Profit took a tumble at Yorkshire Building Society, as declining interest rates tightened the firm’s interest margins.
The building society booked a £385.2m profit in 2024, compared to the £453.7m pocketed in 2023.
The decline was largely due to net interest income falling £49.5m year-on-year, as increased pressure on mortgage and saving books boosted reductions.
Net interest income, a measure of the bank’s revenue from loans minus the interest it pays out on deposits, fell to £736.5m.
The firm’s net interest margin reduced by 15 basis points to 1.16 per cent, down from 1.31 per cent in 2023.
The lender joined Britain’s top banks in facing profit cuts after the Bank of England slashed interest rates three times in six months.
Loan book ‘remains strong’
Yorkshire Building Society said mortgage balances reached £49.7bn, compared to £46.8bn at the end of 2023.
The bank cited “higher levels of lending and improved retention” as the reasons behind the growth.
The Society said its “favourable savings rates” continued to support members, with the firm paying 0.9 points higher than their competitors on savings accounts.
Share balances increased £4.9bn over the year, reaching £52bn as the company said growth was supported by its “loyalty products and new propositions”.
The Bradford-headquartered company said the asset quality of its loan book “remains strong” with the number of retail mortgage accounts more than three months in arrears remaining flat at 0.5 per cent.
Company boss Susan Allen praised the firm’s “solid performance” and said there were signs broader economic challenges were “beginning to ease”.
Allen added: “We recognise that many people continue to face financial challenges.
“This year we have launched targeted, innovative products to help address some of these challenges and continue to provide our members with savings rates that were consistently above the market average.
“We have further improved our customer advocacy and are proud of our mutual status. These results strengthen our financial position and place us well in the continuing pursuit of our purpose.”