Nottingham Building Society Annual Financial Report (7198R)
03 März 2023 - 8:00AM
UK Regulatory
TIDMNOTP
RNS Number : 7198R
Nottingham Building Society
03 March 2023
NOTTINGHAM BUILDING SOCIETY REPORTS STRONG FINANCIAL PERFORMANCE
WITH GROSS MORTGAGE LING UP 18%
The Nottingham today presents its results for the year ended
31 December 2022. The mutual ended the year in a strong position,
with an increase in mortgage lending and pre-tax profit compared
to 2021.
Key achievements and financial highlights of 2022 include:
* Group pre-tax profit of GBP18.9 million, with
underlying pre-tax profit of GBP15.2 million
* Gross mortgage lending up 18% at over GBP659 m illion
for 2022; resulting in total assets of GBP3.8 billion
* Strong capital position with Common Equity Tier 1 at
16.8% and leverage of 5.7%
* Net interest margin of 1.69% - up 45 basis points
from 1.24%
* Achieved a customer Net Promoter Score of 72%
* Employee engagement score of 81%
Sue Hayes, CEO of Nottingham Building Society, comments on the
results:
"I am pleased to report that we ended the year in a strong position,
with profit before tax of GBP18.9 million, up GBP3.8 million
on 2021. Our financial performance has been achieved despite
additional costs and increased provisions for expected future
credit losses driven by the rising cost of living, and inflationary
challenges that our borrowers face into 2023 and beyond. Increasing
interest rates have supported the strong performance.
"We have made it a key priority to support our members through
these difficult times by paying savers the best rates we could
whilst strengthening the Society. Building the right team has
also been very important. In 2022 we announced some significant
hires to bolster our talented executive team. Alongside this,
finding the right allies to support our ambitions was a focus.
Our partnership with Generation Home, announced in November,
is a great example of how we will think differently to help achieve
our goals.
"I am proud of the results we are sharing today and would like
to thank our members, and each one of our dedicated colleagues,
for their continued trust in the Society. We look ahead to the
coming years with a renewed sense of focus, guided by a clear
and impactful purpose, with mutuality as our bedrock."
Financial performance
The Society has delivered a strong level of profit in 2022 during
turbulent economic conditions, with an underlying profit before
tax of GBP15.2m (2021: GBP7.4m) and a statutory profit after
tax of GBP15.8m (2021: GBP12.6m).
Although this was aided by higher interest income and gains on
derivatives, these were partially offset by increased investment
and expenses in the new strategy, supporting colleagues in the
cost of living crisis and passing through some of the interest
rate increases to our saver members.
In light of the macroeconomic conditions, the continuation of
the cost of living crisis and the potential impact on mortgage
affordability, the Society increased its provision for expected
losses on loans to customers, recognising the increasing risk
of credit deteriorating in a recessionary environment. Our asset
quality remains strong with arrears levels remaining low at 0.20%
of loans three months or more in arrears and an average loan
to value at the end of 2022 of 54%.
Supporting local communities has continued to be an important
part of The Nottingham. Throughout 2022 we delivered our Corporate
and Social Responsibility programme that saw 841 hours volunteered
to community projects and charities by our team. In addition
to this GBP150,000 was donated to the Samuel Fox Foundation.
In relation to colleagues, we have made two cost of living payments
to support them through these challenging times.
Strategic review and outlook
The Society completed a strategic review in 2022. Following this
process, a new strategy is being developed which builds on The
Nottingham's 170-year heritage looking after savers and helping
people own their own homes while also seeking to address the
challenges some aspiring homeowners face due to their chosen
careers or lifestyles. This will be further implemented in 2023.
Sue Hayes
Chief Executive
3 March 2023
Consolidated income statement
Total Group Basis 2022 2021 2020
GBPm GBPm GBPm
------------------------------------------------ ------- ------- -------
Net interest income 62.8 45.9 40.6
Net fees & commissions receivable 1.6 3.1 3.7
------- ------- -------
Net underlying income 64.4 49.0 44.3
Management expenses (47.0) (43.0) (41.1)
Impairment (charge)/release - loans & advances (2.2) 1.4 (2.9)
Underlying profit before tax 15.2 7.4 0.4
Gains from derivative financial instruments 10.2 7.9 (2.7)
Net strategic investment costs (5.0) (0.2) (4.5)
Change in accounting estimate (1.5) - (1.6)
Reported profit/ before tax 18.9 15.1 (8.4)
Tax charge (3.1) (2.5) 1.2
------- ------- -------
Reported profit after tax 15.8 12.6 (7.2)
Represents:
Profit after tax - continuing operations 15.8 12.4 (7.0)
Profit after tax - discontinued operations - 0.2 (0.2)
================================================ ------- ------- -------
Within the consolidated statutory financial statements, the mortgage
broking business is reported as a discontinued operation in the
2021 comparatives.
Consolidated income statement
for the year ended 31 December 2022
2022 2021
GBPm GBPm
Continuing Operations
Interest receivable and similar income 98.8 64.4
Interest payable and similar charges (36.0) (18.5)
--------- ----------
Net interest income 62.8 45.9
Fees and commissions receivable 3.1 3.0
Fees and commissions payable (1.5) (0.9)
Net gains from derivative financial
instruments 10.2 7.9
Total net income 74.6 55.9
Administrative expenses (42.8) (36.5)
Depreciation and amortisation (10.7) (6.8)
Operating profit before impairment 21.1 12.6
Impairment (charge)/release - loans
and advances (2.2) 1.4
Profit on disposal of subsidiary undertaking - 0.5
Profit on disposal of property, plant
and equipment - 0.4
Profit before tax 18.9 14.9
Tax charge (3.1) (2.5)
Profit after tax for the financial year for
continuing operations 15.8 12.4
Discontinued operations
Profit after tax for the financial year from
discontinued operations - 0.2
Profit after tax for the financial
year 15.8 12.6
--------- ----------
Consolidated statement of comprehensive
income
for the year ended 31 December 2022
2022 2021
GBPm GBPm
Profit for the financial year 15.8 12.6
Items that will not be re-classified
to the income statement
Remeasurements of defined benefit 0.1 -
obligations
Tax on items that will not be re-classified (0.1) 0.3
Items that may subsequently be re-classified
to the income statement
FVOCI reserve
Valuation losses taken to reserves (4.1) (0.3)
Tax on items that may subsequently
be re-classified 0.8 0.2
Other comprehensive (expense)/income for the
period net of income tax (3.3) 0.2
--------- ----------
Total comprehensive income for the
year 12.5 12.8
--------- ----------
Consolidated statement of financial position
as at 31 December 2022
2022 2021
GBPm GBPm
Assets
Liquid assets 719.3 562.5
Derivative financial instruments 142.6 26.1
Loans and advances to customers 2,922.8 3,010.9
Fixed and other assets 27.8 35.3
-------- --------
Total assets 3,812.5 3,634.8
-------- --------
Liabilities
Shares 3,009.7 2,874.6
Borrowings 518.4 496.1
Derivative financial instruments 14.4 6.5
Other liabilities 14.4 14.5
Subscribed capital 24.0 24.0
-------- --------
Total liabilities 3,580.9 3,415.7
Reserves
General reserves 235.0 219.2
Fair value reserves (3.4) (0.1)
-------- --------
Total reserves attributable to members of the
Society 231.6 219.1
Total reserves and liabilities 3,812.5 3,634.8
-------- --------
Consolidated statement of changes in General FVOCI Total
members' interests as at 31 December reserve reserve
2022
GBPm GBPm GBPm
Balance as at 1 January 2022 219.2 (0.1) 219.1
Profit for the year 15.8 - 15.8
Other comprehensive expense for the period
(net of tax)
Net losses from changes in fair value - (3.3) (3.3)
Total comprehensive income/(expense)
for the period 15.8 (3.3) 12.5
--------- --------- ------
Balance as at 31 December 2022 235.0 (3.4) 231.6
--------- --------- ------
Balance as at 1 January 2021 206.3 - 206.3
Loss for the year 12.6 - 12.6
Other comprehensive income/(expense)
for the period (net of tax)
Net gains/(losses) from changes in fair
value 0.3 (0.1) 0.2
Total comprehensive income/(expense)
for the period 12.9 (0.1) 12.8
--------- --------- ------
Balance as at 31 December 2021 219.2 (0.1) 219.1
--------- --------- ------
Summary consolidated cash flow statement
for the year ended 31 December 2022
2022 2021
GBPm GBPm
Cash flows from operating activities 34.3 22.0
Changes in operating assets and liabilities 132.8 3.2
Net cash generated from operating activities 167.1 25.2
Cash flows from investing activities (159.2) (117.2)
Cash flows from financing activities (2.7) (2.8)
-------- --------
Increase/(decrease) in cash and cash equivalents 5.2 (94.8)
Cash and cash equivalents at beginning of year 287.2 382.0
-------- --------
Cash and cash equivalents at end of year 292.4 287.2
-------- --------
Summary ratios
2022 2021
% %
Common Equity Tier 1 ratio 16.8 16.5
Liquid assets as a percentage of shares and borrowings 20.39 16.69
Group profit for the year as a percentage of
mean total assets 0.42 0.34
Total Group management expenses as a percentage
of mean total assets 1.44 1.19
Group continuing management expenses as a percentage
of mean total assets 1.44 1.17
Society management expenses as a percentage of
mean total assets 1.43 1.17
Society interest margin as a percentage of mean
assets 1.68 1.24
Notes
* The financial information set out above, which was
approved by the Board of Directors on 2 March 2023,
does not constitute accounts within the meaning of
the Building Societies Act 1986.
* The financial information for the years ended 31
December 2022 and 31 December 2021 has been extracted
from the Accounts for those years and on which the
auditors have given an unqualified opinion.
* Underlying profit is a measure that aims to present
management's view of the Group's underlying
performance for the reader of the Annual Report &
Accounts with like for like comparisons of
performance across years without the distortion of
one-off volatility and items which are not reflective
of the Group's ongoing business activities.
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