On the back of ‘opening not closing’ branches over the last three years, Swansea Building Society reached new record-breaking highs in terms of its total assets, mortgage and savings balances in 2018, when it celebrated the largest single year of growth on both sides of its balance sheet in the Society’s history.
The Society’s total assets increased by £34.0m to £309.3m, a growth rate of 12.3%. Its mortgage balances increased by £32.0m to £233.2m, a growth rate of 15.8%. All of the growth in net mortgage lending was funded by increased retail savings balances from personal customers of £31.9m.
The Society remains one of the few financial institutions in the UK that has no wholesale funding or support from the Bank of England in the form of cheap funding. Its balance sheet is funded entirely by customer savings balances and its own capital reserves built up from retained profits over many years.
Gross mortgage lending hit a new high at £62.2m in 2018, up from £46.0m in 2017 as a result of opening the new Cowbridge branch in 2017 and appointing more customer facing mortgage managers. Despite the increased mortgage lending, mortgage arrears amounted to just £27k, representing 25 customers on a mortgage book of £233.2m and 1,666 mortgage customers.
The Society’s total net interest receivable for the year was £6.8m compared to £6.4m in the previous year. Its pre-tax profits for 2018 were £2.6m, slightly down on the £2.9m it made in 2017. The Society has now delivered consistent annual pre-tax profits of between £2.5m and £2.9M over the last five years.
The Society has invested heavily in expanding its branch network over the last three years, with new branches in Carmarthen and Cowbridge adding to its existing branches in Swansea and Mumbles. This demonstrates the Society’s ethos of opening not closing branches.
The relocation of its flagship Swansea branch to a prime high street location in Swansea City Centre in January 2019 also supports this philosophy, which is in stable contrast to the majority of financial institutions, which have been closing branches and making long serving staff redundant. The Society is also surveying the potential in South and Mid Wales to continue its branch expansion plans to further widen its geographic footprint.
Alun Williams, Chief Executive of Swansea Building Society, said:
“I am delighted to report that all of our branches performed strongly in 2018, Carmarthen and Cowbridge our newest branches in particular. The growth witnessed in 2018 fully justifies our strategy of opening new branches and investing in well trained and qualified customer facing staff.
“Despite the increase in the Bank Of England base interest rate in August 2018 our gross mortgage lending increased by 35% to £62.2m in 2018, demonstrating the demand from customers for our face-to-face mortgage sales business model, which we deliver in branch. We strive to provide a personal service to all of our customers and understand the needs of the communities that we serve. We firmly believe that it is this approach that underpins our continued success.
“Results from our latest customer surveys confirm that 97.2% of our existing customers would recommend the Society to other prospective customers, which again we feel supports our current branch expansion policy. We are providing an outstanding level of customer service which our new customers cannot believe, based on their experiences with other financial services institutions.
“We opened our new Swansea branch on 7 January 2019 and it has already helped improve our brand awareness in view of its prominent high street location. The new branch is already making a very significant contribution towards our overall performance in 2019 for the year to date. We are currently renovating our head office administration centre in Cradock Street in Swansea to accommodate more staff to provide back-up administration services to our branch based team members.
“It is true that our profits reduced in 2018 as a result of our investment in new branches in Cowbridge and Swansea, as well as increasing our customer facing staff members and a considerable and ongoing investment in IT. However, the biggest impact to our profitability was as a result of increasing all of our savings interest rates by the full 0.25% during 2018. This increased the interest payable to our savings members by over £660k during the year which is no bad thing for a member owned business such as ours.
“Our aim is to continue delivering strong controlled growth through our existing branch network as well as potentially expanding our branch network further within South Wales.”
Swansea Building Society’s balance sheet is 100% funded by retail and business savings and retained profits, meaning it has no reliance on the wholesale money markets to fund either asset growth or mortgage lending, as well as having liquidity and capital ratios that far exceed minimum regulatory requirements.
The building society will hold its annual general meeting at Swansea Liberty Stadium on Thursday 25 April 2019.