As one of the UK’s leading building societies, we’re pleased to announce another year of strong performance.
Our annual results include a pre-tax profit of £14.3 million despite challenging and changing times across the financial sector and UK market, and we’ve been able to achieve these results while conducting a significant strategic review of its business.
This review has been undertaken to ensure our business remains sustainable and successful in a rapidly changing financial services market, and has seen us begin a multi-year programme of significant investment in our senior leadership team, our people, our capabilities and future customer strategy.
During the year we saw an inflow of funds of £101 million, a 28% uplift on the previous year, which meant all of our new lending was funded by deposit growth.
Our residential loan book also grew to £1.89 billion and net interest income increased by £1.4 million to £40.6 million.
However, along with other lenders we have experienced increasing levels of competition in our core markets. This, combined with the uncertainty surrounding the UK’s exit from the EU, increased downward pricing pressure on our net interest margin (NIM), which decreased from 1.66% to 1.61%. (Net interest margin or NIM is the difference between the interest income earned and the interest paid relative to our interest-earning assets).
Our Regulatory Common Equity Tier 1 (CET1) ratio, (a measurement of financial strength) improved to 17.7% at 31 March 2019 (2018: 16%) continuing a long term track record of being profitable and well capitalised while maintaining high levels of liquidity.
Over and above our strong financial performance during the year we also collected a series of awards.
In addition to winning Mortgage Finance Gazette’s ‘Regional Building Society of the Year’ award for the fifth year in succession, we also collected Moneyfacts’ ‘Regional Lending Provider of the Year’ and Feefo’s Gold Trusted Service award, which recognises businesses that deliver exceptional customer service, based solely on feedback from their customers.
We have continued to help forge strong communities by supporting a wide range of local charities and events focused on local needs. In the new financial year we also pledged to increase the amount we donate to charitable and community groups to 1.5% of our net profits which, in practice, will see us distribute over £170,000 to good causes across the region this financial year, an increase of approximately £70,000 over last year.
We have made great strides in improving the lives of our own colleagues/staff during the year, implementing a number of changes which will make our business a great place to work. The total employee experience has been considered, which involved committing to paying the Real Living Wage as a minimum starting point, and improving various benefits that underpin our values, such as absence payments and family friendly entitlements.
We also signed up to the Women in Finance Charter, and we have already made a significant shift by accelerating the proportion of women in senior leadership team roles from 19% to 33%.
We are implementing practices to support wider diversity and inclusion in the workplace, through flexible working and refreshing our recruitment approach.
Enhancing our capability has become increasingly important and, in recognition of this, a new Senior Leadership Team was put in place during the year to deliver The Cumberland’s new strategy.
This strategy has been created by undertaking a deep review of our existing business model, involving customers, our people, regulators and partners, and listening to what they had to say.
The review also looked at the significant changes in the way our customers want to interact with us, taking into account technology, customer expectations and how the forms of customer engagement are evolving.
This has helped us create a strategy that will see us remain a sustainable and successful business, as we have been for over 169 years, serving our customers and communities into the next decade and beyond.
As part of this strategic review, we have developed a new purpose based on our strong heritage and future direction - To make a positive difference to the lives of our Customers, our Communities and our People - .
We will seek to excel in serving a more focused set of three customer and regional needs, which are:
- - helping people secure a home;
- - helping people plan and save to achieve their goals; and
- - helping the local leisure and tourism sector grow, supporting the regional economy.
Our vision has therefore been refined to reflect this - To be a focused and agile mortgage and savings provider that our Customers, our Communities and our People are proud of.
Commenting on the year, Des Moore, our chief executive, said, "This is a very exciting time for our business. We have a series of challenges ahead of us including some uncertain market conditions as a result of a variety of economic and political pressures. However, we have strong foundations, a brand which continues to be valued highly by our members and a team of great people who are committed to providing excellent customer service. We will become a more focused and agile mortgage and savings provider that our customers, our communities and our people are proud of. The vision will be delivered in our new brand proposition of ‘Brighter Banking from Cumbria’".
"The changes we are making are designed to ensure we place the customer at the heart of everything we do. This is something I am passionate about and firmly believe is critical in ensuring our future success. A simplified leadership structure will help people in the business work together much more collaboratively, which will provide great benefits for both our people and customers. It will also ensure we consider and involve all areas of the business as we develop the future strategies we need to help us live up to our purpose of making a positive difference to the lives of our customers, our communities and our people".
Pictured: The Cumberland’s senior leadership team. Pictured (L-R) are Will O’Carroll, Jill Johnston, Des Moore, Susanne Parry, Richard Ellison and Alex Windle.