Monmouthshire Building Society has reported strong financial results with a rise in its mortgage lending and total assets. The Newport-headquartered mutual posted profits after tax of £9.7m for its financial year to the end of April 2023, compared to £7.8m in the previous year, despite challenging market conditions.
It recorded a profit before tax of £12m (2022: £9.6m) and an underlying profit before tax of £3.8m (2022: £5.2m). Its total assets (comprised primarily of mortgage assets) increased to £1.62bn in the financial year, up from £1.49bn in 2022.
The society also grew its lending book by 7.4% to £1.29bn (2022: £1.20bn), with net lending of £104.2m (2022: £88m). More than a third (38%) of the mutual’s total lending was in Wales at £493m. While £26.5m of new lending went to support energy efficient homes.
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Retail deposits now fund 90% of the society’s mortgage book (compared to 83% in 2022). The society remains predominantly retail funded with retail funding and other deposits inflow was £116m (2022: £101m) for the year.
The total value of new loans in the last financial year rose from £247.8m to £284.9m in 2023. Capital reserves stood at £82.5m, compared to £72.5m in the previous year, with the mutual reporting that it had “sufficient levels” of capital above its regulatory requirements and a “solid foundation” to achieve planned levels of growth.
The mutual, which employs 260 across south Wales and the south-west England, acknowledged the cost of living crisis, rising inflation and interest rate increases faced by its members and said it has passed on rate increases six times to its savers during the financial year, following the Bank of England’s base rate announcements. Provisions for bad and doubtful debts increased from £660,000 in 2022 to £1.1m in 2023.
In a statement within the report, Monmouthshire Building Society chief executive William Carroll said the results outlined another successful year for the mutual, however new challenges lie ahead in the coming years as the world adapts to higher interest rates, geopolitical uncertainty, and the ongoing cost of living crisis.
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He said: “The society delivered on both purpose and performance for the year ended April 30, 2023, supporting our members and colleagues where possible throughout the period.
“We invested in services that add value for our members and colleagues, including our digital capability, branches and working environments. Our new app is scheduled to launch early 2024, and we’re one of a few building societies using automated solutions for repetitive processes.
“We will continue to be led by our core purpose as we move forward with our ambition to become a modern mutual for the benefit of our current and future members.”
Chair of the board Roger Turner said: “As a board, we are very conscious that our members, colleagues, and communities are facing increased pressure on their finances, alongside a future that can feel unpredictable and uncertain. The society has been swift to adapt to these economic conditions, ensuring continued support for members, colleagues, and communities through this challenging time.
“Our agile approach has enabled the society to progress strategic priorities for the benefit of its members, communities and colleagues whilst also ensuring long-term sustainability.”
The financial results follow news that Monmouthshire Building Society has ceased working on plans for a community bank in Wales, in partnership with the Welsh Government, due to what it said were challenging market conditions.
The Welsh Government had chosen the mutual to deliver on its 2022 Senedd Election manifesto pledge of creating a new community bank for Wales, aimed at addressing a contraction in the presence of high street bank branches across Wales.
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However, the mutual said that to due to market conditions it has been forced to put the plans on hold. Confirming the decision last month Mr Carroll said: "As we’ve seen over recent months, the 海角视频’s economic outlook remains uncertain - interest rates have risen to a 15 year high, house prices are falling and the cost-of-living crisis continues.
“As a purpose-driven mutual building society, we prioritise our members and the communities they live in, and we’ll always do the right and responsible thing.
“This means we won’t take any unnecessary risks that could potentially impact on the society’s performance or the trust our members place in us.
“Given current unpredictability and ongoing challenges facing the 海角视频 economy, we’ve decided to stop working on our community bank. We know this is disappointing, but we want to be honest with all those who have supported our work so far.
“I’d like to thank everyone that’s helped and supported us on our journey so far. We’re still committed to the people and communities of Wales and will continue to deliver products and services that are fit for purpose and meet the needs of our current members, future members and the communities we serve."
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