The West Brom has reported a year of significant profitability despite a downturn in mortgage lending.
In the financial year ending on March 31, 2023, mortgage lending fell from £756m in 2021-2022 to £691m. Yet, pre-tax profits saw a robust increase from £23.2m to £31.8m.
In an effort to better serve its customers, the building society has adapted its approach for existing customers on its Standard Variable Rate (SVR) to mirror that of new mortgage customers. This new strategy meant a lower interest rate for borrowers with a larger proportion of equity in their homes.
This shift in policy resulted in approximately 90% of owner-occupier mortgage customers witnessing savings on their interest rates, with the majority experiencing a reduction of 0.75% at the time of introduction.
Jonathan Westhoff, chief executive officer of The West Brom, expressed satisfaction with the performance, despite the external challenges: “Our financial performance demonstrates our underlying strength and resilience, and allows us to advance on our Purpose-led agenda. But, the greatest satisfaction comes from what we have delivered for our members. Over the past year, we’ve prioritised ensuring our members enjoy the benefits of being part of the West Brom.”
The company has been proactive in aligning its practices to benefit its borrowing members. West Brom became the first lender in the market to adapt its SVR approach to match that of new mortgage members.
The new structure led to all owner-occupier mortgage members reverting to the SVR at the end of their product term, having their rate determined by their loan-to-value (LTV). Westhoff said: “This provided real relief for many of our members at a time when mortgage costs are increasing.”
In addition to these changes, West Brom has negotiated new structures with its partners, resulting in an average 8% reduction in home and contents insurance premiums for members. Furthermore, for savers who helped 3,413 members purchase their first homes this year, West Brom continued to provide ‘best buy’ fixed savings rates. This saw the mutual benefit rise to £33.2m this financial year, more than three times the previous year.
While acknowledging the economic pressures that may impact the members and the employees, West Brom continues to support them.
Westhoff highlighted the company’s commitment to their colleagues: “Across the winter months, over 70% of our colleagues benefitted from a one-off payment of £1,200. This is in addition to our Financial Hardship Support Fund, which exists to offer colleagues support in the event of a sudden, unexpected financial burden.”
