BSA: Building societies very well placed to succeed
“Whatever the scenario, building societies are very well placed to succeed” – that was the key message from the outgoing Chairman of the Building Societies Association (BSA), Iain Cornish, in his address to the BSA Annual Conference in Manchester today.
Reviewing the last year, he said “we entered troubled waters in a fundamentally sound vessel. Societies generally are well capitalised, highly liquid and prudent businesses.”
He went on to say that societies “have high levels of consumer trust, a trust built on delivering value to our members. The sector dominated the best buy tables again last year and collectively we delivered more than £1bn worth of member benefits, and we consistently outscore the banks when it comes to quality of service.”
Highlighting the outstanding business performance of societies, Mr.
Cornish noted that net receipts in 2007 were over £16bn – the highest figure ever. And this impressive performance has continued into 2008, with net inflows in January and February the highest in ten years and the figure for March the highest ever for that month.
On the lending side, he said that societies share of net lending was up from 19% in 2007 to 25% in the first quarter of 2008. In a difficult market, and contrary to popular misconception, every society continued to lend last month.
But Mr. Cornish also said that building societies will in the future have to operate in a lower growth and higher risk environment than before. The economy has started to slow, the housing market has weakened and consumer confidence is precariously balanced.
He continued that “a resilient job market and low and falling interest rates will protect us from the kind of recession that we saw in the late 1980s and early 1990s, and that a slowdown and gradual unwinding of some of the imbalances we have seen build up over the last five years is the more likely scenario.”
Noting that societies need to work with the government on long term funding structures, Mr. Cornish observed that there would be “a huge and frankly unacceptable irony if the part of the market which had contributed least to the problems became competitively disadvantaged by the solutions.”
Mr. Cornish spoke about the sector needing to promote itself far more effectively and assertively in the future, saying that “circumstances have presented the sector with a once in a generation opportunity to re-establish its differentiated position in the post-conversion era so that consumer awareness and perceptions of the sector matches what societies deliver to their members.”
Above all else, against such a background, he said that the most important priority for societies must be “to go on focusing on the needs
of savers and borrowers.”
~ Ends ~
1. The Building Societies Association (BSA) represents all 59 building societies in the United Kingdom. Building societies have total assets of just under £350 billion and, together with their subsidiaries, hold residential mortgages of £245 billion, more than 20% of the total outstanding in the UK. Societies hold about £215 billion of retail deposits, accounting for more than 20% of all such deposits in the UK.
Building societies also account for over 38% of all cash ISA balances.
Building societies employ over 50,000 full and part-time staff and operate through more than 2,100 branches.
2. Photographs of Iain Cornish are available from the BSA press office, from the Association’s website at www.bsa.org.uk or from Headlinemoney www.headlinemoney.co.uk
3. The BSA has produced a consumer fact sheet, What should I do if I am having difficulty paying my mortgage, can be viewed on the BSA website here http://www.bsa.org.uk/consumer/factsheets/arrearsfactsheet.htm
-01.png){kind=spacer}