A BUILDING society is well positioned for the future despite reporting a small loss for the first six months of the year, its chief executive said.
Jim Willens, pictured, of Newcastle Building Society, said he was comfortable with the loss of £900,000 to June 30, compared to a profit of £700,000 for the same period the previous year, given the present financial climate.
The loss before tax grew to £4.9m, due to a one-off cost of £4m attached to a cost-saving programme announced in May, which saw the society announce a possible 126 redundancies and the closure of four branches at Crook, in County Durham, Yarm, near Stockton, West Road, in Newcastle and York.
It is understood there are likely to be less than 50 compulsory redundancies and the programme is expected to deliver annual savings of £8m.
Mr Willens said underlying performance in the second quarter was already seeing the benefits. The society, which employs 950, has also recovered more of the money invested in the failed Icelandic banks, which saw it record a loss of £25.8m in 2008 after it had to write down £43m.
Mr Willens said although he would have liked the results to have been a strong positive he was comfortable with the progress the society was making, adding: “I think the word comfortable, bearing in mind the circumstances, is one that would sit very well.”
At the time of the redundancy announcement in May, Mr Willens was hopeful some staff would be found other role and some have taken roles in its Solutions division where 80 customer service vacancies were created following a contract win.
He said: “Having worked through a very challenging situation where we have job losses in the next six months, we will see contracts coming on board in our Solutions business and 80 new jobs.
“The benefit will make its way through the business not just over the next six months but for years to come. The staff have been superb and working our way through the recovery we will be in a very good position.”
The society’s level of lending funded by retail deposits has reached 100 per cent, compared to 91 per cent last year, and it has no sub-prime or self-certification mortgages.
The number of residential borrowers in arrears of three months or more has fallen to 0.79 per cent, from 0.86 per cent, and only six owner occupied repossessions were instigated by the society in the six-month period.
The amount of money recovered from the Icelandic banks has also risen from about £6.7m in May, to in excess of £8.4m, and further recoveries are expected.
Yorkshire Building Society has recorded pre-tax profits of £65.4m for the first six months of the year.
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