A decade of record financial results comes to an end for the West Bromwich Building Society today as the Black Country’s biggest financial institution reports a rare dip in profits.

Reported profit before tax fell by 6.8 per cent to £41.1 million in the 12 months to March 31, the West Brom’s annual results statement will show.

Against that, however, mortgage assets under management rose by nine per cent to £7.3 billion while net savings balances rose by £1 billion to £5.5 billion and total assets rose by 15 per cent to £9.6 billion.

The pre-tax profit figure is net of £37.5 million-worth of “mutuality benefits” through improved savings and borrowing rates, up from £34.1 million last time.

The results, which reflect nine months of turbulence in the financial markets, are “creditable”, the society says.

Chief executive Stephen Karle said: “The West Brom has performed creditably despite the current market conditions. “The society has an overriding focus on ensuring the safety and security of our members’ savings and investment interest whilst ensuring profitable performance.

“We have a funding base that will allow us to provide competitive products and respond to opportunities that may arise from the current market conditions.”

The West Brom’s consolidated income statement, which counts contributions from subsidiary operations as well as the core building society business, shows a total operating income for the year of £102.6 million compared with £100 million the year before.

Against that, impairment losses on loans and advances rose to £6.4 million from £1.3 million previously.

The management expense ratio, as a proportion of assets, was driven down to a record low of 0.60 per cent.

Chairman Brian Woods-Scawen said the West Brom puts an “absolute premium” on safety and security. As a response to the turmoil sparked by the US subprime crisis and the run on Northern Rock in the UK the society beefed up its holding of liquid assets from £1.5 billion to £2.1 billion.

“We remain confident in the strength of our balance sheet. As part of our commitment to security and prudence, we have no exposure to US subprime markets or to US mortgage-backed securities,” Mr Woods-Scawen said.

The society raises about 70 per cent of its total funding from deposits. Net savings balances last year rose by 22 per cent to £5.52 billion.

“The West Brom is not exposed to the difficulties of some other financial institutions which have been more dependant on wholesale markets for funds,” Mr Woods-Scawen added.

The economic slowdown had produced “modest and controllable” increases in mortgage arrears, Mr Karle said. At the year end, loans 2.5 per cent in arrears were within industry norms at 0.6 per cent of total balances, while repossessions were “far short” of those reported by other lenders.

“The society has a policy of sympathetic and supportive response to borrowers who are in financial difficulties,” Mr Karle said. “Debt counselling is available and it works with borrowers to help them through periods of temporary problems. Repossessions are only progressed when all other possible avenues have been fully explored.”

Commenting on current market conditions, Mr Woods-Scawen said: “Consensus forecasts indicate continued economic growth in the current year, although at a lower rate than in recent years, and there is no evidence of a serious and sustained increase in unemployment.

“We expect a modest reduction in house prices in the year ahead and a lower overall demand for mortgages.

“The rate of our asset growth will be restrained whilst current market conditions persist - a situation which shows no significant signs of changing at present.”