Profits have more than halved at Darlington Building Society but the organisation’s chief executive hailed a “robust” performance during the pandemic.
The society has published its annual report for 2020 which showed that profits fell from £1.77m to £730,000 as funds were set aside to cover bad debt and interest rates were cut by the Bank of England. A slowdown in the housing market and increased costs also reduced profitability.
But the society’s total assets rose to £705m (from £666m a year earlier), and chief executive Andrew Craddock said the organisation’s performance was “a testament to the way the staff pulled together in unprecedented circumstances.”
General reserves at the society rose slightly to £46.6m but there was a fall in both new mortgage lending and new savings balances.
The results mirror performances posted by a number of larger building societies in recent weeks, with most seeing profits fall substantially during the pandemic. Mr Craddock said: “It’s been the hardest year I’ve ever known, and I couldn’t be prouder of the staff – it’s been humbling. In the context of the unprecedented challenges in the economy, it is an extremely robust set of results.”
He added: “The economic outlook remains highly uncertain and depends on the future path of the virus, the stringency of public health measures, the timing and effectiveness of vaccines and the reactions of households and businesses to all of these.
“It also depends on the Brexit trade deal not causing any future disruption to our ongoing trading and relationship with the European Union and the Government continuing support to the economy.”
The society did not take advantage of the Government’s furlough scheme and gave staff early assurances about job security.
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It also continued its support for the community, with 5% of profits going to local good causes.
Mr Craddock said the society’s investment in new technology was starting to pay dividends, and that branches in Redcar and Bishop Auckland would relocate to more prominent sites with better disabled access in the coming year.
Chairman Jack Cullen said: “Although profitability is lower, we remain a strong, safe and resilient society, with robust levels of capital and liquidity, well in excess of regulatory requirements, and our total assets have increased to nearly £705m.
“This has enabled us to manage through the Covid-19 pandemic without needing to participate in any of the Government support schemes and we have not furloughed any of our staff.”