Nottingham Building Society
22 February 2008
Nottingham Building Society
Year End Results
The Nottingham delivers robust performance in 2007.
Achievements and highlights include:
• Total assets exceed £3bn
• Record mortgage lending of £697m
• The mortgage book grew by 10.5%
• The quality of the mortgage book remains high and arrears levels are well
below the industry average
• No exposure to the sub prime mortgage market
• Savings balances grew by over 10% and represent 75% of funding
• Group pre-tax profit for the year was £8.2m
• General reserves increased by 5.7% to £144.1m
Commenting Ian Rowling, Chief Executive, said:
'Against a backdrop of challenging market conditions, we made solid progress and
delivered a number of records in 2007.
'In the second half of the year the markets experienced unprecedented
turbulence. As a building society the majority of our funding comes from the
retail savings of our members. This placed us in a better position than some
when the credit crunch took effect.
'Record new lending, along with a successful retention strategy resulted in
mortgage book growth of 10.5%. We continue to diversify our lending but not at
the expense of quality. Our residential mortgage book has an average loan to
value ratio of 34% (using an index valuation basis). The buy to let book is
performing better than the residential book and we have no exposure to the sub
prime market.
'At the year end 75% of our funding came from members. Savings balances grew by
over 10% during the year.
'Group profit before tax ended the year at £8.2m. The key factors impacting
profit include the following:
• Net interest income was broadly unchanged compared to 2006, notwithstanding
a reduced net interest margin and adjustments under International Financial
Reporting Standards (IFRS);
• Reduced house sales resulted in a reduction in income from our estate
agency.
• Management expenses increased by 3.25% largely driven by IT expenditure and
depreciation, which were partly offset by a release of non mortgage related
provisions.
• Impairment charges were low and reflect the quality of the mortgage asset
book.
'Group management expenses reduced from 90p to 83p; the Society only ratio from
77p to 70p.
'The general economic outlook for 2008 remains uncertain. We are adapting to
the new environment, ensuring that as we do the quality of our lending remains a
priority.'
Consolidated income statement
2007 2006
£000 £000
Interest receivable and similar income 161,272 126,581
Interest payable and similar charges (135,731) (100,993)
Net interest income 25,541 25,588
Fees and commissions receivable 7,295 8,068
Fees and commissions payable (1,182) (1,061)
Other operating income - 87
Total net income 31,654 32,682
Other operating costs (218) -
Administrative expenses (20,984) (20,907)
Depreciation and amortisation (2,389) (1,730)
Finance income and expense 175 78
Operating profit before provisions 8,238 10,123
Impairment losses on loans and advances (2) 10
Profit before tax 8,236 10,133
Tax expense (2,365) (2,820)
Profit for the financial year 5,871 7,313
Consolidated statement of recognised income and
expense
2007 2006
£000 £000
Valuation gains/(losses) on available for sale 615 (223)
securities
Actuarial gain on retirement benefit obligations 2,663 1,629
Tax on items taken directly to or transferred from (996) (420)
equity
Net income recognised directly in equity 2,282 986
Profit for the financial year 5,871 7,313
Total recognised income and expense for the year 8,153 8,299
Consolidated balance sheet
2007 2006
£000 £000
Assets
Liquid assets 611,720 438,326
Derivative financial instruments 24,933 19,854
Loans and advances to customers 2,369,849 2,144,293
Fixed and other assets 19,278 16,155
Total assets 3,025,780 2,618,628
Liabilities
Shares 2,121,131 1,901,058
Borrowings 719,219 539,824
Derivative financial instruments 6,905 1,847
Other liabilities 9,291 14,821
Subscribed capital 24,811 24,808
Total liabilities 2,881,357 2,482,358
Equity
General reserves 144,141 136,427
Available-for-sale reserves 282 (157)
Total equity and liabilities 3,025,780 2,618,628
Consolidated cash flow statement
2007 2006
£000 £000
Cash flows from operating activities
Profit before tax 8,236 10,133
Depreciation and amortisation 2,389 1,730
Interest on subscribed capital 1,969 1,969
Net (gains) on disposal and amortisation of debt (72) (17)
securities
Increase in impairment of loans and advances 17 3
Taxation (2,235) (862)
10,304 12,956
Changes in operating assets
(Increase) in other assets (17,672) (2,257)
Increase/(decrease) in other liabilities 26,314 (4,284)
(Increase) in liquid assets (11,460) (20,247)
(Increase) in loan and advances to customers (217,296) (157,673)
Increase in shares 199,840 155,242
Increase in borrowings 175,662 32,075
165,692 15,812
Capital expenditure and financial investment (105,754) 63,916
Financing activities (1,969) (1,969)
Increase in cash and cash equivalents 57,969 77,759
Cash and cash equivalents at beginning of year 224,054 146,295
Cash and cash equivalents at end of year 282,023 224,054
Summary ratios
2007 2006
% %
Gross capital as a percentage of shares and borrowings 5.96 6.60
Liquid assets as a percentage of shares and borrowings 21.54 17.96
Group profit for the year as a percentage of mean total 0.21 0.29
assets
Group management expenses as a percentage of mean total 0.83 0.90
assets
Society management expenses as a percentage of mean total 0.70 0.77
assets
Notes
• The financial information set out above, which was approved by the Board of
Directors on 20 February 2008, does not constitute accounts within the
meaning of the Building Societies Act 1986.
• The financial information for the years ended 31 December 2007 and
31 December 2006 has been extracted from the Accounts for those years
and on which the auditors have given an unqualified opinion.
This information is provided by RNS
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