Building societies getting back to ‘business as usual’ – KPMG
In a report which tracks the financial performance of the mutual sector, KPMG found most building societies are now “well-placed” to benefit from an upturn in the economy and “increasing demand” for mortgages
However, it said the likelihood of savings rates improving in the near future remains “very low”.
Of the country’s 46 building societies, 35 grew their assets in the 2012 financial year. Although assets across the sector as a whole fell by £2.1bn to £313.3bn, this reduction was due to a £5.4bn decrease in Nationwide Building Society’s assets.
If the impact of Nationwide is excluded, sector total assets grew by 2.8% to £122.6bn, the report said.
Nationwide still dominates the sector. With assets of £190.7bn, it represents nearly 61% of the sector on its own. In contrast, the smallest building society, the City of Derry, has assets of £42.6m meaning that Nationwide is over 4,400 times its size.
But Simon Walker, partner in KPMG’s Financial Services practice, said: “While there is much good news for societies’ borrowers, the outlook for their depositors is less good.
“Now that banks and building societies have rebuilt their funding, competition for retail funding has fallen and savers’ rates with it. The impact of the Funding for Lending Scheme has exacerbated this. The likelihood of savings rates improving in the near future is very low.”