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Lender posts £23.7m pre-tax loss
West Bromwich Building Society has revealed it has made a loss before tax of £23.7m for the six months to 30th September 2016.
The lender’s pre-tax loss came after it was forced to pay £27.5m as a one-off reimbursement on a proportion of interest charged on certain buy-to-let mortgages.
West Bromwich lost a court of appeal battle earlier this year which overturned the previous High Court judgement in the building society’s favour.
The result meant West Bromwich were told to pay £27.5m to some buy-to-let customers for a proportion of interest charged since December 2013.
The statement read: “As expected, and forecast when the outcome of the legal case was announced, this has resulted in a pre-tax loss of £23.7m for the half year.”
However, the underlying business had gone from strength to strength,
Advances were also almost 50% higher than the previous half year at £441m, while arrears on residential mortgages also fell.
These performances meant that West Bromwich reported an underlying profit before tax of £3.8m, up from £1.3m on the same period the year before.
“We have continued to invest in developing the systems to support the society's ambitions of enhancing our ability to provide an increasing number of members with the opportunity to fulfil their ambitions for home ownership.
“At the same time, we remain very aware of the impact ultra-low investment rates continue to have on the society's savers.
“Although savers' rates have reduced, we have ensured that the average rates paid by the society have remained above those for the sector.”
The building society added how the Brexit vote would impact its future performance.
“Following the Brexit decision, the economic environment has become more uncertain, particularly in the commercial real estate sector where the society still has an exposure, albeit significantly less so than in previous years.
“This presents the most prominent area of uncertainty for the second half of the financial year.
“Despite this, we are confident that the society will deliver on its lending plans.”
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