Profits at Connells tumble by nearly £13m

Skipton Building Society advanced £717m in new mortgages in the first six months of this year, a dramatic 409% increase on the £141m lent during the same period last year.

But its pre-tax profits did an equally dramatic slide, falling 75% from £21.7m in the first half of last year to £6.3m for the same period in 2011.

Announcing its half-year performance, the country’s fourth largest building society reported market share of 1.1%.

It also reported that its Connells Group estate agency subsidiary reported operating profits of £16.9m, down from £29.6m in the first half of 2010.

Nevertheless, Skipton  said this was a better-than-expected performance given the subdued market conditions in late 2010.

It said that the sales pipeline increased by £14m in the first half, and recent trading activity indicated that Connells’ performance in the second half of the year will be ‘robust’.

It said Connells sold 11% more houses in June compared with June last year, and that sales of new-builds were 44% higher in the second quarter of 2011 compared with the same period last year.

However, the stock of properties for sale as at June 30 was 9% higher than a year ago.

The proportion of loans in Skipton’s mortgage book where arrears were greater than 2.5% of the balance outstanding was 1.48%, in line with the industry average of 1.47%, but up from 1.42% as at December 31.

Accounts where the amount in arrears was less than 2.5% fell slightly to 0.65%, from 0.66% at December 31.

Group chief executive David Cutter said: “We have increased our new lending fivefold and helped to boost market competition by offering product solutions for evolving needs, such as mortgages for low-deposit buyers and landlords.”

Skipton launched a 95% mortgage for first-time and next-time buyers, and had 388 ‘best buy’ mentions in the six-month period.

Cutter added: “Considerable challenges remain in the wider economy, coupled with uncertainty over the impact of regulatory developments such as the Independent Commission’s review of the banking sector.

“However, despite this, our confidence in the underlying performance of our business is reflected in our plans to prudently grow the business during the remainder of the year.”

Stephen Shipperley, group executive chairman of Connells, said: “Our results at the end of June 2011 understate a performance and market that has improved as the year has progressed.”

He added: “Connells’ experience and breadth of services continue to put us at the forefront of estate agency. We intend to maintain our market-leading position and continue providing high quality advice and expertise to customers regardless of fluctuations in the market.

“At the start of the year, we envisaged a gradual improvement across the housing market as the year professed and this is what we have seen, particularly in the last few months.”