Marsden Building Society results to 31 December 2009

Financial strength from a trusted name

Despite the challenges brought by a low interest rate environment and the economic recession, Marsden Building Society has performed strongly in 2009 demonstrating the advantages of its mutual status.

“The Marsden continued to compete effectively. Mortgage business increased from the previous year and the Society launched a range of new savings products as the competition for retail funding intensified”.

Neil Shoesmith, Chief Executive

Financial highlights

·      Mortgage assets increase by £14.4m to £269.3m

·      Society management broadly constant at 1.39%

·      Profit before tax of £0.8m.

·      Society reserves increase by £0.6m to £30.6m

·      Gross Capital of 9.46%

Looking after the interests of our members

The Society’s results demonstrate a strong performance in 2009 with the good underlying profitability maintaining the strong financial strength from Lancashire’s leading building society. Today, the Marsden has over £356M of assets and 40 thousand customers, providing a strong mutual alternative to communities across the North West.

Profitability  

The Society’s business model is well placed to protect the interest of members. During 2009, operating profit before impairment charges and exceptional items, reduced to £0.8M (2008 £1.5M). This figure was considered appropriate as the Society sought to protect the return for savers in a low interest rate environment.

Impairment charges, the amount the Society provided to cover loan loss  were increased £0.4M (2008 £0.2M), reflecting a prudent approach in the current climate but one that also reflects the underlying quality of mortgage assets.

Exceptional items were a £0.3M ‘right-back’ of the provision for the Financial Services Compensation Scheme levy to support the failure of a number of banking institutions operating in the UK.

The Society has maintained its focus on expenses. The programme of restructuring has continued resulting in a cost of £0.3M. These changes will ensure that the Society’s business operations are both efficient and effective. Our management expense ratio has remained broadly unchanged at 1.39%.

Balance Sheet

The Marsden has continued to focus on the strength of its balance sheet. Total assets reduced modestly by 3% to £356M (2008 £367). This is considered to be a satisfactory outcome, as the Society sought to maximize the efficiency as opposed to growing the business uneconomically. Unlike many lenders the Society was able to compete effectively within the mortgage market. Gross mortgage advances during the year amounted to £69.8m, an increase of £5.7m on the previous year.

The Society’s main source of funding continues to be in the form of savings from our members. During 2009, retail savings reduced by £17M, the Society electing not to retain balances at uneconomic rates offered by nationalised banks and National Savings.

The Society will continue to offer the best possible protection to its savers.

The Society continued its programme of fixed rate savings bonds and deposit accounts for our business customers. The Society will move to esavings during 2010.

“The competition for retail funding remained intense throughout the year, creating the most significant challenge for the Society. The low interest rate environment itself created an understandable volatility as savers considered the impact of available rates”.

Neil Shoesmith, Chief Executive