Building societies buoyant: Top 20 weather worst housing recession since Second World War

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The Independent Online
BRITAIN'S biggest building societies have come through the worst housing recession since the Second World War with flying colours, according to the stockbroker UBS.

Half the 20 largest societies achieved healthy profit increases last year with half of these improving profits by more than 15 per cent according to the 1993 edition of The Major Players, an annual survey by UBS.

No society recorded a profit fall of more than 50 per cent while nine increased their assets by more than 10 per cent. The analysis ranks the 20 largest societies according to 12 performance ratios, including profitability, capital strength and market share.

Cheltenham & Gloucester, the sixth largest, has been ousted from the top position in the league for the first time in four years.

Northern Rock, the 11th largest society, achieved the best performance last year. The Newcastle-based society has been insulated from the worst of the housing crisis because of its Northern lending bias.

C&G was second. Its performance was hit by large bad debt provisions in 1992, due mainly to the mortgage arrears on the books of smaller societies it took over. There are already signs, however, that C&G is recovering. Last week it reported an increase in pre-tax profits for the first half of this year of more than 70 per cent.

The biggest deterioration in performance was from Bristol & West, the 10th largest. It fell seven places to 16th, equal with Alliance & Leicester.

B&W's pre-tax profits fell to pounds 39m last year from pounds 67m in 1991 after bad debt provisions trebled to pounds 74m.

Skipton Building Society ranked 20th. It dropped one place from the previous year when it was 19th. Chelsea Building Society dropped three places to number 19.

Despite the poor performance of societies at the bottom of the table, UBS said none would need to be rescued in the foreseeable future.

John Wriglesworth, building society and housing analyst at UBS, said building societies had benefited from the simplicity of their business and relative lack of diversification. Arrears had increased but the majority of borrowers had kept up payments.

Had Abbey National still been a building society it would have ranked ninth.

Halifax, the largest society, ranked fourth. Nationwide, the second largest, was 15th.