N&P announces 2005 results

Amanda Jarvis

February 22, 2006

The financial highlights for the group were:

– Group pre-tax profit of £16m, up 24 per cent (2004 £12.9m).
– Total income grew by 10.2 per cent to £69.3m, while costs grew by 5.7 per cent.
– Net interest margin now 1.31 per cent (2004 1.34 per cent).
– Non-interest income rose by 17.3 per cent to £25.8m (2004 £22m) and now represents 37 per cent of total income.
– Management expense ratio down to 1.55 per cent from 1.60 per cent.
– Total mortgage assets up 7.2 per cent to £2,645m with new mortgage advances of £677m.
– Our current account base grew by 16 per cent to 118,000.
– Total assets of the Group increased to £3.4 billion (up 4.7 per cent).
– Group solvency ratio of 12.1 per cent, well above the regulatory minimum.

Matthew Bullock, chief executive of N&P, said: “2005 was an excellent year in terms of service to customers and business performance. Our diversification strategy began to bear fruit, and it is particularly pleasing that our strategy to provide expert independent financial advice is proving so popular with our members.

“Alongside footfall and membership numbers, we closely measure how satisfied customers are with our service: 69 per cent of customers surveyed in 2005 described themselves as “very satisfied” – the same as in 2004. Branch footfall was up 5.1 per cent year on year and membership increased by 5.8 per cent. This, together with good underlying growth in banking, financial advice and general insurance sales, continued cost control and good profitability in mortgages and savings, led to our strong trading performance.”

Other highlights included:

– The Gold Current Account saw strong growth with numbers up by 16 per cent on 2004. We expect this growth rate to be sustained in 2006.
– The Gold Savings Account, which offers a fixed rate interest of 8 per cent for 12 months was launched in September to attract new savings and banking customers.
– 2005 was the second full financial year as an Independent Financial Adviser (IFA). Customers benefit from impartial advice on their investments, retirement income, inheritance tax, protection insurance and pensions. They are able to get advice at every one of our branches, in their home or workplace.

Matthew Bullock added: “We expect the high level of awareness of the increasing burden of inheritance tax, and the need for adequate pension provision to increase the demand for this service year on year. The better performance of the stock market also boosted levels of investment in funds in 2005.”

– It was a good year for mortgage lending for N&P: even though gross lending fell, total balances were up 7.2 per cent, reflecting retention efforts.
– N&P saw good growth in our commercial lending and buy-to-let businesses.

Matthew Bullock said: “In 2005 we streamlined our mortgage processes to drive costs down and improve turnaround times. While the introduction of mortgage regulation has almost certainly increased the processing costs for other lenders, the Society’s direct mortgage processing costs are now beginning to fall.”

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