Coventry announces excellent half year results

Coventry Building Society, the UK’s fifth largest building society, today announces its interim results for the six months ended 30 June 2007.

Gross mortgage lending up 42% to £1.892 billion (2006 : £1.334 billion)

Net mortgage lending increased by 84% to £670m (2006 : £365m)

Mortgages and other loans have grown by 6.9% in the six months and 13% since 30 June 2006

All growth is organic, with no purchase of mortgage books. Lending continues to be concentrated in low risk, residential sectors

Retail savings balances have increased by £246m in the first six months of the year and by £660m (8.4%) since 30 June 2006

During a period in which record mortgage volumes have been processed, expenses increased by only 1.9%, well below the rate of inflation

Management expenses to mean asset ratio reduced to 0.50%, from 0.53% for the 2006 financial year and is 0.05% below the 0.55% reported for the last half year

Excluding net gains on financial instruments, profit before tax increased by 22% over the same period in 2006, to £30.3m

Profit before tax increased by 13% over 2006 to £32.9m

FSA has granted a waiver for the Society to use the IRB approach under Basel II
Commenting on the results, David Stewart, Chief Executive, said: “This has been a good start to the year. Not only have we been able to significantly increase our share of the mortgage market, we have done so without compromising credit quality. Despite record activity levels, costs grew by less than 2%. This operational efficiency remains a source of significant competitive advantage and helps us to deliver value for money to our members, highlighted by the recent launch of a number of market leading savings accounts.

“I am also delighted to report that FSA has approved our move to the Internal Ratings Based approach under Basel II. In terms of preparing for these important regulatory changes to capital management, this puts Coventry at the forefront of the industry and highlights the quality of our risk management systems.

“During the second half of this year, we expect to increase our share of the mortgage market further. It is essential that we retain a high quality mortgage book as we enter a period of potential housing market instability. Our focus will continue to be directed towards lower risk sectors.

“Continued strong growth and the recent increase in interest rates means margins will tighten during the second half of the year. However, we remain confident that we can continue to increase our market share whilst delivering the financial performance necessary to maintain required capital ratios.”