Suffolk Building Society has delivered a strong financial performance for the year ending 30 November 2022, achieving sustained growth in its mortgage book, savings balances, and profits. The backdrop to this performance has arguably been the most eventful economic year since 2008, with numerous factors at play including high inflation, market volatility, and a rising Bank of England base rate.
Being on a strong financial footing ensures the Society can grow and be sustainable for the future; it can invest for the benefit of its members and pursue ambitious environmental and social objectives.
The successes of the past year, the Society’s first full year as Suffolk Building Society, can best be summed up in winning the award for ‘Best Building Society’, revealed at Smart Money People’s British Bank Awards in May 2022.
- Total profit before tax was £5.9m (2021: £2.9m)
- Mortgage completions of £165m (2021: £168m) with a mortgage book growth of 7% to £655m (2021: £615m)
- Savings balances increased by £34m to a total of £681m (2021: £648m)
The Society has seen its mortgage book grow by 7% (£39m) to £655m, significantly ahead of plan. This was largely due to high demand earlier in the year, particularly for remortgages, as interest rates rose, and homeowners and buyers looked to lock in fixed rate mortgages. During its 2022 financial year, the Society processed 1,251 applications resulting in 670 completions for the year with an average loan size of £244k.
Growth is also due to the Society’s focus on targeting niche mortgage markets and on its intermediary relationships.
The Society also benefitted from interest rate swaps, used to smooth out interest rate exposure on fixed rate products.
During the year to 30 November 2022, the Society expanded its mortgage proposition with the following product types; expat holiday let borrowing, self-build large loans (£1m-£2m), increased maximum loan sizes to £1m up to 80% Loan to Value. The Society also re-entered the shared ownership market with both fixed and discount products.
In response to the impact of increased mortgage rates, the Society has put in place a Payment Shock Taskforce which proactively contacts borrowing members when their mortgage payments have risen by a significant amount. The Society has not seen any increase in mortgage arrears or payment arrangement requests despite the challenging conditions in the economy.
In addition to being awarded Best Building Society, the Society’s mortgage business was Highly Commended for both the Best Specialist Mortgage Provider at the British Bank Awards, and Regional Lending Provider at the Moneyfacts Awards.
Peter Elcock, Suffolk Building Society Chairman, commented on the Society’s mortgage book:
“2022 saw strong mortgage performance in another year of global uncertainty and political volatility, during which we carefully managed our offering to prioritise positive and consistent service levels and excellent customer outcomes.
“As such, we’re delighted with the feedback from Smart Money People’s Mortgage Lender Benchmark Report H1 2022, in which intermediaries gave us a people score of 100%, and regard our product performance as being above that of our peers and other lenders.
“2022 was, of course, a difficult year for many, financially, and our borrowers on variable rate mortgages, or those coming to the end of their fixed term, faced rising interest rates after a period of historically low rates. As far as possible we have tried to support our borrowing members, while balancing their needs with those of our investing members”.
The Society’s retail savings have grown significantly by £34m, with 3,743 new savings accounts opened, which included 1,522 new savings members.
Changes to its savings portfolio this year included increasing the maximum balance in fixed rate bonds from £150k to £200k. The Society also introduced a new 120 Day notice account, a new regular saver account, and increased the maximum monthly deposit from £250 to £500 on new issues of regular saver accounts. The Society is aiming to introduce online savings capability later this year but face-to-face customer service via branches will remain at the heart of its savings model.
Community and environment
In 2022, the Society made great strides in embedding its environmental, social, and governance (ESG) framework throughout the organisation. A key factor in this has been recruiting, training and mobilising 12 ESG Champions from across the Society. The performance related pay scheme for Executive Directors also includes criteria for achievement related to the progress of the Society’s ESG and sustainability agenda.
As part of this ambitious programme, the Society committed more than £100,000 over the next three years to address two key issues: providing safe homes and protecting nature. It will work alongside high profile organisations including Emmaus Suffolk, Ipswich Housing Action Group and Lighthouse Women’s Aid to tackle the housing crisis in the region, deliver help to those who are in debt and at risk of homelessness, and provide safe spaces for women under threat of domestic violence.
The Society is also pleased to be partnering with the Suffolk Wildlife Trust. Two savings accounts were launched in collaboration with the wildlife charity, and the Society will also be sponsoring the Martlesham Wilds project – 289 acres which will be given back to nature through a ‘wilding’ initiative.
The Society will also be launching products for homeowners and self builders to fund projects that can help to make their homes more energy efficient, keeping bills down and contributing to a greener housing stock.
In addition to its strategic charity partnerships, local charities have benefited from over £19,000 donated across nine charities, one for each branch, and numerous staff volunteering projects.
A positive and inclusive culture is very much part of the Society’s people strategy, as evidenced by its improving employee engagement score. The Society uses Engagement Multiplier to monitor and improve staff engagement. Its colleague engagement has risen this year from 74.6% to 76.6%.
The Society has supported its own staff members with the majority of employees receiving £1,000 in October 2022 to assist with the cost of living over the winter months. The Society continues to pay the Real Living Wage to all employees.
Peter Elcock concluded:
“I am very encouraged to be able to say that, in my first chairman’s report, we have ended the year in a very strong financial position, during a year of much uncertainty. Crucially this means we can continue to reinvest into the Society, support our members, staff and the local community through the cost of living crisis, and continue to deliver award-winning service.
“Of course, none of this would be possible without the unwavering commitment to service and innovation of our staff, to whom I am hugely grateful.”