Financial support for the victims of the Philips Trust Corporation collapse has impacted pre-tax profits at Newcastle Building Society, but underlying numbers show growth.
New 2024 results for the mutual show pre-tax profits more than halved from £29.1m to £15.7m as a result of the £20m voluntary support offered by the Tyneside lender, alongside sums from other societies. But operating profits before impairments grew 9% to £34.2m as bosses pointed to growth in mortgage customers and savers.
Gross mortgage lending increased to a record £1.2bn, from £1.1bn in 2023, while net core residential lending fell from £575m to £596m. Meanwhile the net interest margin fell six basis points to 1.44%.
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Newcastle Building Society's connection with the Philips Trust Corporation stretches back to 2018 when Philips took control of The Will Writing Company - a service provider the building society introduced to some of its members. Philips Trust's subsequent administration in 2022 spelled difficulties for some of those members - many with distressing stories about the impact on their lives.
Last summer, Newcastle Building Society announced it had created a to support the victims - a measure it said was possible thanks to its financial strength. The society has repeatedly said the decision to provide help is a voluntary one, and that it was under no legal or regulatory requirement.
Elsewhere in the results, the society repeated its investment plans for Manchester Building Society, following the 2023 merger. In January, it was announced a flagship branch would return to Manchester city centre followed by ambitions for more branch openings across Greater Manchester and the North West. There will also be recruitment of a Manchester-based team this year.
That growth will be partially supported by £60m of capital raised last year, which will also be used to expand the infrastructure of the group including the financial systems underpinning the business, customer services and digital mobile work. Andrew Haigh, chief executive of Newcastle Building Society, said: "If you look at the trajectory over the past few years, it's one of steady growth and underlying that has been a lot of investment into the infrastructure of the business - whether that's the investment into the branch network and growth of savings balances but also behind the scenes with a lot of factors that are absolutely essential but invisible to people."
The group's outsourced savings management business, Newcastle Strategic Solutions, saw growth during the year with client savings balances under management topping £50bn for the first time. The North Tyneside-based subsidiary now works with 17 海角视频 banks and other building societies.
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And Newcastle Financial Advisers - the group's financial advice arm - surpassed £1bn of assets under management with reported increasing demand from customers for pensions and retirement planning services as well as investment, inheritance tax and protection advice.
Mr Haigh said: "Despite the many challenges in the external environment, 2024 proved to be a year of progress for the Society with improvements in our infrastructure, the service we provide to members and in our financial results. We never lose sight of the fact that this progress would not be possible without the dedication of our colleagues, the collaboration of our strategic partners and most importantly of all, the support of our members.
"In 2024 we laid the foundations for a bright new future for the Manchester Building Society brand and a continuation of commitment to community and high streets from the whole Society. Our investment in digital capabilities for the Solutions business will ensure that it is ready to continue its development road map and the evolution of its services. We look back on 2024 with gratitude to all those who made our journey to date possible and look forward with positivity, as we seek to further our efforts to 'Connect our communities with a better financial future'."