Swansea Building Society posted its best-ever set of results in 2020 as it benefitted from supporting local communities by keeping its growing network of local branches across South Wales open through the pandemic while reaping the rewards of a five-year investment programme it started in 2015.
Its total assets, mortgage balances, savings, capital and profits all reached record highs last year despite the challenges of the COVID-19 pandemic. This planned increase was the result of a comprehensive investment plan kickstarted in 2015, which has seen it open three new branches, upgrade back-office systems and hire new talent across the business.
Employees in the financial services sector were classed as key workers throughout the COVID-19 pandemic as the government wanted to ensure individuals had access to their finances. By keeping all of its branch offices open for face-to-face and telephone/e-mail contact, Swansea Building Society was able to welcome many new savers and mortgage customers despite the challenges of the last 12 months.
For the 12 months to December 31, 2020, the Society’s total assets increased by £44 million to £414.4m, a growth rate of 12%; its mortgage balances increased by £29.6 million to £302.9 million, an increase of 11%; and its savings balances increased by £41.1 million to £386.8 million, a 12% rise. All of the growth in net mortgage lending was funded by increases in retail savings balances from personal customers deposits.
The Society posted a pre-tax profit of £3.3 million compared with the £2.3 million it made a year earlier in 2019. Although its levels of mortgage lending were slightly down due to the disruption of the pandemic (£67.1 million versus £74.3 million a year earlier) it also reduced its expenses to £4.8 million compared with £5 million in 2019. The Society has now delivered annual pre‐tax profits greater than £2m in each of the last seven years.
Swansea Building Society remains one of the few financial institutions in the UK that receives no wholesale funding or support from the Bank of England in the form of cheap funding. Its balance sheet is funded entirely by customer savings balances and its own capital reserves built up from retained profits over many years.
The Society continued with its ethos of ‘opening not closing’ branches, in contrast to most financial institutions. It has opened new branches in Carmarthen, Cowbridge and Swansea City Centre in recent years. This benefitted it through the pandemic as more customers sought a personal, friendly and local service, and many savers, worried by economic crisis, also looked to spread their assets.
Alun Williams, Chief Executive of Swansea Building Society, said:
“Despite the many challenges of the COVID-19 pandemic, the Society has weathered the health and economic disruption associated with the pandemic during 2020. We remained open and responsive to our customers throughout, which I think was appreciated by many local communities who were also, of course, staying local.
“It is our aim to enable individuals and families to realise their goals of a better and more secure future and the way we supported communities fitted well with that. We provided support to over 400 mortgage members with payment holidays. We also saw an uplift in savers coming to us, some of whom, concerned by the potential for a second banking crisis, were keen to spread their assets.
“In addition to that dynamic, in 2020 we truly reaped the rewards of the investment programme we started in 2015, not just in branches but in talent and infrastructure including IT. Last year was the first year for a while when there was no additional capital expenditure as part of that investment programme, which meant our expenses reduced.
“As ever, as a mutual, our profits will be reinvested into the business, strengthening our capital base so that we can continue to support our members and offer competitive savings rates and a personal, tailored and common-sense approach to mortgage lending with competitive mortgage products. They will be used for the future development of the Society as we consider further expansion and new branches across Wales.
“Despite the pandemic, 2021 finds the Society in a confident mood. The investment that the Society made in opening three new retail branches, refurbishing our Head Office in Cradock Street, and investing in new staff and improved IT systems, has started to pay real dividends.
“2021 will continue to be challenging and uncertain. The record low Bank of England Base interest rate is likely to remain low for a longer period. The Society will continue to adapt and deal with the challenges that arise head on, whilst continuing to deliver a first-class member service and growing our balance sheet and capital reserves in a controlled manner.”