A combination of first-time buyers and home workers looking for larger properties as part of the ‘race for space’ helped Coventry Building Society grow significantly above the level of the market in 2021.
The UK’s eighth largest lender and second largest building society achieved record mortgage volumes and doubled the number of First Time Buyer members as house sales boomed.
The society’s strong financial performance, in which profits bounced back following the Covid-disrupted 2020, also saw savings balances grow as it maintained its record of paying higher than average savings rates.
Strong growth in savings and mortgages
Mortgage balances grew by £3.1bn (7.2%) to £46.6bn, significantly above the level of market growth and doubling the number of first time buyers to 7,100.
Savings balances grew by £1.7bn (4.6%) to £39.9bn with the average savings rate of 0.83%, 0.56% higher than the market average, and the equivalent of an additional £201m interest for savers.
Sustainable profitability and resilient capital and liquidity position
Profit before tax was £233m (2020: £124m). Profitability recovered from 2020 levels driven by balance sheet growth, improved margin and supported by the release of £29m of pandemic related provisions held to cover potential future credit losses.
Net Interest Margin of 0.90% (2020: 0.81%). 1.03% excluding an adjustment of £69m relating to updated assumptions for future SVR income.
Common Equity Tier 1 (CET 1) ratio remains well above statutory requirements at 36.2% whilst the Society’s Leverage Ratio on a UK modified basis increased to 4.8%. The Liquidity Coverage Ratio of 187% is also considerably above the regulatory minimum requirement.
Steve Hughes, chief executive, Coventry Building Society, said: “The pandemic changed the way many people want to live and work, creating greater demand for homes with more indoor and outdoor space, and a surge in the number of people taking their first step on the property ladder.
“The demand from First Time Buyers was particularly strong and we ramped up our support for this critical part of the property market with a greater range of products to help people save for and buy their first home.
“Combined with the Stamp Duty holiday, this created a buoyant and extremely busy mortgage market in 2021. I am very proud of the way my colleagues, the majority working remotely, stepped up and delivered fantastic, confidence-inspiring service to brokers and members during these months.
“In contrast to the first half of 2021 we took decisions to slow growth in the latter months of the year in the face of an increasingly competitive market and the sharp contraction of margins – a clear example of our long-term perspective and member-focussed Purpose.
“We have shown, despite the challenges of the pandemic, that we can meet the needs of today’s members whilst laying the foundations for the future and, as we move on from the challenges of the pandemic, I am very confident about the year ahead.”
