BSA: Mutuals optimistic as they stand up to challenges in 2010

BSA: Mutuals optimistic as they stand up to challenges in 2010

BSA: Mutuals optimistic as they stand up to challenges in 2010

58% of mutual Chief Executives say they are optimistic about the year ahead, and are less at the mercy of events beyond their control than they have been in the last two years. At the same time Chief Executives acknowledge the coming year will present challenges, including pressure on margins from unprecedentedly low interest rates.

The Building Societies Association’s annual Chief Executive opinion survey reveals that bosses of mutuals expect recent gains in house prices to be retained in 2010, with an average prediction of a 1% rise over the year. They expect the Bank of England’s official interest rate to remain low, (with an average forecast of 0.83% at the end of 2010), which could continue to restrict mortgage funding, although will help those with mortgage repayment difficulties.

Chief Executives also believe that the FSA’s Mortgage Market Review could have a negative bearing – through increased costs and potentially cutting out a large section of self-employed borrowers.

Chief Executives predict that retail savings balances will grow by only
£28 billion in 2010 (almost half the £58 billion in 2008 and similar to the 2009 figure), and that this will have a negative impact on funding available for mortgage lending. Many respondents strongly believe that Government backed banks and NS&I have an unfair advantage in the savings market because of the implicit guarantee that their direct Government support affords.

Adrian Coles, Director-General of the BSA, commented:

“Compared to the hectic events of over a year ago, Chief Executives can now plan for the future, notwithstanding the continuing challenging conditions. Mutuals continue to examine how they can cut costs, without compromising on member service.

“Mutuals bring democracy, competition, diversity, customer focus and a risk averse culture to the market. There’s never been a better time for these mutual values to challenge the plc banks.

“What mutuals really need from any new Government is a guarantee of a level playing field on capital, liquidity and funding. Mutuals should be able to compete fairly with those institutions that required direct taxpayer support in recent years.”

~ Ends ~

Notes

1. A full version of the survey can be viewed on the BSA’s website here http://www.bsa.org.uk/publications/industrypublications/ceo_opinion_survey.htm

2. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 51 UK building societies.
Mutual lenders and deposit takers have total assets of almost £375 billion and, together with their subsidiaries, hold residential mortgages of almost £240 billion, 19% of the total outstanding in the UK. They hold over £245 billion of retail deposits, accounting for just under 22% of all such deposits in the UK. Mutual deposit takers account for about 36% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

3. The BSA’s Annual Conference is being held in Manchester on 5 and 6 May 2010.

4. Photographs of Adrian Coles are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk