Key highlights:

  • Operating profit increased by 11 per cent to £16.3m, compared to £14.7m for 2018
  • 12 per cent net growth in customers
  • Record net core residential mortgage lending at £575m, more than 3.5 times higher than 2018 (£160m), supported by strong retail funding through branches
  • An expanding branch network, from 27 to 31, to include two community branches in Hawes and Wooler
  • Multi-million pound investment in refurbishing existing branches, as the Society’s commitment to high streets in towns across the region continues
  • The Newcastle Community Fund at the Community Foundation grew to more than £2m and awarded over £400,000 in grants to 86 charities throughout the North East, North Yorkshire and Cumbria
  • Over 150 additional jobs created across the region

A strong performance throughout 2019 has seen Newcastle Building Society report record mortgage lending, a 12 per cent net growth in customer numbers, increased profit, strong capital ratios, good liquidity and low credit risk across its mortgage book.

Growth across the Group created 157 new jobs, predominantly in the North East. These included a substantial number of technology roles in its fintech subsidiary, Newcastle Strategic Solutions.  The UK’s leading provider of third party online savings management services, the Solutions business, which is based in North Tyneside, welcomed two new challenger banks to its growing client list in 2019.

The Society continued its multi-million pound investment commitment to improve and add to its network of branches on its high streets, which increased from 27 to 31.

With bank branch closures widespread throughout the UK, in 2019 the Society refurbished or relocated branches in Morpeth, Ashington, Ponteland, Consett, Hexham, Stokesley, Berwick and South Shields.  It opened new branches in Bishop Auckland and Barnard Castle, alongside two community branches in Hawes, North Yorkshire, and Wooler in Northumberland. Both towns were left with no local branch access following the departure of the last bank in town.

The Society’s chief executive, Andrew Haigh, commented:  “Like many regions in the UK we’ve witnessed the withdrawal of banks and financial institutions from our high streets. We share concerns expressed across our communities as we witness closed premises, visible decline, and the reduction in the availability of local financial services.

“But for a Society committed to the region and with a strategy to be part of the solution, this is also an opportunity. In our view, something has to change.  It’s time for new and innovative thinking.”

Newcastle Building Society welcomed significant numbers of new customers and increased retail savings funded through its branches, with an increase in branch savings balances of 23 per cent, equalling a net movement of £400m and an overall net increase of customers of 12 per cent.

Competition in the mortgage market has been fierce throughout 2019, with the added challenge of Brexit uncertainty affecting consumer confidence. Despite these headwinds, the Society’s mortgage lending hit a record high of £575m, an increase of £415m on 2018.  This lending has been achieved within margin forecasts and in the context of a flat mortgage market.

Overall the number of loans in arrears remained low at 0.34 per cent (0.30 per cent in 2018) and well below the industry average.   The Society received an award in recognition of its debt arrears management strategy and became the first building society in the UK to introduce a digital debt help service featuring open banking technology.

The Group’s capital ratios remain robust with Common Equity Tier 1 ratio reducing slightly to 13.9% from 15.7% and Tier 1 ratio reducing to 14.3% from 16.3%. Both reductions were primarily a result of increased lending. The Group complied with Individual Capital Guidance plus capital buffers, as notified by the Prudential Regulation Authority.

Newcastle Building Society has complemented spending on its network of modern, innovative branches, with significant investment in colleagues and its IT, digital and cyber security resilience.  Despite the substantial investment involved, profit before tax increased by 10 per cent to £14.7m, compared to £13.3m in 2018. Operating profit also increased by 11 per cent to £16.3m, compared to £14.7m in 2018, reflecting the enhanced performance of the Society.

Its subsidiary, Newcastle Financial Advisers, which is central to the Society’s commitment to providing accessible and affordable financial advice on the high street also enjoyed a strong year.

As part of its strategy for growth, it acquired Fidelis Financial Advisers, a financial adviser practice based in North Yorkshire.

Creating a long term, sustainable, charitable funding legacy to support the region is a key priority for the Society.  2019 saw it celebrate surpassing £2m value in its Newcastle Building Society Community Fund at the Community Foundation, Tyne & Wear and Northumberland. During 2019 the fund provided £403,000 in community grants across the North East, Cumbria and North Yorkshire, supporting 86 different community projects, including the Sir Bobby Robson Foundation and the Prince’s Trust. Six grants were made to foodbanks in the region.

Andrew Haigh concluded:  “Our focus on continued innovation, our sustainable, long term business model and our robust financial performance are critical factors in ensuring we can continue to make a genuine, positive difference for the customers and communities we serve across our region and beyond.”