual building society with a cautious approach to risk and a mortgage book that is fully funded by retail savings balances, it seems somewhat unfair that we have to contribute what seems a disproportionate amount to the failure of organisations with much riskier business models."
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