B&B shows its strength with pounds 165m profits

NIC CICUTTI

Bradford & Bingley, Britain's fifth largest building society, gave the first clue yesterday of how much its planned pounds 50m loyalty bonus to members is likely to cut into earnings, as it announced annual pre-tax profits of pounds 165.6m.

The announcement is the first among societies offering mortgage rate cuts and savings increases to members as part of their defence of mutuality.

Last week, Nationwide Building Society said it was handing back pounds 200m of future earnings to members by cutting mortgage rates to 6.99 per cent.

The decision put rivals - including Halifax, Alliance & Leicester and Woolwich, all of which are planning to float on the stockmarket next year - on the defensive.

But it also means that societies intending to remain mutual, such as Bradford & Bingley, may be forced to go back to the drawing board and give away a further slice of their profits in order to remain competitive.

Last year, Bradford & Bingley's after-tax profits rose by more than 10 per cent to pounds 111.8m - compared with pounds 101.3m in the previous year. Pre- tax profits were up pounds 6m compared to 1994

Geoff Lister, chief executive at Bradford & Bingley, said that the performance underlined the society's financial and strategic strength. Despite difficulties in the housing market, the society increased the amount of its residential mortgage advances by 21 per cent to pounds 1.8bn.

His comments came as another society, Skipton, announced yesterday that its own 1995 pre-tax profits rose by 56 per cent to pounds 27m. Skipton said it has succeeded in cutting the percentage of its borrowers in arrears of 12 months or more to 0.17 of all mortgages, compared to an industry average of 0.81 per cent.

The society, which pioneered free unemployment insurance for borrowers, also added a further 30,000 savers, a 9 per cent increase on 1994.

John Goodfellow, chief executive at Skipton, said his society's results came despite a decision to write off all its mortgage incentives and discounts as already incurred, rather than amortise them over the period of the loan.

Skipton is also preparing its own loyalty bonuses to members. Mr Goodfellow said: "If we were to follow the example of Nationwide we would be handing back profits of pounds 10m in a full year."

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before