Press
Co-operative Bank results 'point the way forward'
By Joy Dunbar
Financial Adviser, Thursday, Mar 05, 2009
Pre-tax profits at Skipton declined by a dramatic 86 per cent last year, according to the building society's annual results.
Net interest margin reduced by £12.2m to £69.8m partly as a result of the competitive interest rates on savings products, securing longer-term funding and carrying above-normal levels of liquidity during the credit crunch.
The results highlighted gross lending was down by a third from £2.2bn to £1.3bn.
Profits were impacted by the lender's £11m exposure to the Icelandic banking system and its contribution to the Financial Services Compensation Scheme to rescue Bradford & Bingley and other banks.
Skipton said profits last year were almost half what they would have been had the FSCS provision not been required.
David Cutter, chief executive of Skipton, said: "Skipton, in common with all building societies, has a substantial and stable retail funding base. We also have high levels of capital and liquidity, which make us strong in the current climate.
"However, unlike other building societies, we also have a diversified group of subsidiary investments, which generate profits, even in this difficult economic climate."
James Carter, principal of London-based IFA Independent James, said: "It is to be expected in the current climate.
"You could tell the results were not going to be that great because it had tightened its mortgage lending criteria, even though it was mainly a prime lender it was not outlandish in its lending."
Skipton added its merger with Scarborough Building Society was on track to be completed by the end of March.