Annual Financial Report

Nottingham Building Society

07 March 2024

 

Nottingham Building Society Results for the year ended 31st December 2023 The Nottingham delivers a positive financial performance for the year ended 31st December 2023, achieving growth in mortgage lending in a challenging economic environment as it continues its transformation plan  Key Performance Indicators ('KPIs') The KPIs disclosed below are based on the position at 31st December or for the 12-month period ended 31st December, unless otherwise stated. The average Liquidity Coverage Ratio ('LCR') represents a 12-month average for the year ended 31st December 2023. ·    £887m gross new lending (2022: £659m), representing an increase of £228m; ·    £3.6bn total mortgage assets (2022: £3.0bn), being growth of £0.6bn; ·    6,957 new mortgage customers (2022: 3,984), an increase of 74.6%; ·    £3.6bn total savings balance (2022: £3.0bn), an uplift of £0.6bn; ·    £91.8m total interest paid to savers (2022: £23.9m), an increase of £67.9m; ·    £8.3m profit before tax (2022: £18.9m), representing a decrease of £10.6m; ·    £24.2m underlying profit before tax (2022: £15.2m), representing an increase of £9.0m; ·    1.94% net interest margin (2022: 1.69%), being an absolute increase of 0.25%; ·    84.6% cost : income ratio (2022: 71.7%), an increase of 12.9%; ·    70.5% underlying cost : income ratio (2022: 73.0%), a reduction of 2.5%; ·    ECL coverage ratio of 15bps (2022: 17bps), a decrease of 2bps; ·    The Nottingham continues to benefit from a robust capital / liquidity base, demonstrated by: o  15.2% CET1 ratio (2022: 16.8%); o  5.2% Leverage ratio (2022: 5.6%); o  184% average LCR (2022: 192%); ·    4.9 Trustpilot score (2022: 3.8); ·    64.6% net promoter score (2022: 64.7%); and ·    2,462 colleague volunteering hours (2022: 841) Sue Hayes, Chief Executive Officer ('CEO') of The Nottingham, commented on the results: "I am pleased to report our financial results for 2023 alongside the progress towards delivering our strategy. Our financial performance in 2023 was strong, with profit before tax of £8.3m (2022: £18.9m), an underlying profit before tax of £24.2m (2022: £15.2m) and an 18.3% increase in mortgage balances compared with 2022. We achieved significant growth in mortgage lending while overall lending in the UK mortgage market fell. We helped 6,957 (2022: 3,984) customers either take out a mortgage with us for the first time or move to a new mortgage. We achieved good growth in our savings balances of 18.3%. We diversified our proposition to offer a variety of attractive products and savings rates to our customers via our branch network and online savings app. As interest rates have risen and remained high throughout this year, we have focused on paying savers the best rates we can whilst doing what we need to strengthen the Society. We paid a total of £91.8m in interest to savers in 2023 (2022: £23.9m). I am proud of the results we are sharing today and would like to thank our members, and each one of our dedicated colleagues, for their continued trust in the Society. We look ahead to the coming years with a renewed sense of focus, guided by a clear and impactful purpose, with mutuality as our bedrock. Looking to the future, we will continue to monitor the impact of movements in base rate on our mortgage and savings propositions, while focusing on innovation in our products as part of our ongoing transformation journey. We will also continue to support our saver members with attractive savings propositions." Sue Hayes Chief Executive Officer 6th March 2024
Consolidated income statement for the year ended 31 December 2023					2023		2022
					£m		£m
Interest receivable and similar income					205.5		98.8
Interest payable and similar charges					(125.2)		(36.0)
Net interest income					80.3		62.8
Fees and commissions receivable					2.5		3.1
Fees and commissions payable					0.4		(1.5)
Net (losses) / gains from derivative financial instruments					(14.2)		10.2
Total net income					69.0		74.6
Administrative expenses					(52.3)		(42.8)
Depreciation and amortisation					(6.7)		(10.7)
Operating profit before impairment and losses on disposal of treasury assets					10.0		21.1
Impairment credit / (charge) - loans and advances to customers					0.1		(2.2)
Loss on disposal of treasury assets					(1.8)		-
Profit before tax					8.3		18.9
Tax charge					-		(3.1)
Profit after tax for the financial year					8.3		15.8
Reconciliation to underlying profit before tax					2023		2022
					£m		£m
Profit before tax					8.3		18.9
Losses / (gains) from derivative financial instruments					14.2		(10.2)
Net strategic investment costs					0.2		5.0
Other					0.5		-
Change in accounting estimates					(0.8)		1.5
Loss on disposal of treasury assets					1.8		-
Underlying profit before tax					24.2		15.2
Consolidated statement of comprehensive income for the year ended 31 December 2023					2023		2022
					£m		£m
Profit for the financial year					8.3		15.8
Items that will not be re-classified to the income statement
Remeasurements of defined benefit obligations					0.1		0.1
Tax on items that will not be re-classified					(0.1)		(0.1)
Items that may subsequently be re-classified to the income statement
Valuation gains / (losses) taken to reserves					2.8		(4.1)
Loss on disposal of treasury assets taken to income statement					1.8		-
Tax on items that may subsequently be re-classified					(1.0)		0.8
Other comprehensive income/(expense) for the year net of income tax					3.6		(3.3)
Total comprehensive income for the year					11.9		12.5

Consolidated statement of financial position as at 31 December 2023	2023		2022
	£m		£m
Assets
Liquid assets	801.3		719.3
Derivative financial instruments	105.2		142.6
Loans and advances to customers	3,543.9		2,922.8
Fixed and other assets	24.5		27.8
Total assets	4,474.9		3,812.5
Liabilities
Shares	3,565.9		3,009.7
Wholesale funding	583.1		518.4
Derivative financial instruments	43.9		14.4
Other liabilities	14.5		14.4
Subscribed capital	24.0		24.0
Total liabilities	4,231.4		3,580.9
Reserves
General reserves	243.3		235.0
Fair value reserves	0.2		(3.4)
Total reserves attributable to members of the Society	243.5		231.6
Total reserves and liabilities	4,474.9		3,812.5

Consolidated statement of changes in members' interests as at 31 December 2023			General reserve		FVOCI reserve		Total
			£m		£m		£m
Balance as at 1 January 2023			235.0		(3.4)		231.6
Profit for the year			8.3		-		8.3
Other comprehensive income for the period (net of tax)
Net gains from changes in fair value			-		3.6		3.6
Total other comprehensive income			-		3.6		3.6
Total comprehensive income for the period			8.3		3.6		11.9
Balance as at 31 December 2023			243.3		0.2		243.5
Balance as at 1 January 2022			219.2		(0.1)		219.1
Profit for the year			15.8		-		15.8
Other comprehensive expense for the period (net of tax)
Net losses from changes in fair value			-		(3.3)		(3.3)
Total comprehensive income / (expense) for the period			15.8		(3.3)		12.5
Balance as at 31 December 2022			235.0		(3.4)		231.6

Summary consolidated cash flow statement for the year ended 31 December 2023
	2023		2022
	£m		£m
Cash flows from operating activities	18.9		34.3
Changes in operating assets and liabilities	55.7		132.8
Net cash generated from operating activities	74.6		167.1
Cash flows from investing activities	74.7		(159.2)
Cash flows from financing activities	(2.6)		(2.7)
Increase in cash and cash equivalents	146.7		5.2
Cash and cash equivalents at beginning of year	292.4		287.2
Cash and cash equivalents at end of year	439.1		292.4

Notes

The financial information set out above, which was approved by the Board of Directors on 6^th March 2024, does not constitute accounts within the meaning of the Building Societies Act 1986.

The financial information for the years ended 31^st December 2023 and 31^st December 2022 has been extracted from the Accounts for those years and on which the auditors have given an unqualified opinion.

 

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