Losses been cut at lender the West Brom – but the building society still can’t break into the black.
The mutual has reported losses of £10.4 million for the year to March 31, down from £17 million last year.
New chief executive Jonathan Westhoff said the society had had success with a ‘Back to Basics strategy’, which emphasises its focus as a traditional regional with core activities of savings, investments and prime residential lending.
However, the losses are stark in comparison to growing profits at local rivals like Coventry Building Society, which reported a 27 per cent rise in profits to £75.3 million last year.
Smaller community societies like the Tipton and Coseley, The Dudley and Stafford Railway have all posted profits as they bounce back from the recession.
Mr Westhoff said, however, that the West Brom – the name the society now uses, after changing from the West Bromwich Building Society – had posted an operating profit and said the historic low interest rates remain an issue.
He said: “While the society has reported a post tax loss for the year of £10.4 million, this represents a further reduction from last year’s £17 million – and, more significantly, we have seen profits return at the operating profit level, at £9.3 million.
“This performance is very encouraging, especially in light of the unrelenting pressure on interest margins from bank rate which, at 0.5 per cent, has remained at an all-time low for a prolonged period of time.”
The West Brom saw its total assets fall by more than nine per cent, to £7.55 billion, although its cash position significantly strengthened from £9.6 million last year to £385.4 million.
During the financial year, the Society attracted £1.9 billion of new retail balances. As a result, at the year end, the society’s
residential lending was covered 1.22 times by retail deposits.
However, in a statement, the Mr Westhoff conceded difficult conditions were set to continue.
He said: “It would appear that the fallout from one of the worst economic crises in generations will continue to have an impact for some time to come. Operating in such challenging conditions, our aim has been to position the society to withstand these pressures and, as we look ahead, to be able to compete as opportunities arise.
“The financial environment remains a demanding one but, I can confidently say that the initial goals set by my predecessor,
Robert Sharpe, have been realised, in particular returning the Society to strength and putting in place a high quality management team that can take the West Brom forward.”