Purpose drives solid results for Yorkshire Building Society and its members

Mortgage innovation and above-market average savings rates in the first half of this year have allowed Yorkshire Building Society to deliver on its purpose of Real Help with Real Life.

First-time buyers benefited from the launch of a unique and innovative £5k Deposit Mortgage to help them achieve their first home. So far this year, one in three new mortgages provided by the Society has gone to a first-time buyer.

Over 2024 so far on average, savers received interest rates of 0.91 percentage points higher than the market average[i], equating to an additional £140m in interest paid to savers.

Yorkshire Building Society grew both its mortgage and retail savings balances by £2.0bn and £2.6bn respectively in the six months to June, despite gross mortgage lending in the UK being down 12% year on year[ii] and an economic environment that continued to be challenging.

The rising rate environment has served to elevate levels of profitability across the industry over the past two years. This dynamic has been absent from the first six months of 2024 and, as Bank Rate appears to have reached its peak, income performance and profitability have stepped down accordingly to more normalised levels.

Financial highlights:

• 290,000 savings accounts opened (2023 H1: 320,000)
• Savings balances increased to £50.3bn (2023: £47.7bn)
• On average savers were paid 0.91 percentage points above the market average (1.01pp higher over 2023)
• Provided 23,000 new residential mortgages (2023 H1: 21,000), with one in three new mortgages provided to a first-time buyer
• Mortgage balances increased to £48.8bn (2023: £46.8bn)
• Statutory profit before tax was £158.1m (2023 H1: £180.6m)
• Core operating profit[iii] £149.2m (2023 H1: £246.4m)
• Common equity tier 1 ratio 17.8% (2023: 16.7%)

As part of its commitment to the communities where its colleagues and members live and work, Yorkshire Building Society has also:

• Made a positive difference to 8,100 people through its partnership with Citizens Advice since 2021, now available in more than 40% of branches
• Raised more than £400,000 towards its £1million target for charity partner FareShare, enabling nearly 200 people to be supported through the employability programme
• Delivered 548 financial and career education sessions to children, young people and adults across the UK so far in 2024

Susan Allen, Chief Executive of Yorkshire Building Society, said:

“Over the first six months of the year, I have seen first-hand a clear commitment from our colleagues to deliver on our purpose. We have continued to offer above-market average savings rates, launched new, innovative products to help first-time buyers and delivered a solid financial performance.

“I’m delighted that we have been able to achieve all this and continue to invest to improve the customer experience for our members, with a particular focus on our digital channels, which together with our national network of branches has played a part in increasing the Society’s overall Net Promoter Score®[iv] to +64 (2023 H1: +63).

Mortgages

“Providing support to our borrowers is important to us and we know one of the most significant challenges faced by first-time buyers is saving for their deposit.

“Our £5k Deposit Mortgage makes buying a home much more achievable for a greater number of people and the stories I have heard about its impact have been heart-warming. Simply put, it has been life-changing for those people who thought they would never own their own home and who are now getting keys and planning their future as home-owners.

“While we continue to seek to support prospective borrowers, we are also mindful of the challenges faced by our existing mortgage holders. While some aspects of the cost-of-living pressures have eased, household finances remain strained for many and the cost of borrowing is higher than a few years ago. Our teams have worked hard to understand and respond to individual circumstances and help customers navigate the difficulties they may face.

Savings

“Recent research we supported found the benefits of saving extend far beyond the financial[v]. Not only are savers much more likely to go on to become homeowners in the future, but also there is a strong, positive relationship between the act of saving and mental wellbeing.

“Our new First Home Saver provides a regular savings tool specifically designed to help first-time buyers reach their goal of saving for a deposit and owning a home. We also continue to reward those members who have been with us for at least a year with Loyalty products.

“As a mutual, we do not have external shareholders so we can return more to our members. Over 2024 so far, we paid savers on average 0.91 percentage points above the market average, delivering an additional £140m in interest to members.

Communities

“We play a key role in strengthening financial wellbeing within the wider community. Our community programmes operate both locally and nationally, and they place the issues of financial hardship, financial education, and employability skills front and centre.

“Our award-winning partnership with Citizens Advice funds advisers to hold free, confidential appointments in our branches for members and non-members alike. Beginning as a trial in a small number of our branches, this was quickly expanded after observing the genuine, positive difference the service makes to people’s lives. To date, the programme has assisted over 8,000 people. This is a key example of how the ways we use our face-to-face retail network are evolving as we seek out opportunities to take full advantage of our national presence.

“Until June 2026, money raised by Yorkshire Building Society will fund FareShare’s Building Skills for the Future employability programme. Our aim is to raise £1 million to help lift over 2,500 people out of financial hardship and into the world of work. We are delighted with the progress we have already made toward this goal. So far, almost 200 people have been reached through the programme.

Looking forward

“External factors, including the interest rate environment and inflation, continue to influence our core markets – mortgages and savings.

“Both 2022 and 2023 represented periods where profits made by the Society were higher than historical levels. An anticipated reduction in income due to mortgage and savings margin compression, and the absence of further changes to Bank Rate, led to H1 2024 profitability returning to more normalised levels. Mortgage and savings margins stabilised over this reporting period, and core profits increased between quarter one and quarter two. We expect this trend to continue in to the second half of the year. The Society is well-positioned for the prospect of reducing interest rates.

“As a mutual, it is vitally important we operate a responsible and sustainable business on behalf of our members and hold levels of capital and liquidity that comfortably exceed regulatory minimums.”

The half-yearly financial report can be read here.