The Carlisle-based mutual, Cumbria’s largest financial institution, saw mortgage lending grow from £2.37bn to £2.59bn in the year to March, while savings balances rose from £2.61bn to £2.81bn.
Profit before tax fell from £26.6m to £9.6m, largely due to the unwinding of the interest-rate swaps that protected the Society when rates surged in 2022. But operating profit, a more realistic measure of performance, jumped 29 per cent to £27.4m while the balance sheet reached a record high of £3.2bn.
Writing in the annual report, chair John Hooper said: “It has been another year of steady progress despite repeated increases in the Bank of England’s base rates to a level not seen since early 2008.
“That spike in rates brought relief for savers but pain for borrowers and it dampened demand in the housing market.”
As a building society owned by its members, the savers and borrowers, the Cumberland prides itself on doing the right thing.
The Society was quick to raise savings rates when interest rates increased but was deliberately slower to pass on increases to borrowers this year choosing not to pass on the last 1% of base rate increases to its variable rate owner occupier mortgage borrowers. It recently cut rates on fixed-rate mortgages in anticipation that interest rates will fall.
And it goes out of its way to assist borrowers in financial difficulty.
The Cumberland made charitable donations of £369,958. The main beneficiary was FareShare Lancashire and Cumbria, a partnership embodied by the Kinder Kind of Kitchen initiative which supports 52 food banks across the region.
FareShare Lancashire and Cumbria also benefited from the ‘pledge for votes’ scheme where the Society donates £2 for every vote cast at its annual general meeting (AGM).
The Cumberland’s vehicle finance subsidiary, Borderway Finance, performed well while commercial lending to the hospitality sector saw modest growth despite difficult trading conditions for many hospitality customers.
The Society remains driven by purpose rather than profit and continued to invest in its technology transformation programme. It will ensure the Society is fit to face the future, but chief executive Des Moore stressed that technology would not replace human interaction, and remained committed to its branch network at a time when many banks are closing branches.
He wrote: “We are the last financial institution standing in 16 locations throughout our region. We’ve retained our branches because a significant number of customers prefer face-to-face contact.”
The Cumberland is pressing ahead with the refurbishment of its flagship branch in English Street, Carlisle, which is due to reopen this year.
The work includes installation of solar panels and other energy-saving measures. Chief people officer Jill Johnston has been given a wider remit, to include sustainability, as the Society strives to become carbon neutral by 2030.
The Cumberland retained its Platinum Trusted Service Award from the customer service platform Feefo for the fourth consecutive year and was highly commended for its approach to colleague wellbeing at the British HR Awards.
It improved its rankings in the annual Best Companies survey, making it the highest ranked large building society, and was awarded two-star status for workplace engagement.
The Society facilitates hybrid working, helping to boost colleague retention rates, and has made great strides in advancing the careers of female colleagues. Fifty per cent of roles at executive and board level are held by women, up from 19 per cent only five years ago.
John Hooper will step down at the AGM after five years as chair and nearly nine years as a non-executive director. He will be succeeded as chair by Jackie Arnold who has served on the board since 2018. Jackie brings more than 40 years’ experience in business and financial management. She has been a part of the Cumberland team as a non-executive director since 2018 and the people, remuneration and culture committee chair since 2019.
Eric Gunn, non-executive director, chair of board risk and senior independent director, also retires at the AGM after eight years’ service while Cameron Marr, who has significant international banking experience, has joined the board as a non-executive director and as chair of board risk committee.