Long term strategy of prudence continues to pay off for Bath Building Society
One of the South West’s only remaining independent building societies has continued to defy the market, announcing growth rates of more than 16 per cent with net lending up by around a third.
Bath Building Society has, in announcing its results for the year ending 31 December 2009, confirmed a record year, with net lending totalling £22 million. Pre-tax profits for the Group – consisting of the Society, its property lettings business and its independent financial advice business – were £962,000 (up from £470,000 in 2008).
A strengthened market position in a year that saw many of its competitors, both larger and smaller, fighting for survival is the result of long-term prudence and a clear and focused strategy according to the Society’s Chief Executive, Dick Jenkins:
“We have always been very aware of where our strengths lie and our stability is a result of a consistently cautious approach. When times were good we were often accused of being too risk-averse, however, we remained firm in our strategy as we take our responsibility to our members very seriously.
“Of course the unprecedented changes in the financial services market in the past few years were bound to have an impact on building societies and some have fared better than others. Seeing the fate of the Chelsea Building Society, based in Cheltenham, and, just this week, the Stroud & Swindon has brought the difficulties in the market closer to home – quite literally, in fact.”
“Rather than embrace trends such as sub-prime mortgages or relying on computer-driven lending our approach has been to develop our own niche products,” Jenkins explains.
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The Society’s innovative Parent Assisted Mortgage, launched at the end of 2008, has been well received and won industry acclaim, having helped to support first time homebuyers in a time when the market was turning on them. Likewise, its Buy for Uni mortgage, which enables students to purchase a property with parents acting as a guarantor, and a mortgage specifically for the self-build market has continued to demonstrate that targeting niche groups can bring long term benefits to its mortgage lending arm.
“We use our size to our advantage,” Jenkins adds. “When you are small you keep things at a human-scale; our focus is on the person, as a unique individual and not as a number. We want to be able to know and understand our members. We don’t use computerised assessment systems because it makes the process impersonal and we believe that if you lose contact with your customers you effectively lose control of where your business is headed.”
Despite the UK being in a recession throughout 2009 and high unemployment levels, the Society’s results indicate a level of arrears that is only half of the industry average. This, according to Jenkins, is a result of the Society’s hands-on approach to lending and developing relationships with its customers.
The Society’s savings arm also saw growth in 2009, with shares and deposits up by 17.8% to more than £236 million. Its success in this area can again be linked with innovation, with independent organisation Moneyfacts awarding the Society a number of accolades in 2009 for its various business accounts. Its children’s’ savings account FutureBuilder also attracted a high level of new customers for the 105 year old Society.
Diversification has also paid off for the Society, with subsidiary Bath Property Letting experiencing a three-fold growth over the past three years.
“A buoyant rental market has resulted in a strong performance for our lettings arm. We are extremely pleased that we have been able to instil the same values – consistency, high service levels and strict adherence to industry regulations – into this business as we have into the Society,” Jenkins says.
Bath & City Financial, the independent financial advice business, increased its client base considerably during the year, assisting the Society’s customers with independent investment, mortgage, protection, inheritance tax and pension advice.
Jenkins confesses to being ‘cautiously optimistic’ about the coming year:
“The past two years have been some of the most challenging in the history of the Society. Whilst we appear to be weathering the storm fairly well, this is no time to be taking our eye off the ball. We are determined to pursue a safe strategy in the interests of all of our members.”
Bath Building Society will host its annual AGM on 29 April 2010 at the Francis Hotel in Queen Square where members are invited to learn more about the institution’s performance and future . For more information contact 0333 240 008. |
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