Manchester Building Society 2020 Half Year Results (2276V)

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RNS Number : 2276V

Manchester Building Society

05 August 2020

Manchester Building Society Results for the 6 months ending 30 June 2020

 
                                        Unaudited   Unaudited     Audited 
                                         6 months    6 months   12 months 
                                               to          to          to 
                                        30-Jun-20   30-Jun-19   31-Dec-19 
                                           GBP000      GBP000      GBP000 
 
 Total operating income                     3,877       3,917       6,856 
 Administrative expenses and 
  depreciation                            (2,122)     (2,547)     (4,829) 
 
 Operating profit before impairment         1,755       1,370       2,027 
 Impairment losses                        (2,148)       (921)     (1,446) 
 Financial Services Compensation 
  Scheme levy                                   -           5          11 
 
 (Loss)/profit for the period 
  before taxation                           (393)         454         592 
 Tax expense                                    -           -           - 
 
 (Loss)/profit for the period               (393)         454         592 
                                       ----------  ----------  ---------- 
 
 Total assets                             235,538     262,341     247,108

6 months results summary:

   -     Loss of GBP0.4m compared with a GBP0.5m profit in the equivalent period in 2019.

- Total operating income of GBP3.9m was in line with H1 2019. GBP0.8m of this income related to GBP-EUR FX gains (GBP0.1m in 2019) with these gains being largely offset by GBP0.7m FX losses within impairment (GBP0.0m in 2019). The underlying reduction in operating income of GBP0.7m includes GBP0.4m resulting from lower balances and lower margins following the Bank of England base rate reductions in March 2020 and GBP0.2m of lost income following the sale of the Society's head office building in August 2019.

- Administrative expenses decreased by GBP0.4m compared with the same period in 2019. The reduction in costs resulted from lower fees in relation to the legal case against Grant Thornton (UK) LLP and continued cost saving initiatives.

- Impairment losses in the period were GBP2.1m (H1 2019: GBP0.9m). As stated above, GBP0.7m of GBP-EUR FX losses are offset in operating income. Of the underlying GBP1.4m charge, GBP0.7m relates to provision assumption changes due to more difficult economic conditions in light of the Covid-19 pandemic with the remaining charge of GBP0.7m being comparable with the prior year and largely relating to the Spanish lifetime portfolio.

   -     Total assets fell by 5% since 31 December 2019 and by 10% since 30 June 2019.

- The accounts for the 6 month period have been prepared on a going concern basis of accounting and, in line with previous accounts, set out a "material uncertainty" regarding the long term future of the Society.

- As at 30 June 2020 the Society met its Total Capital Requirement ("TCR") and the requirement to hold Common Equity Tier 1 ("CET 1") regulatory capital in excess of 4.5% of Risk Weighted Assets ("RWA"), but did not meet the qualitative standards for the level of CET 1.

- Following the Society's CET 1 capital falling below the required 4.5% of RWAs in 2018, a medium to long term strategic plan was produced which was independently reviewed and acknowledged by the PRA who agreed to monitor the Society against it. The plan was updated in June 2020.

   -     The Society continues to have a strong liquidity position.

- The Society continues to discuss the strategic future and capital position of the Society with the PRA.

Permanent Interest Bearing Share ("PIBS") coupon payments October 2020

On 27 March 2020 the Society announced the non-payment of the April 2020 coupon on its two tranches of PIBS. While no decision has been taken regarding the October 2020 coupon, payment is unlikely at this time. Any further update on PIBS coupon payments will be announced to the market.

2020 Half Year Financial Information

The accounts for the 6 months ending 30 June 2020 are available to view on the Society's website:

http://manchesterbuildingsociety.co.uk/Main/FinancialInformation

Enquiries

Andy Donald - Maitland/AMO

020 7379 5151

adonald@maitland.co.uk

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END

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