Bosses at Newcastle Building Society have pointed to solid underlying half year results despite the impact of the way interest rate swaps are valued on its numbers.
The mutual saw operating profits fall to £10.5m in the first half of the year, compared with £20.1m in the same period last year. Meanwhile underlying operating profit was up marginally to £15.9m, compared with £15.6m at the same point last year. Net interest income and other income grew strongly to £81.9m, compared with £71.2m in the first half of 2024.
Investors on the London Stock Exchange were told of unrealised losses on instruments the group holds, having been impacted by issues in the wider economy, and increased costs thanks to investment in staff, systems and infrastructure all weighed on the group's results. But the society also saw gains across a number of key areas, including its mortgage book growing to £5.4bn from £5.3bn at the end of 2024, and a 4% rise in savings balances to £5.7bn.
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During the first half, payments of £8.6m were made to customers affected by the demise of the Philips Trust, with the society having made a provision of more than £21m last year. The issues stretch back to 2018 when the Philips Trust took control of The Will Writing Company - a provider that Newcastle Building Society introduced some of its members to, but which was caught up when the Philips Trust was put into administration in 2022.
Bosses said a further £1m has now been received from the administrators, from recoveries made from Philips Trust Investments. So far a total of £18.7m has been voluntarily paid to those impacted - in some cases with distressing consequences to their lives.
Elsewhere, the group's Strategic Solutions business - which provides outsourced savings management services to other banks - saw balances under management grow by more than £700m to £51.4bn in the first half. The subsidiary saw a £2.9m operating loss despite growth in revenue to £24.3m, compared with £22.5m. This was due to investment in systems for the business which is said to have seen client growth.
Speaking to BusinessLive, chief executive Andrew Haigh said he was pleased to see savings balances growing a branches as the society continues its commitment to protecting face-to-face banking services - a model it hopes to roll out in the North West following its acquisition of Manchester Building Society.
Mr Haigh explained: "It's the same formula - it's all about the people. You will be greeted by a colleague who is interested in serving you face-to-face, not a battery of technology. Then we'll build out in a similar way.
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"The important thing is, if you want to be a community orientated business, you're going to have to do that authentically. So we'll build this on the ground in Manchester - we've already got a team starting to build relationships there.
"We're a patron of the newly launched Salford Youth Zone, which is all about enabling young people. So we're starting to build out our commitment to community and employability, and we've got a relationship with the local community fund. It's the same approach but it'll be a bit different to the North East.
"We're not sitting on the ground in Newcastle telling Manchester what Manchester wants, it will be up to customers and members in the communities there. They'll talk to us and we'll tailor what we do to suit what they want."
And during the period nearly £100,000 in grants were allocated through the society's Community Funds. In the North West, £20,950 was issued to five charities from the Manchester Building Society Community Fund at Forever Manchester. And in the North East, the Newcastle Building Society Community Fund at the Community Foundation issued 15 grants totalling £71,240.
The sums were given to support charities' work tackling debt management, insecure housing and homelessness, food poverty, the environment and work and opportunity.