Coventry profits boosted 10% by buy-to-let surge
Coventry Building Society has reported mortgage assets up 9 per cent when compared to the first half of last year, meaning statutory profit before tax increased by 10 per cent to £110m.
In the first six months of the year, the society advanced £4.8bn of mortgages - up from £4.2bn - with net mortgage lending of £2bn - up from £1.8bn during the first half of last year.
Impairment charges totalled just £300,000 on mortgage assets of £31.4bn.
Meanwhile, management expenses rose to £73.5m from £65.1m in 2015, as a result of the society’s growth and the resulting costs of servicing a larger membership, continued investment in core IT infrastructure and implementing ongoing changes to regulation.
An £8.1m charge for provision for liabilities and charges for the period ended 30 June is in respect of the Financial Services Compensation Scheme levy - £7.6m - and Payment Protection Insurance - £500,000 - both of which are down on last year’s £14.2m FSCS levy and £700,000 PPI bill.
Looking ahead Coventry’s chief executive Mark Parsons said while the repercussions of the EU referendum may affect market sentiment and government policy, the fundamentals of the business are unchanged.
He said: “We are a low cost, low risk provider of residential mortgages wholly within the UK, funded predominantly by over one million individual savers.
“In common with other lenders, we had a particularly strong period ahead of the stamp duty changes in April, driven by the buy-to-let sector which has been an area of strength for the society in recent years.
“The new stamp duty rules, together with the forthcoming changes to mortgage interest tax relief, are significant developments within this sector.
“We will adapt to these changes, as will landlords and tenants, and I am confident that buy-to-let investments will continue to offer secure and high quality lending opportunities.”
Mr Parson also pointed out the Coventry continues to receive few complaints, and of those referred to the Financial Ombudsman Service, the overturn rate of just 5 per cent reflects a commitment to doing the right thing for members and remains substantially less than the 53 per cent industry average.