Chelsea reports 2005 results

Amanda Jarvis

February 24, 2006

Highlights of 2005 for the Chelsea included:

– Gross mortgage lending £2.2bn – 22 per cent greater than sector market share.
– Net mortgage lending £0.7bn – 12 per cent greater than sector market share.
– Asset quality remains high with mortgage arrears 20 per cent less than the industry average.
– Net interest margin down to 1.02 per cent benefiting both savers and borrowers.
– Costs to mean assets ratio down to 0.60 per cent – one of the best efficiency ratios in the building societies’ sector.
– Pre-tax profit up 12 per cent to £50.0m
– Group assets up 9 per cent to £9.7bn
– Retail savings balances up 7 per cent to £7.2bn

Richard Hornbrook, director and chief executive of Chelsea commented: “I’m delighted to announce an excellent set of results for the Chelsea. Despite a very competitive market-place, these results demonstrate that we continue to punch well above our weight, particularly in terms of lending. Helping more people own their own home is at the core of what we do. This is just as relevant today as when we were first established in 1875.

“Another highlight of these results is undoubtedly a strong profit performance. This was achieved as a direct result of an improvement in our cost ratios and despite the fact that our highly competitive borrowing and savings rates are resulting in a reduction in the net interest margin. The competitiveness of our interest rates continues to deliver real value to our members, whilst this level of profitability provides an excellent platform for our future growth aspirations.

“During 2005 we continued to invest heavily in our distribution, product and customer service capabilities. A particular focus for the year was to broaden our range of products, which included the launch of a Tracker mortgage. This trend will continue in 2006, when we will be looking to make in-roads into the commercial lending and affinity markets.

“This year will see the opening of our new purpose built customer contact centre in Cheltenham, bucking the trend of moving call centres overseas. This state of the art building includes some leading edge environmental measures. Investment in the branch network continued with the relocation of our Harrow branch and refurbishments at Kingston and Croydon.

“We have recently seen the announcement of another building society merger, which could be a pre-cursor to further consolidation in the building society sector and financial services market as a whole. Chelsea is entering 2006 in a very strong position to consider strategic opportunities for partnerships or acquisitions that represent a good fit for the organisation and that would be beneficial to the Chelsea and its members.

“We pride ourselves on the high degree of interaction we have with our members. 2005 saw almost 20 per cent of our members vote on our Annual General Meeting resolutions, one of the highest voting turnouts in the industry. We held our first member forum events in Bristol, which proved highly successful, and we will be holding more of these events in 2006.

“Our commitment to Corporate Social Responsibility goes from strength to strength and in 2005 we commissioned an independent assessment of the Society’s practices. We will publish our first Corporate Social Responsibility report in the summer.

“These results give us plenty of reasons to look forward with confidence. We are 100 per cent focussed on helping our members to save, to get the home they want and the protection they need, and to plan for the future.”

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