Record year for investment and strong annual results for The Cambridge Building Society despite pandemic
It was a period in which every aspect of our lives was impacted by the pandemic and yet The Cambridge Building Society was able to deliver a record year of investment in 2020 and another strong performance.
From establishing a new £500,000 community fund to upskilling its team with 1,400 hours of training and refurbishing two more stores, it proved a remarkably busy year for the mutual.
Its annual results - which came out on March 31 - show The Cambridge grew its mortgage book by two per cent to £1,345million, and its total assets by seven per cent to £1,701m.
And advanced £241m in home loans - down on the last two years but slightly above its 2017 level.
“There were quite a few of peaks and troughs of activity, but fundamentally we stayed open during the year and the housing market actually stayed quite strong,” CEO Peter Burrows tells the Cambridge Independent.
“The predictions earlier in the year about significant falls of house prices and so on did not turn out to be true. There are still some who predict that for 2021, but time will tell. So far, in the first quarter this year, it hasn’t proved true either. Our business has stood up well.”
It certainly did. Net interest income grew nine per cent to £19.6m and profit before tax was £4.8m, up 35 per cent on 2019. After tax, profits reached £3.8m, up from £2.7m a year earlier.
Help was extended to those who had trouble paying their bills amid the pandemic.
“We did have a reasonable number of members who struggled with their mortgage at different times during the year,” says Peter. “We made sure that we spoke to everybody as they have gone through those experiences. We have given a number of our members payment holidays to help them through. We find that most people are now back to paying their mortgage each month as normal.”
Chief financial officer Richard Brockbank points to the importance of “long-term financial stability” to ensure The Cambridge can deliver on its mission as a “thriving, independent, mutual society”.
“Going back to 2015, our story has been about growth,” he says. “In terms of our mortgage book, we are now about 50 per cent bigger than we were in 2015 and that means we are a stronger and more profitable organisation. Going into 2021, where a lot of commentators say the world will face some challenges, we feel very secure.”
Its mortgage numbers reflect not only some pent-up demand in the housing market following the initial lockdown, but also a significant number of people moving providers.
“Perhaps with people having got a little bit more time on their hands at home they have reviewed their mortgage arrangements and switched providers,” suggests Peter.
“A trend we began to see at the end of last year, which is continuing this year, is people exiting their fixed deals before their term is up. There’s been such a significant movement in base rate and a lot of that has flowed through to the mortgage market, so people want to get out their current deal and fix a new rate in this very low interest rate environment.”
The mutual remains firmly rooted in its core territory here, but its deals are also available via brokers nationwide, leading to what Peter describes as a “gentle diversification of our geographic spread”.
It is not an easy time for savers, of course, but The Cambridge has attracted significant new money.
“Despite interest rates in general being very low, our members are still choosing to put their money with us,” says Peter.
“Our loyalty regular saver product pays three per cent per annum, which is huge compared to most, but it is only available to existing members and you are limited to depositing £100 per month.”
These strong results have enabled The Cambridge to continue with its mission to help local people find a home and to play an active role in its community, which come together under its ‘Making the Difference’ programme.
“We are an organisation that cares deeply about our place in the community,” says Peter. “And if there was any time when you want to maximise what you can do to help, then during a global pandemic is it.”
Its biggest move, as the Cambridge Independent reported, was to launch The Cambridge Building Society Community Fund with £500,000. This is funded by a government-backed scheme that enables a proportion of dormant assets to be used for public good, while insuring them should their original owner ever re-emerge.
Working with the Cambridgeshire Community Foundation to administer the fund, the first two awards have now been made to:
- CHS Group, which will receive £6,983 to support 30 women with homelessness and mental health issues; and
- Cambridge Cyrenians, which will receive £10,000 to support 25 previously homeless people move on successfully from supported accommodation.
“We’re really pleased to be able to show what the fund is doing,” says Peter, who added that a second application period will open in a couple of months.
The Cambridge also invested in its people and stores.
It increased headcount by six in the year and continued its refurbishment programme by refitting its Bar Hill store and moving to a better site in Cherry Hinton. It is developing its new store in Histon, due to open in a couple of months, replacing its existing one nearby.
“We will continue with our ambition to complete two a year, either refurbishing an existing store or quite possibly a brand new location, which will be exciting,” says Peter.
“We are continuing to invest in our high street presence. One thing we learned during the pandemic was just how much customers value our place on the high street. We didn’t realise what an impact we had.
“That’s not to say we’re not continuing to invest in digital. The number of transactions we get through the internet is higher than it was a year ago and our call volumes are about 50 per cent higher.
“That was a challenge. In parallel with establishing a call centre in people’s houses, we had to cope with volumes going up, but it worked.
“There are many ways people can contact us. Surprisingly, post has even become more popular! It’s been interesting.”
In an environment where the stores were open for more limited hours, and the importance of ensuring flexibility for customers was underscored, The Cambridge took the opportunity to provide additional training for staff.
“During lockdown, the way that people have chosen to contact us has changed. The big unknown for us post-lockdown is what will be the norm.
“But I think we will be placed to adjust to meet members’ needs,” says Peter.
Likewise, the mutual will seek to adapt its own working practices. Richard is now leading a project looking at how the head office should look post-pandemic.
Peter explains: “There has been perhaps a shift away from being office-based to a blended office and virtual-based world of work. We are conscious that we as a society want to respond to that.”
Economic uncertainty, of course, remains amid the ongoing pandemic and as the country adapts to its post-Brexit environment.
But Peter remains “cautiously optimistic” about what is to come, particularly after a strong start to 2021.
And Richard says: “If the market is indeed there for us, then I think you’ll see our lending volumes a good deal higher than 2020.”
With a strong balance sheet, and robust stress testing, The Cambridge is feeling confident it can continue to perform well.
And after delivering in 2020, it’s hard to argue with that.
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