Building societies ride out the financial crisis

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The Independent Online

All but four of the UK's 48 building societies were profitable in the past year despite "highly competitive" conditions, a new report shows.

At a time of record-low interest rates and subdued mortgage activity, KPMG's annual survey of the sector showed 28 societies increased bottom-line profits, while the four making a loss compared with six in the previous year's report.

Nationwide continues to dominate, with total assets of £188.9bn in April accounting for 61.7 per cent of the sector, down £2.5bn on a year earlier.

Lending constraints caused by the cost of retail funding have forced many societies to shrink the size of theirmortgage books, meaning total sector-wide assets fell from £319.5bn to £306.2bn.

However, KPMG partner Simon Walker said building societies continued to have a "good" credit crisis, in contrast with the problems endured by former members of the sector such as Halifax and Northern Rock.

"The sector has had no taxpayer support and all but four made a profit last year," he said. "Building societies' reputation for looking after their own problems continues, with Yorkshire and Coventry each taking over multi-billion pound troubled societies."

KPMG said the four loss-making societies last year were West Bromwich, Newcastle, Century, and Norwich & Peterborough, whose members have just voted in favour of a merger with Yorkshire Building Society.